Nokia reports profit up on lower sales

Nokia Corp., the world's largest mobile phone maker, reported a 46 percent year-on-year increase in second quarter net profit, on 6 percent lower sales. Excluding goodwill amortization and nonrecurring items, profit increased by 9 percent, it said Thursday.

The Espoo, Finland, company posted a second quarter net profit of €862 million (AUD$1.57 billion as of June 30, the last day of the period being reported), up from €589 million in the year-ago period, it said in a statement. Excluding goodwill amortization and nonrecurring items, second quarter net profit was €905 million, up 9 percent from €830 million in the year-ago quarter.

Earnings per share were in line with Nokia's forecast, at €0.19 excluding goodwill amortization and nonrecurring items.

Company-wide sales in the quarter fell 6 percent to €6.94 billion. The company had forecast a drop of between 2 percent and 6 percent in June. Mobile phone sales increased 1 percent to €5.4 billion, while sales at Nokia Networks dropped 22 percent to €1.47 billion. Nokia Networks sells mobile phone networks to operators.

Mobile phone sales rose in Asia and Europe, offset by declines in the Americas, Nokia said. Network sales suffered from low investments by operators in China and in Europe, while the U.S. showed steady growth, Nokia said.

The solid second quarter was due to "strong execution and tight cost control," Nokia Chairman and Chief Executive Officer Jorma Ollila said in the statement.

Nokia expects sales in the third quarter to be between €7.2 billion and €7.6 billion, up from €7 billion in last year's third quarter. For the second half of 2002, sales should grow between 3 percent and 10 percent, driven by shipment of new handsets and 3G (third generation) network sales, Nokia said.

Nevertheless, Nokia trimmed its forecast for worldwide mobile phone sales. The market leader now expects about 400 million handsets will be sold by all vendors in 2002. Late in June, Nokia said it expected between 400 million and 420 million phones would be sold. Last year about 380 million phones were sold.

Pro forma earnings per diluted share for the third quarter should be between €0.15 and €0.17, and between €0.79 and €0.84 for the full year, Nokia said. The company expects to take a charge in the third quarter to account for losses as result of a loan to troubled German mobile operator Mobilcom AG.

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