Nokia revises 2026 operating margin target ahead of investor event

Nokia will host an investor and analyst event to provide an update on its execution against its group strategy, initial planning assumptions for 2024 and a revised comparable operating margin target for 2026. It will also outline its strategy to give more autonomy to its four business groups. The presidents of Nokia’s Mobile Networks and Cloud and Network Services business groups will also present their strategies and future opportunities. Accompanying the move towards more autonomous business groups and to provide investors with greater transparency in assessing their financial performance, Nokia will begin reporting cash flow and regional sales at the business group level in 2024. Tommi Uitto, president of Mobile Networks will present on how MN is revamping its strategy. It has begun to re-baseline its operations for resilience and profitability while maintaining its commitment to technology leadership and protecting its R&D output. These combined actions, to be completed by 2026, will enable MN to achieve a double-digit operating margin at net sales level of approximately EUR 10B, compared to the approximately EUR 11.5B threshold level that would be required. In addition to serving CSP customers, MN will accelerate its offerings to faster growing segments, including Enterprise, Cloud RAN, O-RAN, and the defense sector. As a conclusion to Nokia’s long-range planning process, the company has decided to lower its comparable operating margin target to be achieved by 2026 from the prior at least 14% to at least 13%. Nokia still sees a path to achieving the at least 14% comparable operating margin target but considering the current market conditions in Mobile Networks, this is deemed a prudent change. Nokia sees further opportunities to increase margins beyond 2026 and believes this 14% target remains achievable over the longer term. Nokia targets for both NI and CNS to grow faster than the market through 2026 while Mobile Networks will face challenges in 2024 and 2025 before returning to grow faster than the market in 2026. Nokia’s other targets remain unchanged.