Nokia Q4 sales jump but profits unmoved

Price erosion continues

By Tony Smith • Get more from this author

Posted in Financial News, 26th January 2006 17:08 GMT

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Mobile phone average selling prices are in decline, Nokia warned today as it reported its Q4 FY2005 financial results.

Sales for the period hit €10.33bn ($12.68bn), nine per cent higher than the year-ago quarter's €9.46bn. The mobile phone giant sold €6.22bn ($7.64bn) worth of handsets in the quarter, up just six per cent on Q4 FY2004's total, €5.87bn ($7.21bn).

Nokia's net income was €1.07bn ($1.31bn), down a single percentage point from the year-ago quarter. Then, the company made €1.08bn ($1.33bn) in net profit. By contrast, earnings were up year on year, from 24 cents a share to 25. Nokia said it will spend €6.5bn ($8bn) this year buying back stock, raising the prospect that earnings will continue to rise.

ASPs, on the other hand, will continue to fall, Nokia said. In Q4, they dropped to €99 ($122) from €102 ($125) in Q3 and €111 ($136) in Q4 FY2004. Analysts had forecast a Q4 FY2005 ASP of €100 ($123). The ongoing ASP decline will be "primarily driven by a mix shift in our volumes to markets where low-end models predominate", Nokia said, and "consistent with the industry trend, specifically the strong volume growth in emerging markets".

For FY2005 as a whole, Nokia reported income of €3.62bn ($4.44bn) on sales of €34.19bn ($41.98). Those figures amounted to increases of 13 per cent and 16 per cent, respectively, on FY2004's totals.

The phone division reported annual sales of €20.81bn ($25.55bn), 12 per cent higher than the €18.52bn ($22.74bn) Nokia announced this time last year. ®

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