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Phone sales drive Nokia Q4 profitability

But phone growth will be slower in 2004

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Nokia reported its fourth quarter financial results today, with minor dips in quarterly and annual sales but strong performance from its mobile phone division.

Sales for the three months to 31 December 2003 totalled €8.79 billion, down a single percentage point on the year-ago quarter. However, sales of the product for which the company is best known, mobile phones, grew four per cent to €7.01 billion on the back of a 20 per cent year-on-year rise in shipments.

During the quarter, Nokia shipped some 55.3 million handsets - enough to give it 38 per cent of the global market, the company claimed. Growth was driven by increasing demand for phones with cameras and colour screens - the latter accounted for over half of the shipments. The handset division's operating margin reached 24.4 per cent, driving the company's overall operating profit of €1.67 billion (75 cents a share), up 14 per cent on the year-ago quarter.

Nokia Networks contributed €41 million to that figure; Mobile Phones generated €1.71 billion. Losses at the company's venture capital wing and overall group expenses pulled down to the reported €1.67 billion.

For the year as a whole, sales dropped two per cent to €29.46 billion, €23.62 billion of which came from the Mobile Phone division, which shipped 179.3 million handsets during 2003, up 18 per cent by volume, two per cent by value. The group reported 2003 profits of €5.01 billion (75 cents a share). Nokia Mobile Phones was the only profitable division of the company.

Looking ahead, Nokia said it expects sales to grow 3-7 per cent year-on-year during Q1 2004. Diluted EPS is anticipated to come in around 17-19 cents a share. Throughout the year, mobile phone shipments will increase by around ten per cent, it reckons. Network infrastructure sales are expected to be much the same as 2003, but we should see a large number of 3G launches this year, driving with growing demand for picture messaging that increase in handset shipments. ®

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