Nokia Quarterly information (Q1 2007)
Profitability strong for the quarter - driven by a sequential increase in gross margin
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*Q1 2007 special items:
- EUR 32 million restructuring charges (EUR 17 million impacting Enterprise Solutions operating loss, EUR 10 million impacting Mobile Phones operating profit, EUR 3 million impacting Multimedia operating profit, and EUR 2 million included in Common Group Expenses).
- EUR 25 million charge related to restructuring of a subsidiary company (impacting Mobile Phones operating profit)
- EUR 12 million charge for Nokia Siemens Networks related incremental costs expensed during the first quarter (impacting Networks operating profit).
- Excluding the net impact of these special items, diluted EPS was EUR 0.26.
**Q1 2006 special items:
- EUR 14 million initial restructuring charge for the CDMA business in Mobile Phones.
- EUR 8 million restructuring charge in Enterprise Solutions.
- Both of these charges impacted operating profit.
- The net impact of these special items on diluted EPS was negligible.
FIRST QUARTER 2007 HIGHLIGHTS
- Estimated industry device volumes of 253 million units, down 13% sequentially and up 18% year on year.
- Nokia device volumes of 91.1 million units, down 14% sequentially and up 21% year on year.
- Nokia estimated device market share 36%, at the same level as Q4 2006 and up from 35% in Q1 2006.
- Nokia device ASP of EUR 89, at the same level as Q4 2006.
- Nokia gross margin of 33.1%, up sequentially from 32.4% in Q4 2006.
- Nokia operating margin of 13.6%, up sequentially from 13.3% in Q4 2006, excluding special items.
- Nokia diluted EPS of EUR 0.26 excluding special items.
- Nokia operating cash flow of EUR 1.6 billion.
- Multimedia and Enterprise Solutions net sales strong, up sequentially from Q4 2006.
- Key products started shipping: Nokia 6300, Nokia N95 and Nokia E65.
The following chart sets out Nokia's mobile device volumes for the periods indicated, as well as the year on year and sequential growth rates by geographic area.
| (million units) | Q1 2007 | Q1 2006 | YoY Change (%) | Q4 2006 | QoQ Change (%) |
| Europe | 23.9 | 20.4 | 17.7 | 33.3 | -28.3 |
| Middle East & Africa | 15.7 | 11.9 | 31.8 | 15.5 | 1.3 |
| China | 15.7 | 10.9 | 43.4 | 14.6 | 7.8 |
| Asia-Pacific | 23.7 | 16.4 | 44.7 | 23.7 | 0.3 |
| North America | 4.8 | 8.4 | -42.5 | 5.9 | -19.0 |
| Latin America | 7.3 | 7.1 | 2.4 | 12.5 | -41.8 |
| Total | 91.1 | 75.1 | 21.4 | 105.5 | -13.7 |
Based on our preliminary market estimate, Nokia's market share for the first quarter 2007 was 36%, compared with 35% in the first quarter 2006 and 36% in the fourth quarter 2006. Nokia's year on year market share increase was driven primarily by strong gains in Asia-Pacific and Europe that more than offset a significant market share decline in North America. Year on year market share was approximately at the same level in China, Latin America and Middle East & Africa. Sequentially, Nokia's market share was approximately at the same level as in fourth quarter 2006, globally as well as in each geographic area. The sequential decline in first quarter industry volumes was similar to previous years, however we believe there has been an impact in the market from the excess inventory of certain of our competitors' products.
Nokia's average selling price in the first quarter 2007 was EUR 89, down from EUR 103 in the first quarter 2006 and at the same level as in the fourth quarter 2006. The lower year on year ASP in the first quarter 2007 was primarily the result of a significantly higher proportion of entry-level device sales, where the industry growth especially in the emerging markets has been strong and where Nokia's share has been growing. In addition, certain ageing higher end products in our portfolio were viewed as less competitive in various markets. Sequentially, first quarter 2007 ASPs were impacted by a higher percentage of entry-level device sales. That sequential development was offset by strong sales of our higher ASP devices, particularly from the Multimedia business group.
Source: Nokia press release