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Nokia smiles through falling profits

Only US disappoints

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A poor performance in the US marred an otherwise better than expected set of results, Nokia said today.

The world's biggest mobile handset maker reported net income of €1.02bn, down 13 per cent on the same period last year (€1.17bn). Sales were up three per cent to €9.06bn (Q4 03:€8.79bn). The company slashed handset prices in Q4 as it worked to regain market share. By the end of Q4, market share climbed back to 34 per cent, recovering from earlier in 2004, when it fell to its lowest levels in five years.

Despite a difficult start to 2004, performance improved greatly in the second half, and the final results were better than expected, the company says. It shipped 208m units through the year.

Revenues for 2004 of €29.3bn were slightly lower than 2003 - the company blames the fall on currency variations, as half of its invoices are in dollars. Net income fell 8.5 per cent to €3.2bn (Q4 03: €3.5bn).

"Even if operating profit was somewhat down, we were able to report growth," Jorma Ollila, chairman and chief executive, said in a webcast today. "We exceeded our guidance to the markets, and have better than expected profitability in both the infrastructure and handset markets."

Nokia has been heavily criticised for tardiness in bringing to market clamshell style handsets and camera phones. However, Ollila says the breadth of the product portfolio is much better now: "It covers pretty well all segments," he said. "The ten clamshell phones and the 9300 enterprise smartphone were important additions." He expressed disappointment in the sales of games devices. Nokia's N-Gage has sold so poorly, that many in the games industry think its days are numbered.

Regionally, the European market continues to dominate, but the fastest volume growth is in Latin America, China and Asia Pacific countries. Africa was also a strong emerging market, Ollila said, but the USA, was "a disappointment".

The company employs 55,505 people, up eight per cent on 2003. Three quarters of this staff increase is in manufacturing. Ollila said: "Volumes do require more personnel". The company also paid €456m to staff in bonuses and incentives

Earnings per share were slightly down on 2003 at 70c, but the company proposes a ten per cent dividend increase, taking it up to 33c per share. ®

Nokia results here. ®

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