Nokia(US:NOK)2025-01-30 13:15Financial Data and Key Metrics Changes - The company reported a net sales growth of 9% in Q4 2024, with a gross margin increase of 250 basis points to 47.2% and an operating margin of 19.1%, the highest since 2015 [10][12][16] - Free cash flow for the year was EUR2 billion, with a year-end net cash balance of EUR4.9 billion after returning EUR1.4 billion to shareholders [13][29] Business Line Data and Key Metrics Changes - Network Infrastructure grew by 17% in Q4, with IP networks growing 24% [11][17] - Mobile Networks saw a 2% decline in net sales, but trends stabilized with double-digit growth in North America [18][19] - Cloud and Network Services grew by 7%, despite a 4 percentage point headwind from a prior disposal [11][20] - Nokia Technologies experienced an impressive 85% growth in net sales in Q4, with a run rate of EUR1.3 billion to EUR1.4 billion [23][24] Market Data and Key Metrics Changes - North America and India were the biggest contributors to net sales growth, with strong demand from telecom operators in North America [25][26] - The competitive environment remains challenging in Latin America, while Europe showed resilient market performance mainly due to Nokia Technologies [26] Company Strategy and Development Direction - The company plans to accelerate investments in its IP networks business, targeting an additional EUR1 billion in net sales by 2028 through a EUR100 million annual operating expense increase [41][99] - The acquisition of Infinera is expected to strengthen Nokia's position in optical networking and data center markets [34][72] - The company aims to diversify its business and accelerate growth outside traditional service provider markets, with a focus on enterprise and defense sectors [37][110] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improved visibility for 2025, with a growing order backlog and robust CapEx commentary from customers [64] - The company expects strong growth in Network Infrastructure and stable sales in Mobile Networks, despite a headwind from AT&T [51][65] - Management highlighted the importance of private wireless and defense sectors as key growth areas moving forward [110][112] Other Important Information - The company returned EUR1.4 billion to shareholders in 2024, with EUR710 million through dividends and EUR680 million via buybacks [30][31] - A dividend authorization of EUR0.14 per share is proposed for the financial year 2024, an increase from EUR0.13 the previous year [31] Q&A Session Summary Question: Guidance on gross margin and visibility for 2025 - Management indicated improved visibility for 2025 compared to the previous year, with a growing order backlog and optimistic growth opportunities in enterprise markets [64][66] Question: Trends with hyperscalers and data centers - Management sees significant growth opportunities in the data center market, with good deal traction and plans to strengthen capabilities through the Infinera acquisition [71][72] Question: Growth trajectory in Network Infrastructure - Management expects strong growth across all segments of Network Infrastructure, particularly in optical, but refrained from providing specific figures [86][87] Question: Data center growth plans and operating expenses - Management confirmed plans to grow operating expenses by EUR100 million to achieve an additional EUR1 billion in sales by 2028, focusing on both R&D and go-to-market investments [99][100] Question: Mobile Networks business turnaround - Management acknowledged the need to drive top-line growth in Mobile Networks, emphasizing the importance of private wireless and defense sectors for future growth [108][110] Question: Opportunities in Nokia Technologies - Management highlighted growth opportunities in new areas such as automotive and multimedia, with ongoing investments in R&D [90][115]