Mobile giant Nokia has warned that its first quarter 2004 sales will be below expectations, with net sales estimated to be down 2pc on the year to €6.6bn. The decline in sales was due to a failure by the company to exploit market opportunities in Europe and Asia after failing to get enough supply of mid range phones to meet demand, prompting prospective customers to go elsewhere.
Nokia said that sales of mobile phones and its multimedia business groups were below expectations. Phone sales declined in Europe and Asia due to lower than expected volumes and a product mix weighted more towards the low end. This, the company says, negatively impacted sales and operating profits.
The company said that due to gaps, particularly in its mid range product portfolio, the company was unable to capitalise on significant market developments. Global mobile phone volume growth is estimated to have been in excess of 25pc in the first quarter of this year, although Nokia volumes grew only 19pc.
The company’s networks businesses exceeded expectations with estimated sales of €1.4bn, which represents 16pc growth compared with sales in 2003. The enterprise solutions business is also expected to report sales slightly better than planned.
“Obviously, we are not satisfied with our sales development during the first quarter,” said Jorma Ollila, chairman and CEO of Nokia, “but I am pleased that once again we have managed to achieve good, solid profitability. We are particularly pleased with the sales and profitability development in the Networks’ business.
“The overall Nokia sales were negatively impacted because we were not able to fully exploit the usual seasonal market pick up in March, and the product mix was weighted towards the low end. Although we are already starting to see the long-term benefits of the new organisation, in the short term its implementation slightly slowed down our reactions and operational effectiveness.”
Nokia will announce its full first quarter results together with the second quarter outlook on 16 April.
By John Kennedy