Nokia 2012 Annual Report Download - page 118

Strategy and Restructuring Program
In November, 2011, Nokia Siemens Networks announced its strategy to focus on mobile broadband
and services and the launch of an extensive global restructuring program. Nokia Siemens Networks
continues to target to reduce its annualized operating expenses and production overheads, excluding
special items and purchase price accounting related items, by more than EUR 1 billion by the end of
2013, compared to the end of 2011. While these savings are expected to come largely from
organizational streamlining, it has also targeted areas such as real estate, information technology,
product and service procurement costs, overall general and administrative expenses, and a significant
reduction of suppliers in order to further lower costs and improve quality.
During 2012, Nokia Siemens Networks recognized restructuring charges and other associated items of
EUR 1.3 billion related to this restructuring program, resulting in cumulative charges of approximately
EUR 1.3 billion. In total we now expect cumulative Nokia Siemens Networks restructuring charges of
approximately EUR 1.3 billion by the end of 2013, virtually all of which have now been recognized. By
the end of 2012, Nokia Siemens Networks had cumulative restructuring related cash outflows of
approximately EUR 650 million related to this restructuring program. Nokia Siemens Networks expects
restructuring-related cash outflows to be approximately EUR 450 million for the full year 2013, and
approximately EUR 200 million for the full year 2014 related to this restructuring program.
2011 compared with 2010
Nokia Group
The following table sets forth selective line items and the percentage of net sales that they represent
for the fiscal years 2011 and 2010.
Year Ended
December 31,
2011
Percentage of
Net Sales
Year Ended
December 31,
2010
Percentage of
Net Sales
Percentage
Increase/
(Decrease)
(EUR millions, except percentage data)
Net sales ..................... 38659 100.0% 42 446 100.0% (9)%
Cost of sales ................. (27300) (70.6)% (29 456) (69.4)% (7)%
Gross profit ................... 11359 29.4% 12 990 30.6% (3)%
Research and development
expenses .................. (5584) (14.4)% (5 844) (13.8)% (4)%
Selling and marketing
expenses .................. (3769) (9.8)% (3 856) (9.1)% (2)%
Administrative and general
expenses .................. (1085) (2.8)% (1 039) (2.4)% 4%
Other operating income and
expenses .................. (1994) (5.2)% (181) (0.4)%
Operating profit ............... (1073) (2.8)% 2 070 4.9%
Net Sales
Although the mobile products market continued to see volume growth in 2011, our net sales and
profitability were negatively affected by the increasing momentum of competing smartphone platforms
relative to our Symbian smartphones in all regions as we embarked on our platform transition to
Windows Phone, as well as our pricing actions due to the competitive environment in both the
smartphone and feature phone markets. In addition, during the first half of 2011 our net sales and
profitability were adversely affected by our lack of dual SIM products, which continued to be a growing
117