Nokia (NYSE: NOK), headquartered in Espoo, Finland, bolstered its position as a leading global communications equipment supplier with double digit top line growth in 2022. Consolidated sales grew 12 percent year-over-year to $27 billion, and operating profit grew 9 percent to $2.5 billion. During 2022, Nokia invested $4.9 billion or 18 percent of sales in research and development. For 2023, the company is projecting sales of $27-29 billion with operating margins in the 11.5-14 percent range.
Pekka Lundmark, Nokia President and CEO comments, “As we look into 2023, even as some developed markets, like North America, mature, other markets, like India, are just starting to ramp up. So, we see the addressable markets for Mobile Networks continuing to grow. With the recent deals won, we believe we are in a strong position to outperform the market.”
Nokia’s customer base comprises mainly communications service providers that account for 80 percent of sales. Enterprise and private networks account for just 8 percent of sales but is the company’s fastest growing segment at 27 percent YoY. The company derives the balance of its revenues from licensing its communications technology to CSPs and through sales of specialty products from its Submarine Cable and Radio Frequency System subsidiaries.
Nokia’s product offerings consist of network infrastructure (fiber, IP and fixed network systems), mobile networks, and cloud and network services. Mobile networks are Nokia’s flagship products, accounting for 43 percent of total sales. Network infrastructure makes up 36 percent, while cloud and network services account for 13 percent. Nokia Technologies contributes another 6 percent.
North America, the company’s largest market region accounting for 34 percent of 2022 sales, grew 17 percent YoY. This volume reflects the high level of 5G deployments across all the major MNOs in the U.S. and Canada along with demand for IP and optical network gear, and cloud and network services.
Nokia’s European home market accounts for 27 percent of sales and grew 6 percent in 2022 on the strength of demand for fixed and optical network infrastructure and a slow ramping of 5G mobile network builds across numerous countries. Sales for the year included an extension of a long-term technology licensing agreement with a major CSP.
India and Latin America are the company’s smallest markets, each accounting for 5 percent of sales, but both are Nokia’s fastest growing regions. The strong growth in mobile networks sales in India reflected 5G deployments that started to ramp in the fourth quarter. Network infrastructure also saw strong growth driven by both optical and fixed networks. Sales in Latin America increased primarily due to demand for network infrastructure and mobile networks. The Middle East and Africa region made up 8 percent of sales but exhibited double-digit growth driven by cloud and network services.
Within Greater China, sales growth slowed due to demand declines among Chinese MNOs for network infrastructure, particularly in IP networks. The solid single-digit performance in Asia Pacific reflected growth across mobile networks, network infrastructure, and cloud and network services.
By John Celentano, Inside Towers Business Editor