Nokia 2012 Annual Report Download - page 98

In 2012, the Japanese yen depreciated by 5.7% against the euro. During that year, approximately 10%
of the devices components we used were sourced in Japanese yen and, consequently, the
depreciation of the Japanese yen had a positive impact on our operating profit in 2012.
In 2012, emerging market currencies performance was mixed. The Chinese yuan and the Russian
ruble performed the best appreciating by 4.9% and 3.4%, respectively, against the euro. The Indian
rupee and the Brazilian real depreciated by 2.3% and 11.4%, respectively, against the euro.
In general, the depreciation of an emerging market currency has a negative impact on our operating
profit due to reduced revenue in euro terms and/or the reduced purchasing power of customers in the
emerging market. The appreciation of an emerging market currency generally has a positive impact on
our operating profit.
Significant changes in exchange rates may also impact our competitive position and related price
pressures through their impact on our competitors.
For a discussion on the instruments used by Nokia in connection with our hedging activities, see
Note 34 to our consolidated financial statements included in Item 18 of this annual report. See also
Item 11. “Quantitative and Qualitative Disclosures About Market Risk” and Item 3D. “Risk Factors.”
Seasonality
Our Devices & Services sales are somewhat affected by seasonality. Historically, the first quarter of
the year has been the lowest quarter and the fourth quarter has been the strongest quarter, mainly due
to the effect of holiday sales. However, over time we have seen a trend towards less pronounced
seasonality. The difference between the sequential holiday seasonal increase in the Western
hemisphere in fourth quarter and subsequent decrease in first quarter sequential volumes has
moderated. The moderation in seasonality has been caused by shifts in the regional make-up of the
overall market. Specifically, there has been a larger mix of industry volumes coming from markets
where the fourth quarter holiday seasonality is much less prevalent.
Our HERE (formerly Location & Commerce) sales to the automotive industry are not significantly
affected by seasonality. However, HERE sales to navigation device and mobile device manufacturers
typically see strong fourth quarter seasonality due to holiday sales.
Nokia Siemens Networks also experiences seasonality. Its sales are generally higher in the last quarter
of the year compared with the first quarter of the following year due to network operators’ planning,
budgeting and spending cycles.
Accounting Developments
The International Accounting Standards Board, or IASB, has and will continue to critically examine
current IFRS, with a view towards improving existing IFRS as well as increasing international
harmonization of accounting rules. This process of improvement and convergence of worldwide
accounting standards has resulted in amendments to existing rules effective during the year ended
December 31, 2012. These are discussed in more detail under “New accounting pronouncements
under IFRS” in Note 1 to our consolidated financial statements included in Item 18 of this annual
report. The adopted 2012 amendments to IFRS did not have a material impact on our results of
operations or financial position.
97