Nokia Q1 sales down 27% year on year

Sales for the first quarter at Nokia are down 27% year on year, the company has reported. This is down due to Nokia mobile device volumes of 93.2 million units, down 19% year on year and down 18% sequentially. Estimated industry mobile device volumes hit 255 million units, down 14% year on year and down 16% sequentially, the company stated.

Devices and Services net sales hit EUR 6.2 billion, down 33% year on year and down 24% sequentially (down 31% and down 23% at constant currency). Yet, the Devices and Services gross margin of 33.8% is unchanged from Q4 2008. Services net sales totalled EUR 150 million (billings of EUR 166 million), which is up 79% year on year and down 5% sequentially.

Nokia 5800 XpressMusic made volumes of 2.6 million units, with cumulative shipments of more than three million units since the smartphone’s launch in late November 2008. However, Nokia’s estimated mobile device market share is 37% in Q1 2009, down from 39% in Q1 2008 and unchanged from Q4 2008.

Nokia has a total operating cash flow of EUR 276 million at the end of the first quarter.

Olli-Pekka Kallasvuo, Nokia CEO, stated: “In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer internet services delivered across our broad portfolio of mobile devices. Combined, these solutions will drive our future growth. As an example in Q1, I am especially pleased with the performance of our first mass market touch product, the Nokia 5800 XpressMusic. Together with Comes With Music, it is a great example of Nokia providing solutions that consumers value.

“Regarding the health of the overall mobile device market, the inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter. However, it has also resulted in the demand picture becoming more predictable as we enter the second quarter.”

Nokia expects industry mobile device volumes in the second quarter 2009 to be at approximately the same level or up slightly sequentially.
It expects its mobile device market share in the second quarter 2009 to increase sequentially, and also continues to expect 2009 industry mobile device volumes to decline approximately 10% from 2008 levels.

Nokia continues to expect the decline to be greater in the first half than in the second half of the year. The company continues to target an increase in its market share in mobile devices in 2009. It will continue to target its non-IFRS operating margin in Devices and Services to be more than 10% in the first half 2009 and to be in the teens for the second half 2009.

Nokia and Nokia Siemens Networks now expect the mobile infrastructure and fixed infrastructure and related services market to decline approximately 10% in Euro terms in 2009, from 2008 levels. This is an update to Nokia and Nokia Siemens Networks’ earlier estimate that the mobile infrastructure and fixed infrastructure and related services market would decline 5% or more in Euro terms in 2009, from 2008 levels.

Nokia and Nokia Siemens Networks continue to target for Nokia Siemens Networks market share to remain constant in 2009, compared to 2008.

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