Nokia announced mixed results for the first quarter of 2013, with its mass market Mobile Phones unit taking its turn to weigh on the company’s numbers.
In a statement, Stephen Elop, its CEO, said: “People are responding positively to the Lumia portfolio, and our volumes are increasing quarter over quarter. Nokia Siemens Networks delivered another strong quarter and contributed to an overall improvement in Nokia’s cash position.”
“On the other hand, our Mobile Phones business faces a difficult competitive environment, and we are taking tactical actions and bringing new innovation to market to address the challenges,” he continued.
In the company’s core Devices & Services business, it saw an operating loss of EUR42 million, compared with a prior year loss of EUR218 million, on sales of EUR2.89 billion, down from EUR4.25 billion. Its total device volume fell by 25 per cent to 61.9 million units.
In its smartphone unit, sales fell 32 per cent year-on-year to EUR1.16 billion. Some 6.1 million units shipped, down 49 per cent year-on-year, including 5.6 million Lumia devices and 0.5 million Symbian handsets.
In its Mobile Phones unit, sales fell 31 per cent year-on-year to EUR1.59 billion. Shipment volumes were 55.8 million, down 21 per cent. Average selling price also slid to EUR28 from EUR33.
However, compared with the prior sequential quarter, while smartphone sales fell by 5 per cent and volumes by 8 percent, for Mobile Phones sales fell 36 per cent and volumes 30 per cent.
While some of this can be accounted for by seasonality (calendar Q4 is traditionally strong for handset makers), there is a clear sign that it is in mass-market devices where the company is currently suffering most.
Significantly, the company’s Asha Touch devices – designed to rival entry level Android devices and filling part of the gap left by the demise of Symbian – saw Q1 volumes of 5 million units, down 46 per cent over the prior quarter, “reflecting intense competitive industry dynamics as well as lower seasonal demand”.
At Nokia Siemens Networks, there was an operating profit of EUR3 million for the quarter, compared with a prior-year loss of EUR1 billion, on sales which fell 5 per cent to EUR2.8 billion.
This was “primarily due to divestments of businesses not consistent with Nokia Siemens Networks’ strategic focus as well as the exiting of certain customer contracts”.
Otherwise, falling sales in Global Services were “almost entirely offset” by growth in mobile broadband.
On a group level, the company reported a loss attributable to equity holders of EUR272 million, compared with EUR928 million in the first quarter of 2012, on sales of EUR5.85 billion, down from EUR7.35 billion.
The company claimed “underlying profitability for the third consecutive quarter”, with a non-IFRS Q1 operating margin of 3.1 per cent.
Looking forward, Nokia expects its Devices & Services non-IFRS operating margin in the current quarter to be “negative 2 per cent, plus or minus four percentage points”. It expects to see further traction in its Lumia business, with a volume increase “higher than the 27 per cent sequential growth in the first quarter 2013”.
Nokia Siemens Networks’ operating margin in the second quarter of 2013 is expected to be “approximately positive 5 per cent, plus or minus four percentage points”.