Executive Summary
The fundamental measure of value creation is Economic Profit (NOPLAT minus a charge for the capital employed). Nokia’s current operations generate a mere €60 million in Economic Profit on an invested capital base of €18.0 billion. This indicates that the corporation, in its entirety, is creating virtually no value above its cost of capital. The capital charge of €1.215 billion consumes 95% of the Net Operating Profit After Less Adjusted Taxes (NOPLAT), leaving an insignificant surplus for shareholders. The company is effectively a “treadmill entity,” running hard to stand still. This performance is untenable and requires immediate strategic intervention focused on the two primary levers of SVA: increasing NOPLAT or decreasing the Invested Capital base.
Methodological Financial Diagnosis
| Metric | Calculation | Value |
| :— | :— | :— |
| NOPLAT | EBITA * (1 – Cash Tax Rate) | €1.275 B |
| Invested Capital | Net Working Capital + Net Fixed Assets | €18.000 B |
| ROIC | NOPLAT / Invested Capital | 7.08% |
| WACC | Cost of Capital (Blended) | 6.75% |
| Capital Charge | Invested Capital * WACC | €1.215 B |
| Economic Profit | NOPLAT – Capital Charge | €60 M |
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