Nokia’s revenue was €5,092 million, down 11% in the second quarter of 2020 with the majority of that due to COVID-19 as well as a sharp decline in China.
Speaking on Q2 2020 results, Rajeev Suri, President and CEO, Nokia said, “Nokia delivered a strong improvement in Q2, with better-than-expected profitability, significant improvement in cash generation, clear indications of a return to strength in mobile radio, and a year-on-year increase in earnings-per-share, despite the challenges of COVID-19. These results show that our execution has improved as planned and that we are well positioned to end the year with a significantly stronger financial position.”
“Profitability gains in the quarter were supported by a 4.5 percentage point year-on-year improvement in Networks gross margin, building on a 3.5 percentage point gain in the first quarter and driving Nokia non-IFRS gross margin to 39.6%. Nokia Enterprise also grew year-on-year constant currency sales by 18% compared to one year ago and expanded margins,” commented Suri.
“At the start of the year, we said we would have a sharp focus on our Mobile Access business and improving cash generation. In both areas we continue to make good progress. Free cash flow in the quarter was positive €265 million, versus negative €1.0 billion one year ago, and Nokia ended Q2 with €1.6 billion of net cash, and €7.5 billion in total cash,” said Suri.
In Mobile Access, the company is showing healthy improvements in its radio portfolio, where roadmaps are strengthening, costs are coming down and product performance is rising. The company’s “5G Powered by ReefShark” shipments continue to increase and the company remains on track to reach 35% or better by year end.
The availability of a software upgrade allows millions of Nokia 4G/LTE radios deployed to more than 350 customers to be migrated seamlessly to 5G; and plans to accelerate leadership in Open RAN. Nokia is the only global supplier fully committed to O-RAN with commercial 5G Cloud-RAN networks.
The company has also announced an expansion of IP routing business into the data center market and highlighted that Apple is deploying Nokia’s technology at its data centers.