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Nokia Turns To Profit In Q2; Lifts 2020 Non-IFRS EPS View

Nokia Corp. (NOK) reported that its second-quarter profit attributable to equity holders of the parent was 94 million euros or 0.02 euros per share compared to a loss of 193 million euros or 0.03 euros per share in the previous year.

The change was primarily driven by lower amortization of acquired intangible assets, lower restructuring and associated charges, continued progress related to cost savings program, a net positive fluctuation in financial income and expenses and higher gross profit.

Non-IFRS net income per share rose to 0.06 euros from last year's 0.05 euros, primarily driven by higher gross profit in Mobile Access within Networks, continued progress related to our cost savings program and a net positive fluctuation in financial income and expenses. It was partially offset by higher investments in 5G R&D to accelerate product roadmaps and cost competitiveness in Mobile Access and a net negative fluctuation in Nokia's venture fund investments.

Both non-IFRS and reported net sales in the second-quarter declined to 5.1 billion euros from 5.7 billion euros last year, impacted by COVID-19 and unique dynamics in China.

On a constant currency basis, both non-IFRS and reported net sales decreased 11%. Excluding one-time licensing net sales, net sales decreased 10% on both a non-IFRS and reported basis.

In the latest-quarter, the company estimated that COVID-19 had an about EUR 300 million negative net impact on its net sales; with the majority of these net sales expected to be shifted to future periods, rather than being lost.

Looking for fiscal year 2020, the company now expects non-IFRS earnings per share to be 0.25 euros plus or minus 5 cents, compared to the prior outlook of 0.23 euros plus or minus 5 cents.

For Long term period, the company expects an earnings-based growing dividend of about 40% to 70% of non-IFRS earnings per share, taking into account Nokia's cash position and expected cash flow generation.

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