MobileMonday Global

^{China shines, US rains} Nokia beats analysts

Nokia estimates, that year-on-year volume growth for the mobile device market in the first quarter of 2005 came in ahead of expectations at 20 percent, with Nokia growing at about the same pace as the market.

Despite some weakness in 3G devices at the industry level, this marked a strong start for the year and prompted an upward revision of the company’s 2005 annual market volume estimate to about 740 million units, compared with previous estimate of approximately 10 percent annual growth, from an estimated 643 million units in 2004.

Nokia is reporting that year-on-year volume growth during the quarter was fastest in China, which became the company’s number one single market, followed by Asia Pacific and Europe/Middle East/Africa. Nokia says that volume declines in North America and Latin America were disappointing.

Sales up 17 percent

Nokia’s first-quarter 2005 net sales increased 17 percent to EUR 7.4 billion, compared with EUR 6.3 billion in the first quarter of 2004. At constant currency, group net sales would have increased 19 percent. All business groups contributed to the year-on-year sales growth.

The first-quarter operating profit grew 10 percent year on year to EUR 1.1 billion, compared with the first quarter 2004 (EUR 1.0 billion) with an operating margin of 15.1 percent (16.1 percent).

Second-quarter Nokia group net sales are expected to be in the range of EUR 7.9 billion to EUR 8.2 billion, compared with EUR 6.5 billion in the second quarter 2004.

For the first-quarter 2005, the total mobile device sales volume achieved by the Mobile Phones, Multimedia and Enterprise Solutions business groups reached 53.8 million units, representing a year-on-year rise of 20 percent and a sequential decline, mainly due to normal seasonality, of 19 percent.

Growing at market pace

Overall market volumes for the same period reached an estimated 170 million units, representing 20 percent annual growth and a 13 percent sequential decline. In smartphones, the total industry volume for the first quarter reached an estimated 10 million units, while Nokia’s own smartphone volumes grew to 5.4 million units, compared with 1.8 million units in the first quarter 2004.

Global mobile subscription growth also continued, as total global subscriptions rose to an estimated 1.8 billion by the end of the quarter, backed by the ongoing strong momentum in new growth markets such as India, Russia, China and Brazil.

Nokia’s estimated market share for the first quarter was 32 percent, flat year on year and down compared with 34 percent in the fourth quarter 2004.

China shines

Strong sequential market share gains in China, followed by Europe/Middle East/Africa, were more than offset by substantial market share losses in North America and Latin America. In these two markets Nokia’s year-on-year volume decline primarily reflected operator migration away from TDMA.

The average selling price for Nokia’s mobile device business was EUR 110. This was supported by proportionally higher sales of high-end products from its multimedia and enterprise businesses in the first quarter 2005.

First-quarter 2005 net sales of mobile phones grew 11 percent year on year to EUR 4.5 billion, compared with EUR 4.1 billion in the first quarter 2004, driven by good demand.

Sales growth was strongest in China, followed by Asia Pacific and Europe/Middle East/Africa, partially offset by sales declines in North America and to a lesser extent in Latin America. Operating profit decreased 16 percent to EUR 869 million, compared with EUR 1.0 billion in the first-quarter 2004, with an operating margin of 19.2 percent (25.2 percent).

NOKIA Q3/2004 RESULTS - REPORTED
EUR million	Q1/2005	Q1/2004 revised	Change (%)
Net sales	7 396	6 348	17
Mobile Phones	4 527	4 080	11
Multimedia	1 133	744	52
Enterprise Solutions	307	184	67
Networks	1 431	1 346	6
Operating profit	1 118	1 019	10
Mobile Phones	869	1 029	-16
Multimedia	155	-22	_
Enterprise Solutions	-9	-35	_
Networks	221	154	44
Common Group Expenses	-118	-107	_
Operating margin (%)	15.1	16.1	_
Mobile Phones (%)	19.2	25.2	_
Multimedia (%)	13.7	-3	_
Enterprise Solutions (%)	-2.9	-19	_
Networks (%)	15.4	11.4	_
Financial income and expenses	78	76	3
Profit before tax and minority interests	1 192	1 091	9
Net profit	863	729	18
EPS, EUR			_
Basic	0.19	0.16	19
Diluted	0.19	0.16	19

 

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