Danske Bank: Nokia – Q1 21, initial impression

Nokia (OW): Nokia is out with the Q1 21 result this morning. The group delivered a strong outperformance on both sales and adj. EBIT which beat Bloomberg consensus by 8% and 314% respectively (note that Bloomberg consensus expectations for adj. EBIT was only EUR90m). The good result was driven by strong growth in Network infrastructure as well as Mobile Networks and on a constant currency basis total group sales were up 9% y/y. The strong sales growth boosted the adj. operating margin to 10.9% and Nokia stated that the good start should increase the likelihood of reaching the upper end of the FY guidance range (Adj. EBIT between 7%-10%). Cash flow was also strong due to higher collection of receivables and Nokia ends the quarter with a reported net cash position of EUR3.7bn and total cash of almost EUR9bn. Overall a surprisingly good start to the year and we believe this result would be strong enough to have pricing impact on Nokia’s longer dated bonds.