Nokia Oyj — Earnings Release 2004

Apr 16, 2004

News Details

Ad-hoc | 16 April 2004 12:50

Nokia Stock Exchange Release

Ad-hoc-announcement transmitted by DGAP. The issuer is solely responsible for the content of this announcement. ——————————————————————————– Nokia first quarter 2004 net sales decline 2% to EUR 6.6 billion with continued good profitability and reported EPS (diluted) EUR 0.17 Highlights first quarter 2004 (all comparisons are year on year to first quarter 2003 results regrouped according to 2004 organization): – Net sales declined 2% to EUR 6.6 billion (EUR 6.8 billion in Q1 2003), up 7% at constant currency – Nokia operating profit was EUR 1.1 billion (EUR 1.4 billion), with operating margin of 17.2% (20.2%) – Reported EPS (diluted) was EUR 0.17 (EUR 0.20 including EUR 0.04 from the positive revaluation of the France Telecom receivable and the gain on sales of shares in Nokian Tyres) – Mobile Phones net sales decreased 15% to EUR 4.3 billion (EUR 5.0 billion) with EUR 1.1 billion operating profit (EUR 1.4 billion) and operating margin of 25.6% (29.0%) – Multimedia net sales increased 60% to EUR 776 million (EUR 484 million); Enterprise Solutions net sales increased 95% to EUR 189 million (EUR 97 million) – Healthy mobile device industry volume growth of 29%, according to Nokia’s preliminary estimate – Nokia’s overall mobile device volume grew 19% to 44.7 million units, resulting in a 35% market share, according to Nokia’s preliminary estimate – Networks net sales increased 16% to EUR 1.4 billion (EUR 1.2 billion), with EUR 182 million operating profit (EUR 85 million, including a gain of EUR 226 million from the revaluation of the France Telecom receivable) and an operating margin of 12.9% (7.0%) JORMA OLLILA, CHAIRMAN AND CEO: Overall mobile device industry volume continued to grow at a very healthy pace of 29% in the first quarter 2004, according to our preliminary estimate. This is clearly a vibrant market that is expanding into new areas and attracting many new users every day. Nokia’s own first-quarter mobile device volume growth of 19%, slower than the market, reflected that Nokia was not able to fully exploit the usual seasonal market pick up in March. As a result, our sales for the quarter did not meet our expectations and our mobile device market share declined to 35%, based on our preliminary estimate. However, our long-term mobile device market share target remains unchanged at 40%. Despite Mobile Phones and Multimedia device sales not meeting our expectations, overall we maintained good, solid profitability illustrating the company’s ability to manage costs. I am pleased with the strong growth in Networks’ sales and the Networks’ operating margin of 12.9%, which reflected the positive product mix as well as the full impact of the restructuring measures taken in early 2003. Our new Enterprise Solutions business group is off to a good start with the success of messaging devices, such as the Nokia 6820. Nokia is committed to maintaining a broad mobile device product portfolio covering products in all markets and most technologies. Our mobile device product plans reflect this commitment to bring competitive products to market in all segments and in a wide range of designs and technologies. We have started to ship six phone models since the beginning of this year, including our first fashion-category fold model, the Nokia 7200. To date this year, we have also launched nine phone models: five with cameras, including our first mega-pixel camera phone; four CDMA phones; and the second generation N-Gage, the N-Gage QD game deck. We plan to have a total of approximately 40 product launches in 2004, with shipments weighted towards the second half of the year. The organizational changes, which we began implementing during the quarter, are designed to increasingly enhance our ability over time to realize the specific opportunities in mobile voice, consumer mobile multimedia and mobile enterprise solutions. At the same time, we expect to improve our research and development efficiency and effectiveness as well as our logistical strength. We are not satisfied with our sales development during the first quarter. I realize that improvements require additional effort and a lot of hard work, but I have confidence in the ability of the Nokia team to address and meet customer needs in all segments by further strengthening our product portfolio. Complete press release with tables is available at http://www.nokia.com/results2004Q1e.pdf . It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding: A) the timing of product and solution launches and deliveries; B) our ability to develop, implement and commercialize new products, solutions and technologies; C) expectations regarding market growth, developments and structural changes; D) expectations and targets for our results of operations; E) the outcome of pending and threatened litigation; and F) statements preceded by ”believe,” ”expect,” ”anticipate,” ”foresee” or similar expressions are forward-looking statements. Because these statements involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors that could cause these differences include, but are not limited to: 1) developments in the mobile communications industry and the broader mobility industry, including the development of the mobile software and services market, as well as industry consolidation and other structural changes; 2) timing and success of the introduction and roll out of new products and solutions; 3) demand for and market acceptance of our products and solutions; 4) the impact of changes in technology and the success of our product and solution development; 5) the intensity of competition in the mobility industry and changes in the competitive landscape; 6) our ability to control the variety of factors affecting our ability to reach our targets and give accurate forecasts; 7) pricing pressures; 8) the availability of new products and services by network operators and other market participants; 9) general economic conditions globally and in our most important markets; 10) our success in maintaining efficient manufacturing and logistics as well as the high quality of our products and solutions; 11) inventory management risks resulting from shifts in market demand; 12) our ability to source quality components without interruption and at acceptable prices; 13) our success in collaboration arrangements relating to technologies, software or new products and solutions; 14) the success, financial condition, and performance of our collaboration partners, suppliers and customers; 15) any disruption to information technology systems and networks that our operations rely on; 16) our ability to have access to the complex technology involving patents and other intellectual property rights included in our products and solutions at commercially acceptable terms and without infringing any protected intellectual property rights; 17) developments under large, multi-year contracts or in relation to major customers; 18) the management of our customer financing exposure; 19) exchange rate fluctuations, including, in particular, fluctuations between the euro, which is our reporting currency, and the US dollar, the UK pound sterling and the Japanese yen; 20) our ability to recruit, retain and develop appropriately skilled employees; 21) our ability to implement our new organizational structure; and 22) the impact of changes in government policies, laws or regulations; as well as 23) the risk factors specified on pages 12 to 21 of the company’s Form 20-F for the year ended December 31, 2003 under “Item 3.D Risk Factors.” NOKIA, Helsinki, FINLAND – April 16, 2004 Media and Investor Contacts: Corporate Communications, tel. +358 7180 34495 or +358 7180 34900 Investor Relations Europe, tel. +358 7180 34289 Investor Relations US, tel. +1 972 894 4880 http://www.nokia.com end of ad-hoc-announcement (c)DGAP 16.04.2004 ——————————————————————————– WKN: 870737; ISIN: FI0009000681; Index: Listed: Amtlicher Markt in Frankfurt (General Standard); Freiverkehr in Berlin- Bremen, Düsseldorf, Hamburg, Hannover, München und Stuttgart 161250 Apr 04