After several lean years, Nokia now seems to have recovered after a year 2021 in the green. The Finnish equipment manufacturer delivered growth forecasts on Thursday likely to satisfy the markets. The manufacturer thus expects to record a turnover of between 22.6 billion and 23.8 billion euros at the end of its 2022 financial year. In 2021, the group recorded revenues of around 22, 26 billion euros at the end of 2021, up 3% year-on-year.
Outpaced by Ericsson and Huawei on the telecom infrastructure front, the Scandinavian giant intends to get back into the race thanks to the launch of a strategic project initiated as soon as its CEO Pekka Lundmark returns to the helm in 2020. This will notably involve an increase of its investments in research and development, which have already increased from 3.8 billion euros to 4 billion euros during the past year. After years of restructuring its activities – particularly in France – the manufacturer announced on Thursday that it had recorded a sharp increase in its operating profit, around 144% over one year, to 2.16 billion euros, against 880 million euros at the end of 2020.
To reward its shareholders who have remained loyal to the position, the company raised its long-term margin target while announcing the upcoming launch of a share buyback program intended to distribute 600 million euros over a two-year period. The carmaker has also proposed a dividend of 0.08 euros per share for the 2021 financial year. These will be the first dividends paid to shareholders of the company since mid-2019.
A road strewn with pitfalls
“Nokia enters 2022 in a strong position with improved margins, faster-than-expected strategy execution and a strong order book, although the global supply chain situation remains tight. We see opportunities in the deployment of 5G and the growing business market,” said Pekka Lundmark in a statement released on Thursday.
It should be recalled that the latter took office as CEO in March 2020, immediately launching a brand new model to restructure Nokia in three phases, with the stated aim of better positioning the firm for changing markets and better responding to the needs client. The launch of this new strategic plan has not been smooth sailing: the company has thus undertaken to cut up to 10,000 jobs – including a third of the workforce of its French subsidiary – to save 600 million euros in ‘by the end of 2023.
A sum that the boss of the equipment manufacturer now intends to reinvest in the firm’s 5G network activity, but also in new products with the intention of returning in the medium term to the wheel of its competitors Ericsson and Huawei.
Still, the road to get there should be strewn with pitfalls for the Scandinavian giant. Among the risks identified by the company for the next year, beyond its only competitors, are in particular the ability of the company to make profitable its investments in research and development, the uncertainties hovering over the supply chains due to the current shortage of semiconductors, the impact of the aftermath of the Covid-19 epidemic on the global economy and the evolution of inflation in the markets operated by Nokia.