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Nokia Q2 Phone Segment Sales Rise 2%

Helsinki, Finland – Mobile phone gains in such strategic areas as the United States helped Nokia pull down an overall 2 percent sales hike in its phone segment, the company’s largest product category.

Mobile phone sales reached a pro forma $6.2 billion in the second quarter, up from $6.1 billion in the year-ago period. All pro forma numbers exclude goodwill amortization and non-recurring items.

At the same time, mobile phone unit volume moved up 14 percent in the second quarter, while dollar sales were adversely affected by a weak U.S. dollar and, to a lesser extent, an increased proportion of lower priced entry-level phones in emerging markets.

With continued broad product competitiveness and operational efficiency driving profitability, Nokia’s mobile phone segment increased pro forma operating profit 9 percent in the second quarter, to $1.4 billion, up from $1.3 billion in the same three months in 2002. Phone operating margin continued at high levels of 23.1 percent, said the company, an increase of 140 basis points over the 21.7 percent recorded in the second quarter a year earlier.

In the third quarter, Nokia expects mobile phone unit volume to grow by well over 10 percent, representing faster-than-market growth. Profitability should remain strong in the period. However, dollar sales in the phone segment are expected to be flat or slightly down in the third quarter, year-on-year, due largely to a major depreciation of the U.S. dollar, compared with the same three months a year ago.

Pro forma mobile phone segment sales moved up 1 percent, to $12.3 billion in the six months, compared with $12.2 billion in the first half of 2002. Pro forma operating profit in mobile phones for the first half reached $2.9 billion, a 9 percent increase over the $2.7 billion recorded year-on-year. Phone operating margin hit 23.5 percent, 150 basis points above the 22 percent recorded in the first half of last year.

Consolidated Nokia sales in the second quarter edged upward 1 percent, reaching a pro forma $7.9 billion, up from $7.8 billion year-on-year. However, pro forma operating profit dropped 32 percent, down to $962.5 million in the second three months, compared with $1.4 billion in the second quarter of 2002. Pro forma net profit also decreased, down 27 percent, to $744.9 million, compared with $1 billion in the year-ago three months.

For the six months, consolidated Nokia sales dipped 1 percent, down to a pro forma $15.5 billion, compared with $15.6 billion in the same period in 2002. Pro forma net profit for the six months reached $1.7 billion, down 16 percent from the $2 billion reported in the previous year.