Citing intense competition and a global device marketplace that appears to be bottoming out, Nokia reported Q2 net sales of EUR 9.9 billion, down 25% year on year and up 7% sequentially (down 24% and up 7% at constant currency). Nokia’s second quarter 2009 reported operating profit decreased 71% to EUR 427 million, compared with EUR 1.5 billion in the second quarter 2008. Nokia’s second quarter 2009 non-IFRS operating profit decreased 62% to EUR 775 million, compared with EUR 2.1 billion in the second quarter 2008. Nokia’s second quarter 2009 reported operating margin was 4.3% (11.2%). Nokia’s second quarter 2009 non-IFRS operating margin was 7.8% (15.6%).
Estimated industry mobile device volumes of 268 million units, down 12% year on year and up 5% sequentially. Nokia mobile device volumes of 103.2 million units, down 15% year on year and up 11% sequentially. Nokia estimated mobile device market share of 38% in Q2 2009, down from 40% in Q2 2008 and up from 37% in Q1 2009.
“We are balancing short-term priorities with our longer-term growth ambitions as elements of the mobile handset, PC, internet and media industries converge to form a new industry. Consumers will increasingly expect devices and services designed as integrated solutions. To capture this opportunity we are accelerating our strategic transformation into a solutions company,” stated Olli-Pekka Kallasvuo, Nokia CEO.
Some highlights from the quarter:
Devices & Services
- The lower device volumes year on year for Nokia and the industry continued to be driven by the negative impact of the deteriorated global economic conditions, including weaker consumer and corporate spending, constrained credit availability and currency market volatility.
- The sequential industry device volume increase primarily reflected seasonality in the second quarter. Nokia volumes also benefited sequentially from a more stable inventory situation in the operator and distributor channels. Nokia’s mobile device market share was an estimated 38% in the second quarter 2009, down from 40% in the second quarter 2008 and up from 37% in the first quarter 2009.
- Of the total industry mobile device volumes, converged mobile device industry volumes in the second quarter 2009 increased to 41.0 million units, based on Nokia’s preliminary estimate, compared with an estimated 37.1 million units in the second quarter 2008, and 36.0 million units in the first quarter 2009.
- Nokia converged mobile device volumes were 16.9 million units in the second quarter 2009, compared with 15.3 million units in the second quarter 2008 and 13.7 million units in the first quarter 2009. Nokia’s share of the converged device market was an estimated 41% in the second quarter 2009, unchanged from 41% in the second quarter 2008 and up from 39% in the first quarter 2009.
- Based on preliminary market estimate, Nokia’s mobile device market share for the second quarter 2009 was 38%, compared with 40% in the second quarter 2008 and 37% in the first quarter 2009.
- Nokia mobile device average selling price (ASP) in the second quarter 2009 was EUR 62, down from EUR 74 in the second quarter 2008 and EUR 65 in the first quarter 2009. Both the year on year and sequential ASP declines were primarily due to general price pressure and a higher proportion of sales of lower priced products. Our second quarter 2009 ASP benefited from sales of new high-end products, compared to the first quarter 2009.
NAVTEQ
- Second quarter 2009 NAVTEQ net sales increased 11% sequentially to EUR 147 million, compared with EUR 132 million in the first quarter 2009, reflecting a slight pick-up in demand for auto navigation systems. NAVTEQ reported gross profit was EUR 126 million (EUR 116 million), with a gross margin of 85.7% (87.5%). Non-IFRS gross profit was EUR 127 million (EUR 117 million), with a non-IFRS gross margin of 85.8% (87.3%). NAVTEQ had a reported operating loss of EUR 100 million (EUR 120 million loss). The reported operating margin was -68.0% (-90.9%). NAVTEQ non-IFRS operating profit was EUR 19 million (EUR 5 million), with a non-IFRS operating margin of 12.8% (3.7%).
Nokia Siemens Networks
- Second quarter 2009 net sales decreased 21% to EUR 3.2 billion, compared with EUR 4.1 billion in the second quarter 2008, reflecting challenging market conditions and competitive factors. At constant currency, Nokia Siemens Networks net sales would have decreased 20%.
- Nokia Siemens Networks reported gross profit decreased 25% to EUR 860 million, compared with EUR 1.1 billion in the second quarter 2008, with a gross margin of 26.9% (28.2%). Nokia Siemens Networks non-IFRS gross profit decreased 30% to EUR 897 million, compared with EUR 1.3 billion in the second quarter 2008, with a non-IFRS gross margin of 28.0% (31.5%). The lower year on year non-IFRS gross profit in the second quarter 2009 was due primarily to lower year on year net sales.
- Nokia Siemens Networks had a second quarter 2009 reported operating loss of EUR 188 million compared with an operating loss of EUR 47 million in the second quarter 2008, with an operating margin of -5.9% (-1.2%). Nokia Siemens Networks non-IFRS operating profit was EUR 2 million in the second quarter 2009, compared with a non-IFRS operating profit of EUR 274 million in the second quarter 2008, with a non-IFRS operating margin of 0.1% (6.7%). The year on year decline in Nokia Siemens Networks non-IFRS operating profit primarily reflected lower net sales.
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