Rajeev Suri expects a better performance in 2017; sees potential for margin expansion on improving market conditions.
Nokia CEO Rajeev Suri said this week he was disappointed by Nokia’s topline performance iin 2016, but said improving market conditions point to a brighter 2017.
The Finnish kit maker on Thursday reported full-year revenues of €23.95 billion, down 10% on 2015. Networks revenue fell 12% to €21.80 billion, while revenue at Nokia Technologies, which includes R&D and the company’s intellectual property rights (IPR) activities, fell 2% to €1.07 billion.
Nokia’s operating profit fell 25% to €2.17 billion.
Nokia, along with major European rival Ericsson, has seen demand for mobile network infrastructure tail off, as telcos in developed economies have largely completed their initial 4G rollouts. The market outlook is gloomy too, since the next major mobile milestone, 5G, is years away from being commercially ready.
Nonetheless, Suri is optimistic about Nokia’s prospects in 2017.
"While I remain disappointed with our topline development in 2016, we continue to expect our performance to improve in 2017 and see the potential for margin expansion in 2017 and beyond, as market conditions improve and our sales transformation programmes gain further traction," he said.
He said 2016 was a year of transition for Nokia, as it underwent dramatic changes stemming from the integration of Alcatel-Lucent.
Nokia is already benefiting from the €15.6 billion acquisition of its Franco-U.S. rival, Suri said.
"Our sales pipeline with customers beyond our traditional communication service provider base accelerated over the course of the year, we saw an increasing share of our Networks pipeline coming from opportunities covering products and services from two or more of our business groups, and the potential of cross-selling started to become a reality," he said.
Meanwhile, in the fourth quarter ended 31 December, revenue was down 13% year-on-year to €6.72 billion. The networks division accounted for €6.07 billion of the total, compared to €7.06 billion in Q4 2015. Nokia Technologies, saw revenue fall 25% to €309 million.
Fourth quarter operating income fell 27% to €940 million.