Nokia Reports Q1 2005 net Sales of EUR 7.4 Billion

According to Nokia estimates, year-on-year volume growth for the mobile device market in the first quarter of 2005 came in ahead of expectations at 20%, with Nokia growing at about the same pace as the market. Despite some weakness in 3G devices at the industry level, this marked a strong start for the year and prompted an upward revision of the company's 2005 annual market volume estimate to about 740 million units, compared with previous estimate of approximately 10% annual growth, from an estimated 643 million units in 2004.

Nokia is reporting that year-on-year volume growth during the quarter was fastest in China, which became the company's number one single market, followed by Asia Pacific and Europe/Middle East/Africa. Nokia says that volume declines in North America and Latin America were disappointing.

Nokia's first-quarter 2005 net sales increased 17% to EUR 7.4 billion, compared with EUR 6.3 billion in the first quarter of 2004. At constant currency, group net sales would have increased 19%. All business groups contributed to the year-on-year sales growth.

The first-quarter operating profit grew 10% year on year to EUR 1.1 billion, compared with the first quarter 2004 (EUR 1.0 billion) with an operating margin of 15.1% (16.1%).
Second-quarter Nokia group net sales are expected to be in the range of EUR 7.9 billion to EUR 8.2 billion, compared with EUR 6.5 billion in the second quarter 2004.

For the first-quarter 2005, the total mobile device sales volume achieved by the Mobile Phones, Multimedia and Enterprise Solutions business groups reached 53.8 million units, representing a year-on-year rise of 20% and a sequential decline, mainly due to normal seasonality, of 19%. Overall market volumes for the same period reached an estimated 170 million units, representing 20% annual growth and a 13% sequential decline. In smartphones, the total industry volume for the first quarter reached an estimated 10 million units, while Nokia's own smartphone volumes grew to 5.4 million units, compared with 1.8 million units in the first quarter 2004.

Global mobile subscription growth also continued, as total global subscriptions rose to an estimated 1.8 billion by the end of the quarter, backed by the ongoing strong momentum in new growth markets such as India, Russia, China and Brazil.
The following chart sets out Nokia's mobile device volume for the periods indicated, as well as the year-on-year growth rates, by geographic area.

NOKIA MOBILE DEVICE VOLUME BY GEOGRAPHIC AREA
                                      Q1      Q1      YoY Change     Q4
    (million units)                 2005    2004            (%)    2004
    Europe, Middle-East & Africa    27.4    21.6             27    32.8
    China                            7.1     4.2             69     5.9
    Asia-Pacific                    10.6     7.4             44    10.4
    North America                    4.3     6.5            -33     8.0
    Latin America                    4.4     5.0            -12     9.0
    Total                           53.8    44.7             20    66.1

Nokia's estimated market share for the first quarter was 32%, flat year on year and down compared with 34% in the fourth quarter 2004. Strong sequential market share gains in China, followed by Europe/Middle East/Africa, were more than offset by substantial market share losses in North America and Latin America. In these two markets Nokia's year-on-year volume decline primarily reflected operator migration from TDMA, which was a strong market for us in the first quarter 2004, to GSM and CDMA, where the company's relative position is not as strong.

The average selling price for Nokia's mobile device business was EUR 110. This was supported by proportionally higher sales of high-end products from its multimedia and enterprise businesses in the first quarter 2005.

First-quarter 2005 net sales of mobile phones grew 11% year on year to EUR 4.5 billion, compared with EUR 4.1 billion in the first quarter 2004, driven by good demand. Sales growth was strongest in China, followed by Asia Pacific and Europe/Middle East/Africa, partially offset by sales declines in North America and to a lesser extent in Latin America. Operating profit decreased 16% to EUR 869 million, compared with EUR 1.0 billion in the first-quarter 2004, with an operating margin of 19.2% (25.2%).