Nokia earnings showed a widening gap between comparable and reported operating performance in the third quarter of 2026. Sales rose 10% to €5.154 billion and comparable operating profit increased 35%, supported by network infrastructure demand. But reported operating profit fell as restructuring and integration costs accelerated, while the company lowered its full-year cash-flow conversion assumption.
Key Takeaways
- Comparable operating profit reached €605 million, while reported operating profit fell 22% to €196 million.
- AI & Cloud customer sales grew 123%, with €1.5 billion in new orders secured during the quarter.
- Nokia retained its 2026 profit outlook but lowered its cash-flow conversion assumption as spending needs increased.
Table of Contents
- Nokia earnings reflect stronger sales but higher restructuring costs
- AI orders support network infrastructure growth
- Profit outlook holds while cash assumptions shift
- Board approves November dividend payment
- Conclusion
Nokia earnings reflect stronger sales but higher restructuring costs
In its October 22 interim report, Nokia said third-quarter sales increased 9% on a constant-currency basis. Comparable operating margin rose to 11.7% from 9.5% a year earlier, with revenue growth and operating efficiency supporting the improvement.
The reported figures moved in the opposite direction at the operating level. Operating margin declined to 3.8% from 5.4%, reflecting accelerated restructuring and integration costs. Comparable gross margin was broadly stable at 44.6%, while reported gross margin fell 220 basis points to 42.2%.
Comparable diluted earnings per share from continuing operations increased to €0.09 from €0.06. On a reported basis, diluted earnings per share from continuing operations rose to €0.03 from €0.01.
AI orders support network infrastructure growth
Network Infrastructure sales reached €2.158 billion, increasing 15% at constant currencies. IP Networks grew 43% and Optical Networks expanded 18% on the same basis.
Across the group, sales to AI & Cloud customers rose 123% and order intake increased 118%. Chief Executive Justin Hotard said Nokia secured €1.5 billion in new orders from those customers during the quarter. He also said the company expects its combined Optical and IP Networks businesses to grow between 25% and 30% in 2027.
Mobile Infrastructure sales increased 5% to €2.902 billion, partly because revenue expected in the fourth quarter was recognized in the third. Nokia said product mix, commercial discipline and continued cost reductions benefited the segment.
Hotard said the Infinera integration remains on track for completion by the end of 2026, one year earlier than planned, with €200 million in net synergies.
Profit outlook holds while cash assumptions shift
Nokia maintained its full-year comparable operating profit outlook of €2.1 billion to €2.6 billion. Its assumptions include a 20% to 24% sequential rise in fourth-quarter sales and a typically strong quarterly increase in comparable operating profit, bringing the full-year result above the guidance midpoint.
The company lowered its expected free cash flow conversion from comparable operating profit to 35%–55%. It plans an additional €400 million investment in working capital this year to secure supply and support the growth opportunity it sees in 2027. Accelerated restructuring also contributed to the lower conversion assumption.
Restructuring and associated charges are now expected to total €1.1 billion, with related cash outflows of €800 million to €900 million. Nokia said it had expanded some restructuring programs to simplify operations and its location strategy.
Capital expenditure is now assumed at €750 million to €850 million. The reduction partly reflects changes to real estate plans and some manufacturing investment payments moving into 2027; Nokia said its optical manufacturing expansion remains on track.
Board approves November dividend payment
Nokia’s board approved a €0.03-per-share dividend on October 22. The record date is October 27, with payment scheduled for November 5. Payment dates outside Finland will depend on intermediary banks’ practices.
Following this distribution, the board’s remaining distribution authorization will be a maximum of €0.03 per share. Nokia plans to publish its fourth-quarter and full-year 2026 results on January 28, 2027.
Conclusion
Nokia’s quarter combined stronger AI-related demand and improved comparable profitability with heavier restructuring and working-capital commitments. The full-year profit target is unchanged, but the company now expects less of that operating profit to convert into free cash flow.
Read More News
Disclaimer
This FinanceVelix article provides general information, not personalized financial, investment, legal, or tax advice. Market prices, interest rates and economic conditions can change; investments carry a risk of loss. Facts reflect the material available when published and may change. Check important information independently and consult a qualified professional when needed. Mentioning an asset, company, or service is not an endorsement.
