Nokia Q2 profit drops 63 per cent

The world’s largest handset manufacturer, Finland’s Nokia, has reported that profit for the second quarter has dropped by more than 63 per cent, year on year. Net income for the three months to June this year was €104m, down from €287m for the same period in 2009. Operating profit was down 40 per cent at €295m.

“Despite facing continuing competitive challenges, we ended the second quarter with several reasons to be optimistic about our future,” said CEO Olli-Pekka Kallasvuo. “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.”

Net sales in the devices and services division were up three per cent at €6.8bn, year on year. Operating profit for the division was down 31 per cent to €295m, however, and the operating margin also tumbled to 9.5 per cent from 11.6 per cent.

Nokia said the net sales increase was the result of “higher volumes in most regions driven by stronger demand, partially offset by an ASP decline, compared to the second quarter 2009”. But the firm reiterated that it had been hit by intense competition in the hight end, where it has endured well documented struggles for some time. Nokia’s head of devices and solutions, Anssi Vanjoki, recently pledged to bring about a turnaround in the division’s fortunes.

“In smartphones, we continue to renew our portfolio,” said Kallasvuo. “We believe that the Nokia N8, the first of our Symbian^3 devices, will have a user experience superior to that of any smartphone Nokia has created. The Nokia N8 will be followed soon thereafter by further Symbian^3 smartphones that we are confident will give the platform broader appeal and reach, and kick-start Nokia’s fightback at the higher end of the market.”