Nokia Quarterly Profits Down by 40%

Nokia has reported a sharp fall in its second-quarter net profits of 40% to US$291 million, compared with US$487 million in the second quarter 2009. Nokia’s second quarter 2010 reported operating margin was 2.9%, compared to 4.3% a year ago.

Revenues were up by 1% at US$12­.8 billion compared to last year – but down by 4% if currency fluctuations are stripped out.

Nokia’s CEO, Olli-Pekka Kallasvuo commented: “Despite facing continuing competitive challenges, we ended the second quarter with several reasons to be optimistic about our future. For one, the global handset market has continued to grow at a healthy pace, led by some of the less mature markets where Nokia is strong. We are also encouraged by the solid second quarter performance of our Mobile Phones business, helped by an improving line-up of affordable models.”

Second quarter 2010 Devices & Services net sales increased 3% to EUR 6.8 billion, compared with EUR 6.6 billion in the second quarter 2009. At constant currency, Devices & Services net sales would have decreased 2% year-on-year. The net sales increase resulted primarily from higher volumes in most regions driven by stronger demand, partially offset by an ASP decline, compared to the second quarter 2009.

Nokia’s net sales of mobile phones were adversely impacted by the competitive environment, particularly in the high end of the market. The company saw its sharpest fall in sales in the North American market, where smartphones are increasingly popular.

In the second quarter 2010, the total mobile device volumes of Devices & Services were 111.1 million units, representing an increase of 8% year-on-year and 3% sequentially. The overall industry mobile device volumes for the same period were 338 million units based on Nokia’s preliminary estimate, representing an increase of 14% year-on-year and 5% sequentially. Nokia’s preliminary estimated mobile device market share was 33% in the second quarter 2010, down from an estimated 35% in the second quarter 2009 and unchanged from an estimated 33% in the first quarter 2010.

Nokia’s 8% year-on-year increase in global mobile device volumes was primarily driven by an improved demand environment as economic conditions had improved in most regions compared with the difficult economic conditions of the second quarter 2009.

Nokia says that it continues to expect its mobile device value market share to be slightly lower in 2010, compared to 2009, although the overall industry will be up by around 10%.