Conference Call
SecondQuarter 2002 Financial Results
Jorma Ollila
Chairman and CEO
Olli-Pekka Kallasvuo
Executive Vice President and CFO
Ulla James
Vice President, Investor Relations
July 18, 2002
15.00 Helsinki time / 08.00 New York time
During this call, we will be making various forward-looking
statements regarding the future business and financial
performance of Nokia and the mobile communications industry.
These statements are predictions that involve both risks and
uncertainties, and actual results may vary materially. We refer you
to pages 10 to 17 of Nokia's Form 20-F, to our previous
announcements and to Nokia's press release issued today regarding
some important risk factors you should consider in evaluating this
information.
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
(Millions of Euro)
Strong Profitability for Nokia
Nokia Sales & Gross Margin Development
50.0%
45.0%
40.0%
35.0%
Net Sales
30.0%
Gross Margin
25.0%
2Q 00 3Q 00 4Q 00 1Q 01 2Q 01 3Q 01 4Q 01 1Q 02 2Q 02
Nokia - Key Figures
2Q 2002 PRO FORMA*
EUR (million)
Net sales 6 935 7 346 -6 6 935 7 346 -6
Nokia Mobile Phones 5 398 5 349 1 5 398 5 349 1
Nokia Networks 1 474 1 896 -22 1 474 1 896 -22
Nokia Ventures Organization 106 134 -21 106 134 -21
Operating Margins 18.2 15.5 17.6 11.7
Nokia Mobile Phones 21.7 17.9 21.3 16.9
Nokia Networks 11.6 15.8 10.9 12.7
Nokia Ventures Organization -59.4 -68.7 -65.1 -190.3
Net profit 905 830 9 862 589 46
EPS, EUR
Diluted 0.19 0.17 12 0.18 0.12 50
Operating Cash Flow 1 410 790 73
Q2-2002 Sales: 50% from Europe/Africa, 26% from APAC, and 24% Americas
2Q/2002 2Q/2001 Change (%) 2Q/2002 2Q/2001 Change (%)
REPORTED
Tools in Place for Growth in Our Industry
Service Environment Becoming a Reality
• GPRS
• MMS
• XHTML
• JAVA
• Color Displays
Unprecedented Industry Cooperation
• Open Mobile Alliance (OMA)
• Open standards
• Interoperability
• Fast mass market adoption
Nokia Mobile Phones in Q2-2002
• Nokia handset volumes up 12% y-o-y
• ASPs down in Q2 – but will rise during H2-2002
• H1-2002 announced 20 new phone models – 2002 total of 30 plus
• Technology Features in Phones Models Shipping in 2002:
• 11 with Java
• 6 with MMS
• 3 with XHTML
• 13 with GPRS
• 10 with color displays
• Series 60 licensed to Siemens and Matsushita
Mobile Phone Market Update
• Approximately 93 million units sold globally in Q2-2002 (sell
through)
• 1 billion mobile subscriber mark was reached during Q2 2002
• Industry volume growth: Americas up most, Europe/Africa up,
APAC down (decline in Korean and slower replacement in Japan)
• Channel inventory at a normal level currently – approximately
one month
• Full year 2002 units sold globally of about 400 million (all
regions about 5% growth –led by Americas, APAC, and
Europe/Africa)
Nokia Mobile Phones in Q2-2002
• 36 million phones sold in Q2-2002 (12% y-o-y growth vs.
market growth of 4%)
• Volumes grew in all regions
• Market share above 38% - increased in APAC, GSM and
CDMA
• 2002 market share to increase over 2001 level of 37%
• Long-term target of 40%
• Replacement market to be about 50% of global market in 2002
Nokia Networks in 2002
• Wireless infrastructure will decline 10% in 2002
• 3G revenue recognition to start in H2-2002 – WCDMA first then
GSM/WCDMA
• 3G revenue recognition expected to represent over 25% of H2-2002
Networks’ revenue
• New public MMS solution contracts with:
• TIM
• Telefonica Moviles
• mmO2
• M1
• Major operators to launch MMS by late September
• MMS initial pricing reasonable at around 50 Euro cents
Nokia Networks in 2002
•3G deliveries to 42 operators (26 full commercial)
•New 3G WCDMA contracts with:
• mmO2 – UK, Germany and Ireland
• Hutchinson 3G –Austria
• Radiolinja- Finland
•First 3G network pre-commercial launch in September
•3G business system ready by early 2003 – start of
commercial 3G terminal deliveries
•Long-term market share target is 35% of overall market
Customer Financing
• Customer financing end of Q2 -2001 was 4.2 billion Euros:
• Outstanding (off & on balance sheet): 1.7 billion Euros
• Additional commitments (un-drawn): 2.5 billion Euros
• 3G outstanding and un-drawn balance total: 3.6 billion Euros
• MobilCom EUR 752 million facility refinancing are ongoing
• We expect that by the time of a final agreement is reached to be in the position to
reassess the value of the receivables and possible alternative security. We do
expect this to lead into a material charge in the 3rdquarter. This charge will be
excluded from the pro forma earnings.
Balance Sheet & Cash Flow
• Net operating cash flow approx. EUR 1.4 billion in Q2-
2002
• WCDMA infrastructure related WIP totaled 686 million
Euros at end of Q2-2002
• Gearing –42%
• Net cash position of EUR 5.4 billion
Guidance for Q3-2002
Q3-2002 guidance:
• Revenues expected to be between EUR 7.2 – 7.6 billion (2-8%
yoy growth)
• Pro forma Q3-2002 EPS is expected to be between .15 to .17
Euro (diluted)
• ‘Common Group Expenses’ approx. EUR 40 million
• ‘Share of Associated Companies’ charge of EUR 5 million
• ‘Financial Income’ approx. EUR 30 million
• ‘Minority Interests’ to remain unchanged from Q2-2002
• Pro forma tax rate approx. 30%
Guidance for H2-2002
H2-2002 guidance:
• Revenue growth of 3-10% vs. H2-2001
• Pro forma operating margins for Nokia Mobile Phones are expectedto be around
20% for the balance of 2002 (Q4 stronger than Q3)
• Pro forma operating margins for Nokia Networks are expected to be around 10%
for the balance of 2002
• Nokia Ventures Organization is expected to post a pro forma loss of around EUR
150 million for 2002
• 2002 pro forma diluted EPS of 79-84 Euro cents
• Net operating cash flow for 2002 to continue at a healthy level
Function/
Feature
Model
Category
Band Functionality/
Frequency
Region
Browser
Nokia PC Suite
Enabling
Technology
Connectivity
Talk Time
Standby Time
Screen Resolution
Extra Features
Availability
GSM 1900
TDMA/AMPS
800/1900
Mobile Wallet
Picture
Messaging
TDMA CDMA
826563606340 GAIT
Classic
TDMA/ AMPS
800/1900
Americas
WAP 1.2.1
YesYes
InfraredInfrared
Up to 7-14 days
96 x 65
Record memos/
Picture
Messaging
1Q 2002
FashionClassic
TDMA/ AMPS
800/1900
AmericasAmericas
WAP 1.2.1WAP 1.2.1
Up to 3 hours 2.6 -5.2 hours3.5 –6 hours
Up to 4-8 daysUp to 10-25 days
84 x 4896 x 65
Picture
Messaging
2Q 20021H 2002
CDMA 1X
AMPS 800/1900
WAP 2.0
Java
MIDI Tones/
Interactive covers
CDMA 1X Voice
AMPS 800/1900
Openwave 4.1/5.0Openwave 4.1/
Record memos/
Picture
Messaging/
Mobile Chat
Voice and Data/
AMPS 800/1900
4.1/5.0
YesYes
InfraredInfrared
Record memos/
Picture
Messaging/
Mobile chat
8270638563703585
FashionClassicClassicExpression
CDMA 1900CDMA 1X
AmericasAmericasAmericasAmericas
Openwave 4.1Openwave
Up to 2h 45min3.2 – 4 hours3.2 –4 hours2.8 – 3.6 hours
Up to 3-5 daysUp to 7-15 daysUp to 7 -15 daysUp to6 – 13 days
84 x 4896 x 6596 x 6596 x 65
5-line
display/Onetouch dialing
2Q 20022H 20022Q 20022H 2002
Function/
Feature
Model
Category
Band
Functionality/
Frequency
Region
Browser
Nokia PC Suite
Enabling
Technology
Connectivity
Talk Time
Standby Time
Screen Resolution
Extra Features
Availability
APAC
3410/33153350
GSM 900/1800GSM 900/1800
Europe,Africa-3410
APAC- 3315
WAP 1.2.1WAP 1.1
Java (3410)
55 - 260 hours55 –260 hours
Picture MessagingPicture Messaging
2Q 20021Q 2002
GSM
3510
GSM 900/1800
GPRS
Europe, Africa,
APAC
WAP 1.2.1
MMS
Up to 13 days
MIDI Tones
Inter-active Covers
2Q 2002
3610
Expression
GSM 900/1800
APAC
WAP 1.1
Up to 3h 50 min
Up to 170 hours
96 x 65
Hindi input/Lunar
Calendar
3Q 2002
3590
GSM 850/1900
GPRS
Americas
WAP 1.2.1/
XHTML
Java
Up 12.5 days
MIDI Tones
Interactive Covers
3Q 2002
5210
ActiveExpressionExpressionExpressionExpression
GSM 900/1800
Europe, Africa,
APAC
WAP 1.1
Yes
Infrared
Up to 3h 50min2h 30min - 6 hours Up to 4h 30min2h 40min – 4h 45min2h 40min -4h 45min
Up to 170 hours
84 x 4896 x 6596 x 6596 x 6596 x 65
Thermometer,
Removable shell
1Q 2002
Function/
Feature
GSM
Model
Category
Band
Functionality/
Frequency
Region
Browser
Nokia PC Suite
Enabling
Technology
Connectivity
Talk Time
Standby Time
Screen
Resolution
Extra Features
Availability
6310i
Classic
GSM
900/1800/1900
GPRS
HSCSD
Global
WAP 1.2.1
Yes
Java/Mobile
Wallet
Bluetooth/
Infrared
Up to 6 hours
Up to 17 days
96 x 65
Voice dialing/
Stopwatch
2Q 2002
6500
Classic
GSM 900/1800
GPRS
APAC
WAP 1.2.1
Yes
Infrared
2h 15min -4
hours
100 – 350 hours
96 x 65
FM Radio/
Voice dialing
1H 2002
6510
Classic
GSM 900/1800
GPRS
HSCSD
Europe, Africa,
APAC
WAP 1.2.1
Yes
Mobile Wallet
Infrared
2h 15m -4 hours
100 – 350 hours
96 x 65
FM Radio/ Voice
Dialing
1Q 2002
GSM 850/1900
2h 30 min - 5
FM Radio
GSM
GPRS
XHTML
hours
96 x 65
6610
Classic
GSM
900/1800/900
GPRS
HSCSD
Europe, Africa,
APAC
WAP 1.2.1
Yes
Java/MMS
Up to 2 - 5
hours
Up to 150 -300
hours
128 x 128
(4096 colors)
FM Radio
3Q 2002
72106590
GSM 900/1800/
1900
GPRS
GlobalAmericas
WAP 1.2.1WAP 1.2.1/
Java/MMS
Infrared
30min
Up to 10 days Up to 4 -16 days
96 x 60
(4096 colors)
FM Radio/
Handsfree
Speaker
3Q 20023Q 2002
7650
ImagingFashionClassic
GSM 900/1800
GPRS
HSCSD
Europe, Africa,
APAC
WAP 1.2.1
YesYesYes
Java/MMS/
Symbian
Infrared/
Bluetooth
2–4 hours2h 30min -4h
Up to 90–230
hours
176 x 208 (4096
colors)
Built-in Camera
Now
Function/
Feature
Model
Category
Band
Functionality/
Frequency
Region
Browser
Nokia PC Suite
Enabling
Technology
Connectivity
Talk Time
Standby Time
Screen
Resolution
Extra Features
Availability
GSM 1900 GPRS
WAP 1.2.1
Up to 4 hours
Up to 16 days
Record memos/
8390
Fashion
Americas
Yes
Infrared
84 x 48
Stopwatch
1Q 2002
8855
Premium
GSM 900/1800
APAC
WAP 1.1
Infrared
3h 20 min – 4h 15
min
Up to 75–225 hours
84 x 48
Analog
Watch/Lunar Date
1H 2002
8910
Premium
GSM 900/1800 GPRS
HSCSD
Europe, Africa, APAC
WAP 1.2.1
Yes
Bluetooth
Up to 4 hours
Up to 300 hours
84 x 48
Titanium casing/Voice
Dialing
2Q 2002
9210c
Business Application
GSM 900/1800
China
WAP 1.1
Yes
Java/Symbian
Infrared
Up to 4–10 hours
Up to 80-230 hours
640 x 200 (4096
colors)
Speaker
Phone/QWERTY
keyboard
1Q 2002
9210i
Business
Application
GSM 900/1800
HSCSD
Europe, APAC
WAP 1.1
Yes
Java/Symbian
Infrared
Up to 4-10 hours
Up to 80-230 hours
640 x 200 (4096
colors)
Speaker
Phone/QWERTY
keyboard
2Q 2002
9290
Business Application
GSM 1900
Americas
WAP 1.2.1
Yes
Java/Symbian
Infrared
Up to 4–10 hours
Up to 80-230 hours
640 x 200 (4096
colors)
Speaker
Phone/QWERTY
keyboard
2Q 2002
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