Nokia profits plunge 90pc

16 Apr 2009

In what it described as an “exceptionally tough environment”, the world’s biggest mobile phone manufacturer Nokia has reported a 90pc fall in profits for the first quarter of 2009.

According to its first-quarter results, net profits at the Finnish company plummeted to €122m from €1.2bn in the previous quarter.

Net sales declined 27pc to €9.28bn in Q1 2009 from the €12.7bn reported in the same quarter last year.

This sharp decrease in sales was due to operators and distributors putting the brakes on ordering new handsets, the company said.

Nokia also reported industry mobile device volumes of 255 million units for Q1 2009, down 14pc year-on-year and down 16pc on the previous quarter.

The company estimated a mobile market share of 37pc in Q1 of 2009, which is down from the 39pc in Q1 of 2008, but unchanged from its share in Q4 of 2008.

Looking ahead to the second quarter of 2009, Nokia said it expects industry mobile device volumes to be at approximately the same level or up slightly sequentially on Q1 2009.

It also expects its mobile device market share in the second quarter of 2009 to increase sequentially.

However, the Finnish company does expect 2009 industry mobile device volumes to decline approximately 10pc from 2008 levels, although it said it expects this decline to be greater in the first half than in the second half of the year.

Amidst news of the drastic fall in profits, Nokia CEO, Olli-Pekka Kallasvuo, sounded a positive note and looked to the future: “In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer internet services delivered across our broad portfolio of mobile devices. Combined, these solutions will drive our future growth.”

He said he was “especially pleased” with the performance of Nokia’s first mass-market touch product, the Nokia 5800 XpressMusic, which sold over 2.6 million units, with cumulative shipments of more than 3 million units since the smart phone’s launch in late November 2008.

He also saw the positive side to extensive destocking of Nokia handsets by operators and distributors in the first quarter of 2009, saying that while this adversely impacted the company’s sales volumes in the quarter, “it has also resulted in the demand picture becoming more predictable as we enter the second quarter”.

By Jennifer Yau