Nokia on Thursday raised its guidance for its Networks division, despite reporting a slight decline in third quarter revenue.
"Even if I am not pleased with the overall sales development, our strong profitability is testament to the strength of our operating model," said Nokia CEO Rajeev Suri, in a statement.
In the three months to 30 September, Nokia’s Networks arm generated revenue of €2.88 billion, down from €2.94 billion in the same quarter of 2014.
The decline was driven by a fall in sales of mobile broadband equipment, which Nokia attributed to a slowdown in sales in North America, and Europe, led by France, Germany and Russia. Services revenue increased to €1.31 billion from €1.27 billion.
Operating profit at Networks slipped to €391 million from €397 million in the year ago quarter, again, driven by lower mobile broadband sales and offset slightly by higher services sales.
"The performance at Nokia Networks was the highlight of the quarter," Suri insisted, which "allowed us to raise our full-year outlook for that business."
Nokia now expects Networks’ 2015 non-IFRS operating margin to come in at the high end of its 8%-11% forecast, compared to its previous guidance of the mid-point of that range.
Networks, by far the largest contributor to Nokia’s overall revenue, is set for major change with the addition of Alcatel-Lucent.
During the quarter, Nokia received approval from the remaining two regulators – China’s Ministry of Commerce (MOFCOM), and France’s Ministry of Economy (MINEFI) – enabling it to proceed with the exchange offer part of the transaction.
Nokia has also scheduled an extraordinary general meeting (EGM) to request shareholder approval for the deal.
In a move likely aimed at warding off any potential opposition to the tie-up, the company on Thursday announced a €7 billion capital restructuring that will see €4 billion of excess capital returned to shareholders, and €3 billion worth of deleveraging.
"That programme, in my view, provides an excellent balance of significant capital return to shareholders while still ensuring we have strategic flexibility for the future," Suri said.
Nokia also now expects to generate full-year operating cost synergies of €900 million in 2018, compared to its earlier target of 2019.
Meanwhile, in the third quarter, Nokia’s patent-licensing division, Technologies, generated revenue of €162 million, up from €152 million a year earlier.
Nokia’s mapping business Here, which is i n the process of being sold to a consortium of German car-makers, is now reported as discontinuing operations. In the three months to 30 September, Nokia’s discontinuing operations generated revenue of €283 million, up from €262 million in Q3 2014.
Overall, Nokia’s third quarter-revenue from continuing operations came in at €3.01 billion, down from €3.09 billion in the same period a year ago. Operating profit increased to €475 million from €457 million.
