Nokia (NYSE:NOK) Corporation (HEL:NOKIA) reported a 15% year-on-year decrease in net sales in its Q3 2023 results, released on Thursday. The drop was attributed to macroeconomic uncertainty and higher interest rates. Despite these challenges, the company's enterprise net sales rose 5% year-on-year in constant currency terms, although the reported figures remained flat.
The company's comparable gross margin fell by 120 basis points due to regional mix changes in its Mobile Networks division. This decline was mitigated by a sequential improvement of 140 basis points. The comparable operating margin also fell, dropping by 200 basis points to hit 8.5%.
Nokia reported a diluted EPS of EUR 0.02 for Q3 2023, with the comparable figure standing at EUR 0.05. The company also recorded a negative free cash flow of EUR 0.4 billion but maintained a net cash balance of EUR 3.0 billion. This aligns with an InvestingPro Tip that highlights Nokia's ability to hold more cash than debt on its balance sheet, a key financial strength that could support the company through its current challenges.
In response to these financial challenges, Nokia announced a series of strategic and operational changes. These include accelerating its strategy execution, enhancing operational autonomy for its business groups, and targeting gross cost savings between EUR 800 million and EUR 1.2 billion by 2026.
As part of these strategic changes, Nokia plans to reduce its workforce from the current level of 86,000 to between 72,000 and 77,000 employees. This significant reduction forms part of the company's broader efforts to streamline operations and improve financial performance amid challenging market conditions.
According to InvestingPro data, Nokia's market cap stands at 17.55B USD and it trades at a low P/E ratio of 4.01, which aligns with another InvestingPro Tip that notes the company is trading at a low earnings multiple. Despite the reported decrease in sales, Nokia has seen a revenue growth of 9.67% as of LTM2023.Q2.
The company's gross profit for the same period was 11093.41M USD, representing a gross profit margin of 40.25%. The operating income, adjusted for LTM2023.Q2, was 2796.81M USD, with an operating income margin of 10.15%.
Nokia's strong financial performance over the last twelve months, including a basic EPS (Cont. Ops) of 0.81 USD for LTM2023.Q2, has led analysts to predict the company will remain profitable this year, as mentioned in one of the InvestingPro Tips.
For more insights and tips on Nokia and other companies, consider InvestingPro's premium service, which offers access to real-time metrics and additional tips. The service currently lists 10 more tips for Nokia, providing a comprehensive analysis of the company's financial health and future prospects.
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