Nokia announces unexpectedly good result for last year

Listed companies more profitable than ever - traditional industries doing best

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The electronics manufacturer Nokia published an unexpectedly good result for 2006 on Thursday. The result per share of stock was EUR 0.32 - somewhat better than the market expectation of an EPS of EUR 0.28. The turnover at the end of the year was EUR 11.7 billion, which is slightly more than the average forecast by analysts.
      The publication of the results at noon caused Nokia share prices to gain around six per cent in early trading in Helsinki.
      Nokia sold a record number of handsets during the Christmas shopping season - 106 million in all. However, the average price of the telephones was a disappointing EUR 89, down from a Q3 average of EUR 93. Nevertheless, the operating margin, a key indicator of profitability, grew slightly from the third quarter to 13.2 per cent, but fell below the previous year's level.
     
Nokia's Mobile Phones unit, whose profitability dipped in the early autumn because of poor demand for handsets in the medium price range, reported a Q4 operating margin of 17.8 per cent. Profitability of the unit manufacturing more expensive multimedia phone models dipped slightly from mid-2006.
      Nokia's turnover for the whole year grew by one fifth from 2005. Nokia's operating profit in 2006 increased 18 per cent to EUR 5.5 billion.
     
Nokia was the first of many large Finnish companies to report results for 2006. With a few exceptions, the news from the corporate world is expected to be positive.
     
As a whole, Finnish listed companies did better last year than ever before. The biggest gains last year were made by the engineering, and basic metals industries - the so-called smokestack industries; they have benefitted more than others of the exceptionally strong and long-lasting global boom.
     
Bringing up the rear have been subcontractors and contract manufacturers of Nokia, such as Perlos, Aspocomp, and Elcoteq. In previous years, those companies had been models of success, benefitting from the coattail effect of Nokia.
      While Nokia itself is doing quite well, the profitability of the subcontractors is in tatters, and some even have the threat of bankruptcy looming over their heads.


Links:
  Nokia press release: Nokia reports fourth quarter 2006 net sales of EUR 11.7 billion, EPS of EUR 0.32 and Nokia reports 2006 net sales of EUR 41.1 billion, EPS of EUR 1.05

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