Nokia Q2 profits slide on flat revenues

Handset shipments on the rise

Nokia saw its profits tumble 27 per cent during its second quarter over the same period last year on flat sales, the company said today.

Net sales hit €7.02 billion ($7.85 billion), up just 1.1 per cent from Q2 2002's €6.94 billion.

Operating profit totalled €858 million down 31.9 per cent on the €1.26 billion it reported this time last year. Q2 2003's figure includes a one-off charge of €399 million thanks to the restructuring of Nokia Networks, its infrastructure business; exclude this and other items and Nokia's income falls to €664 million, down 26.6 per cent on Q2 2002's equivalent figure, €905 million.

These are pro forma figures - reported figures show similar declines year on year. Q2 2003 reported operating profit was €818 million, net profit was €624 million.

Mobile phone shipments rose 14 per cent, Nokia said, but the weak US dollar and a slight shift toward lower-end products in new market territories, leading to an increase in sales of just two per cent year-on-year to €5.5 billion.

Strong European sales were balanced by weaker sales in Asia Pacific and a big drop in the company's US shipments.

The mobile phone business also provided Nokia with its income. Its Networks division would have delivered a small contribution, the company admitted, but that was more than wiped out by the restructuring charge, relating to the cost of cutting staff within the division and shutting down R&D projects.

Nokia reckons it now has around 39 per cent of the handset market, with its shipments growing faster than overall worldwide phone shipments - 14 per cent v. 11 per cent.

Looking ahead, Nokia expects handset shipments to continue increasing, by well over ten per cent, it forecasts. But sales will be flat or slightly down quarter-on-quarter - again thanks to the weak US dollar. Nokia Networks will show a loss next quarter, thanks to ongoing declining sales - likely to be down 15-20 per cent on Q3 2002. ®

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