Nokia on Thursday restarted its quarterly dividend and initiated a share buyback programme after reporting fourth-quarter comparable operating earnings above markets estimates as the Finnish telecoms equipment maker kept costs in check.
The company also forecast annual revenue largely ahead of projections and set a long-term target for operating margins of at least 14%, replacing its earlier 2023 target of between 11% and 13%.
A slew of technology missteps in the early stages of 5G rollout pushed Nokia behind its rivals, prompting a change in management. Since Pekka Lundmark took over as CEO in 2020, he found ways to cut costs and increase spending on research.
“We have now largely caught up competition in 5G,” Lundmark said in an interview. “We have created a foundation for growth acceleration, the year of reset is behind us, now we are accelerating.”
While the ban of rival Huawei (HWT.UL) in some markets had helped Nokia to claw back market share, it faced a setback when long-time U.S. customer Verizon (VZ.N) chose to give a multi-billion-dollar contract to Samsung (005930.KS). read more
That contract loss still hurt fourth-quarter revenue that fell 2% to 6.41 billion, missing expectations of 6.47 billion, a Refinitiv poll showed.
“We have established a new baseline in North America and we do see growth opportunities there,” Lundmark said, adding the upcoming 5G auctions in countries such as India would present further growth avenues.
Nokia’s fourth-quarter adjusted operating profit of 908 million euros beat the 822 million euros expected by analysts.
Lundmark said he was keeping options open when it came to the question of acquiring companies to strengthen its technology position just like rival Ericsson (ERICb.ST), which has splurged billions of dollars in acquiring companies.
Nokia also proposed a dividend, suspended since 2019, of 8 euro cents per share for 2021, and start a share buyback scheme of 600 million euros.
Nokia predicted its 2022 revenue will amount to between 22.6 billion euros and 23.8 billion euros ($25.5 billion-$26.9 billion), up from 22.2 billion last year. Analysts on average expected revenue of 23.06 billion, a Refinitiv poll showed.
For 2021, the company reported revenue of 22.2 billion – a growth of 3% in constant currency.
“At least there was growth, which has not always been the case in the past few years,” Lundmark said.