HELSINKI, 3 August 2007 — Finnish telecommunications equipment giant Nokia yesterday reported a 148 percent surge in second quarter net earnings as it boosted its position as the world’s No. 1 mobile phone provider.
A strong comeback in sales of higher-end devices contributed to the surge in profits, it said, adding that it had revised upward its projection for mobile phone sales for the entire industry this year. But its subsidiary, Nokia Siemens Networks, by contrast had had a rough quarter.
Nokia said overall net earnings came to 2.8 billion euros in the April-June period, after 1.1 billion in second quarter 2006, from sales that rose 28 percent to 12.6 billion euros.
The company said its share of the world mobile phone market had risen to 38 percent from 34 percent in second quarter 2006. The company sold 100.8 million phones between April and June, a 29 percent increase on a yearly basis.
Nokia Chief Executive Olli-Pekka Kallasvuo welcomed “an excellent performance from our device businesses” during the period and said operating margins “were at their highest (quarterly) level in three years.”
“I am particularly encouraged by the success of a number of recently launched higher-end devices, which made a strong contribution to increased profitability,” Kallasvuo said.
While sales by Nokia’s mobile phone division advanced by only one percent year-on-year to 5.9 billion euros, operating profit increased by 28 percent to 1.2 billion euros, leaving an operating margin of 21.1 percent. For the third quarter, Nokia said it foresaw a “moderate” rise in volume on the mobile phone market compared to the second quarter.
Nokia expects to confirm and strengthen its position as the world’s leading maker of mobile phones, ahead of South Korean Samsung and US manufacturer Motorola, despite a slide in prices due to growth in emerging markets where lower- and middle-range devices are the most popular.
The group also revised its 2007 forecast for the whole industry, as it now sees sales volume growth for mobile phones of “more than 10 percent” rather than a maximum of 10 percent.
Kallasvuo acknowledged that results for Nokia Siemens Networks, which been integrated into Nokia accounts since April 1, were disappointing.
“Nokia Siemens Networks had a challenging quarter. Both net sales and margins were weak,” he said.
The unit suffered an operating loss of 1.2 billion euros in the quarter.
Nokia set aside 905 million euros in the quarter to finance the merger of its network operations with those of Siemens of Germany.
But prospects are seen as mediocre, with “very slight growth” in markets for both cell phone and fixed telephone infrastructure in 2007. “Nokia and Nokia Siemens Networks are accelerating and increasing the new company’s annual cost synergies target. Nokia Siemens Networks must also ensure that the company is positioned for success and leadership in the fast changing infrastructure market,” Kallasvuo said.