Earnings
Nokia's comparable profit jumps 35% as AI and cloud sales more than double, but it cuts its cash conversion outlook
The Finnish network maker kept its full-year profit range and lifted restructuring charges to €1.1 billion while adding €400 million of working capital to prepare for 2027 growth.
HedgeWeekly News Desk ·
Nokia reported third-quarter net sales of €5.15 billion on Thursday, up 10% on a reported basis and 9% at constant currency and portfolio. Comparable operating profit rose 35% to €605 million, lifting the comparable operating margin by 2.2 percentage points to 11.7%. Comparable diluted earnings per share were €0.09, against €0.06 a year earlier.
Growth came from the network gear that links AI data centres. Sales to AI and cloud customers rose 123% from a year earlier and orders from the group rose 118%, with €1.5 billion of new orders booked. Network Infrastructure sales climbed 17% to €2.16 billion, with IP Networks up 43% and Optical Networks up 18% at constant currency. Mobile Infrastructure grew 5% to €2.90 billion, helped in part by revenue pulled forward from the fourth quarter.
Reported figures were weaker. Operating profit fell 22% to €196 million, a 3.8% margin, as restructuring and integration costs rose. Nokia held its 2026 comparable operating profit outlook at €2.1 billion to €2.6 billion but cut its expected free cash flow conversion to 35%–55% of that profit, from 55%–75%, citing an extra €400 million of working capital to secure supply and accelerated restructuring. It raised expected restructuring charges to €1.1 billion, with cash outflows of €800 million to €900 million.
Why it matters: the results put Nokia among the European suppliers being re-rated on AI infrastructure spending rather than telecom capex, and management is guiding to 20%–24% sequential sales growth in the fourth quarter and 25%–30% growth in combined IP and Optical Networks in 2027. The trade-off for investors is cash: the lower conversion target means more of this year's profit is being tied up in inventory and restructuring. Nokia also said the Infinera integration is on track to finish at the end of 2026, a year early, with €200 million of net synergies. It declared a €0.03 dividend, payable on November 5.