Nokia Corporation posted its interim report for the first quarter 2015. Net sales of EUR 3.2 billion (EUR 2.7 billion in Q1 2014) were up 20% year-on-year.
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Non-IFRS diluted EPS in Q1 2015 was EUR 0.05 (EUR 0.04 in Q1 2014), an increase of 25% year-on-year; reported diluted EPS in Q1 2015 of EUR 0.05 (EUR 0.03 in Q1 2014), up 67% year-on-year.
Nokia's net sales increased 20% year-on-year and declined 16% sequentially. At constant currency, Nokia's net sales would have increased 11% year-on-year and declined 21% sequentially.
The year-on-year increase in Nokia's net sales in the first quarter 2015 was primarily due to higher net sales in Nokia Networks, Nokia Technologies and, to a lesser extent, in HERE.
The sequential decline in Nokia's net sales in the first quarter 2015 was primarily due to seasonally lower net sales in Nokia Networks and, to a lesser extent, in HERE. This was partially offset by higher net sales in Nokia Technologies.
Nokia's non-IFRS operating profit declined 13% year-on-year in the first quarter 2015, primarily due to a decline in non-IFRS operating profit in Nokia Networks, partially offset by increases in non-IFRS operating profit in Nokia Technologies and, to a lesser extent, in HERE.
Nokia's non-IFRS other income and expenses was an expense of EUR 19 million in the first quarter 2015, compared to an income of EUR 11 million in the first quarter 2014. On a year-on-year basis, the change in Nokia's non-IFRS other income and expenses was primarily due to lower other income in Group Common Functions and higher foreign exchange hedging related losses.
Nokia's non-IFRS operating profit declined 49% sequentially in the first quarter 2015, primarily due to a decline in non-IFRS operating profit in Nokia Networks, partially offset by an increase in non-IFRS operating profit in Nokia Technologies.
Nokia's non-IFRS other income and expenses was an expense of EUR 19 million in the first quarter 2015, compared to an expense of EUR 2 million in the fourth quarter 2014. On a sequential basis, the change in Nokia's non-IFRS other income and expenses was primarily due to foreign exchange hedging related losses.
The share of results of associated companies in the first quarter 2015 includes an approximately EUR 25 million out of period adjustment. Nokia has historically accounted for the results of the associated company in arrears as the results have not been material. Due to an increase in the entity's earnings, the amounts reflected in the first quarter 2015 should have been recorded in the fourth quarter 2014.
Nokia's non-IFRS profit increased 16% on a year-on-year basis in the first quarter 2015, primarily due to lower non-IFRS financial expenses and the approximately EUR 25 million out of period adjustment mentioned above, partially offset by lower non-IFRS operating profit and, to a lesser extent, higher non-IFRS tax expenses.
In the first quarter 2015 Nokia's non-IFRS tax expense was based on an effective tax rate of approximately 25%, and this resulted in a higher non-IFRS tax expense than in the first quarter 2014. However, the tax expenses in the first quarter of 2014 and 2015 are not directly comparable due to the fact that Nokia's deferred tax assets in Finland and Germany were subject to valuation allowances until the third quarter of 2014.
Sequentially, Nokia's non-IFRS profit declined 44% in the first quarter 2015, primarily due to a decline in non-IFRS operating profit, partially offset by lower non-IFRS tax expenses, the approximately EUR 25 million out of period adjustment mentioned above and lower non-IFRS financial expenses. ■