Nokia result plummets in fourth quarter
Operating profit down 53% on Q4/2007; annual net sales just over EUR 50 billion
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At lunchtime on Thursday, the world's largest mobile phone manufacturer Nokia announced its results for the last quarter of 2008.
They did not make for encouraging reading, as the volume of sales and the company's profitability over the final three months of the year declined appreciably.
Non-IFRS operating profit for Q4/2008 stood at EUR 1,239 million, or 53% down on the same period in 2007, while net sales were 19.5% off at EUR 12,665 million.
Earnings per share for the period were EUR 0.26, as compared with EUR 0.48 a year ago.
Devices and Services saw an even steeper decline in operating profit, down by 61.3%, while Nokia Siemens Networks managed to improve its non-IFRS operating profit for the period by approximately 15%.
The company sold 113 million handsets, which was 15% fewer than in the last quarter of 2007, and - equally significantly - was also down by 4% on the figure for the third quarter, although traditionally the last three months of the calendar year are normally good for mobile phone sales.
Sales declined particularly in the emerging market of China, off by 36% in the volume of handsets sold.
The reduced operating profit on smaller net sales clearly weakened Nokia's profitability, with the non-IFRS operating margin dipping fractionally below 10% at 9.8%.
This compares with a figure of 16.7% in Q4/2007, and in the case of Devices and Services - the handset arm of the company - the fall was greater still, from 22.8% to 12.1%.
Nokia estimated its global market share in the handset business at 37% in Q4/2008, as against 40% a year earlier. The figure for the year as a whole was 39%.
The proportion of cheaper lower-end phones in Nokia's aggregate sales continued to expand. The average selling price for a phone was EUR 71.00, or 12 euros less than one year ago, and slightly lower than the published third-quarter figure of EUR 72.00.
Full-year figures published simultaneously indicate that Nokia enjoyed net sales of just over 50 billion euros in 2008, down only fractionally (0.8%) on the 2007 figure.
Non-IFRS operating profit for the year was EUR 7,033 million, down 8.6% from the EUR 7,697 posted in 2007. Full-year EPS (diluted, non-IFRS) was EUR 1.34, a decline of 10.1% from the EUR 1.49 reported last year.
The Nokia Board of Directors is to propose to the shareholders' meeting that a dividend of EUR 0.40 be paid for 2008 (2007: EUR 0.53 per share).
The market took a dim view of Nokia's gloomy projections for global industry demand in 2009 (an anticipated decline in handset sales volume of 10% rather than the earlier estimate of 5%, and with the accent on the beginning of the year for the steepest drop) and of the published quarterly and annual figures, although these were broadly in line with analysts' already pessimistic forecasts.
The Nokia stock in Helsinki was down heavily in mid-afternoon on Thursday.
It was moving off its lows by around 14.30, having at one stage been down by some 7%, but then fell once more, and at 16:20 it was down more than 8% at EUR 9.40.
Nokia is not alone in its discomfort, by any means: only last week rival Sony Ericsson posted its second straight quarterly loss and Motorola announced it would report a fourth-quarter loss and cut 4,000 jobs after its sales collapsed over the Christmas holiday season.
We will have more on the Nokia figures and the market reaction in tomorrow's edition. Non-IFRS and reported figures are given side-by-side in the Nokia results linked below.
They did not make for encouraging reading, as the volume of sales and the company's profitability over the final three months of the year declined appreciably.
Non-IFRS operating profit for Q4/2008 stood at EUR 1,239 million, or 53% down on the same period in 2007, while net sales were 19.5% off at EUR 12,665 million.
Earnings per share for the period were EUR 0.26, as compared with EUR 0.48 a year ago.
Devices and Services saw an even steeper decline in operating profit, down by 61.3%, while Nokia Siemens Networks managed to improve its non-IFRS operating profit for the period by approximately 15%.
The company sold 113 million handsets, which was 15% fewer than in the last quarter of 2007, and - equally significantly - was also down by 4% on the figure for the third quarter, although traditionally the last three months of the calendar year are normally good for mobile phone sales.
Sales declined particularly in the emerging market of China, off by 36% in the volume of handsets sold.
The reduced operating profit on smaller net sales clearly weakened Nokia's profitability, with the non-IFRS operating margin dipping fractionally below 10% at 9.8%.
This compares with a figure of 16.7% in Q4/2007, and in the case of Devices and Services - the handset arm of the company - the fall was greater still, from 22.8% to 12.1%.
Nokia estimated its global market share in the handset business at 37% in Q4/2008, as against 40% a year earlier. The figure for the year as a whole was 39%.
The proportion of cheaper lower-end phones in Nokia's aggregate sales continued to expand. The average selling price for a phone was EUR 71.00, or 12 euros less than one year ago, and slightly lower than the published third-quarter figure of EUR 72.00.
Full-year figures published simultaneously indicate that Nokia enjoyed net sales of just over 50 billion euros in 2008, down only fractionally (0.8%) on the 2007 figure.
Non-IFRS operating profit for the year was EUR 7,033 million, down 8.6% from the EUR 7,697 posted in 2007. Full-year EPS (diluted, non-IFRS) was EUR 1.34, a decline of 10.1% from the EUR 1.49 reported last year.
The Nokia Board of Directors is to propose to the shareholders' meeting that a dividend of EUR 0.40 be paid for 2008 (2007: EUR 0.53 per share).
The market took a dim view of Nokia's gloomy projections for global industry demand in 2009 (an anticipated decline in handset sales volume of 10% rather than the earlier estimate of 5%, and with the accent on the beginning of the year for the steepest drop) and of the published quarterly and annual figures, although these were broadly in line with analysts' already pessimistic forecasts.
The Nokia stock in Helsinki was down heavily in mid-afternoon on Thursday.
It was moving off its lows by around 14.30, having at one stage been down by some 7%, but then fell once more, and at 16:20 it was down more than 8% at EUR 9.40.
Nokia is not alone in its discomfort, by any means: only last week rival Sony Ericsson posted its second straight quarterly loss and Motorola announced it would report a fourth-quarter loss and cut 4,000 jobs after its sales collapsed over the Christmas holiday season.
We will have more on the Nokia figures and the market reaction in tomorrow's edition. Non-IFRS and reported figures are given side-by-side in the Nokia results linked below.
Helsingin Sanomat