Nokia Q4 result exceeds analysts' expectations; stock up in Helsinki following announcement

Handset sales volume at 113.5 million units in final quarter

print this

Mobile phone manufacturer Nokia reported non-IFRS profit of 478 million euros for the fourth quarter of 2011.
      This figure excludes special items for all periods and intangible asset amortization & other purchase price accounting related items.
      The result posted was appreciably better than had been anticipated by analysts, and in the hour after the company's announcement, the share price had put on nearly six per cent in Helsinki, before fading in later trading. By 3 p.m. the stock was still up nearly 3% on its opening price.
      A panel of 36 analysts compiled by the Reuters news agency had estimated that Nokia would come in with non-IFRS Q4 figures of EUR 309 million.
      At the end of 2010, the commensurate figure was roughly EUR 1,100 million, so Nokia has seen its profits decline by rather more than 500 million euros.
     
The quite appreciable 56% falloff in profitability over the last quarter of the year was anticipated, as the company's important Windows-based Lumia phones were only brought to the market at the beginning of November.
     
Nokia sold 113.5 million handsets in the last quarter of 2011, some 8% less than in the previous year, but 6% up on the previous quarter.
      Analysts had predicted a sales volume of 115 million units.
      In North America, handset sales were down 81% year-on-year, and in Europe by 24%. Nokia has of late invested in the sale of cheap entry-level phones in developing markets, and whilst sales were off 33% in China, on the positive side there were gains of 17% in sales to the Middle East and Africa, 11% in the Asia Pacific region, and 2% in Latin America.
     
Net sales for Q4 stood at more or less exactly EUR 10 billion, down from EUR 12.7 billion twelve months previously. Net sales by the company's important mobile phone arm Devices and Services were down 29% on Q4/2010, and for the entire year they were off 18%, with sales of smartphones down rather more, by 27%.
      One reason for this was that the average selling price of Nokia handsets in the period from October to December was down to EUR 53, as compared with an ASP of EUR 69 at the end of 2010.
     
Nokia's reported Q4/2011 figures indicated an operating loss of EUR 954 million, as against profit of EUR 884 million in 2010.
      This loss includes a substantial write-down on impairment of goodwill in the Location & Commerce unit (NAVTEQ and Nokia's social location services operations, moved from Devices & Services).
     
Full-year figures for 2011 saw net sales down by 9% at EUR 38,659 million (2010: EUR 42,446 million), with a reported operating loss of EUR 1,073 million and non-IFRS profit for the year of EUR 1,825 million.
      Earnings per share (diluted) was negative for the year at EUR -0.31, with non-IFRS earnings per share at EUR 0.29, down from last year's figure of EUR 0.61.
     
Although many of the indicators were downward or negative, the impression is that Nokia is weathering the storm relatively well in the light of the massive changes - including its partnership with Microsoft and the phasing out of the aging Symbian platform - that it embarked upon in 2011, and investors were buoyed by the news that during the last quarter Nokia had delivered nearly 20 million smartphones, including the new Lumia 800 and 710 Windows phones.
      This was more than had been forecast, and suggested that Nokia is not yet completely played out of the lucrative smartphone market.
      Sales of the new Lumia models are already in excess of one million, according to the company's statement.
     
     
Details of the figures in the external link, and we will return to analysis of the Nokia result in tomorrow's edition.
     


Previously in HS International Edition:
  Nokia – a heavy burden for new chairman (9.1.2012)
  Nokia is taking a big step (27.10.2011)

See also:
  Finnish investors believe in Nokia in spite of difficulties (18.1.2012)

Links:
  Nokia Q4 and 2011 figures
  Nasdaq OMX - Nokia

Helsingin Sanomat