Nokia Corporation (ADR) (NYSE:NOK) released the results from its most recently completed quarter before opening bell this morning, posting non-IFRS earnings of 6 euro cents per share on revenue of €2.9 billion. Analysts had been expecting earnings of 4.5 euro cents per share on €3.2 billion in revenue. In the second quarter of last year, Nokia posted non-IFRS earnings of 5 euro cents per share on revenue of €3.2 billion.
Reported losses per share were 1 euro cent, compared to losses of 2 euro cents per share in the same quarter a year ago.
Breaking down Nokia’s earnings
Nokia Networks saw €281 million in non-IFRS operating profits, which was 11% of the company’s net sales. The company cited better operational efficiency, which resulted in better operating profits and gross margins. Net sales for the division rose to €2.6 billion for the quarter.
The company’s HERE maps business saw flat sales year over year, while its Nokia Technologies segment saw a strong sequential increase in net sales, mostly because of Microsoft Corporation (NASDAQ:MSFT)’s licensing deal, which went with the company’s purchase of Nokia’s devices division.
Nokia saw sales rise by 18% in China during the quarter as it secured contracts from a number of Chinese carriers that are preparing to upgrade their networks. Both China Mobile Ltd. (NYSE:CHL) (HKG:941) and China Telecom Corporation Limited (ADR) (NYSE:CHA) (HKG:0728) chose Nokia to upgrade their networks. Now Nokia is looking for even more network upgrade orders so that it can increase its margins and also raise its debt rating out of junk status.
Nokia raises guidance
The struggling Finnish company said it now expects Nokia Networks’ non-IFRS operating margin to be at or slightly higher than the top of its previously stated margin range of 5% to 10%. That’s a slight increase from Nokia’s previous forecast of toward the higher end of that same range. The company expects the divisions net sales to grow year over year in the second half of the year.
Nokia cited its financial performance during the first half of this year and a number of other expectations for the second half. Those include competitive dynamics within the industry, its mix of products and regions, a greater proportion of new major network deployment projects and expectations for continuing improvements in operations.
This year the company expects HERE to keep investing in growth opportunities and to see annualized net sales continue at a run rate of about €600 million.