Market share gains and strong profitability drive EPS growth (excluding special items)
Nokia Corporation
Interim report
July 17, 2008 at 13.00 (CET +1)
OLLI-PEKKA KALLASVUO, NOKIA CEO:
"Nokia delivered increased device market share and strong underlying profitability in the quarter. Looking at the rest of the year, we are optimistic and have had good feedback about the broad range of new products we expect to sell in our device business. In the second quarter we saw good momentum in the early stages of our services and software business, and we believe that the next wave of growth will be driven by devices linked with services. On the infrastructure side, Nokia Siemens Networks delivered a second quarter with good net sales growth and improved profitability."
INDUSTRY AND NOKIA OUTLOOK
- Nokia expects industry mobile device volumes in the third quarter 2008 to be up sequentially.
- Nokia expects its mobile device market share in the third quarter 2008 to be approximately at the same level sequentially.
- Nokia now expects industry mobile device volumes in 2008 to grow 10% or more from the approximately 1.14 billion units Nokia estimated for 2007. This is an update to Nokia's earlier estimation that industry mobile device volumes would grow approximately 10% in 2008.
- Nokia continues to target an increase in its market share in mobile devices in 2008.
- Nokia and Nokia Siemens Networks continue to target for Nokia Siemens Networks market share to remain constant in 2008, compared to 2007.
- Nokia and Nokia Siemens Networks continue to expect the mobile infrastructure and fixed infrastructure and related services market to be flat in Euro terms in 2008, compared to 2007.
- Nokia and Nokia Siemens Networks continued cost synergy target for Nokia Siemens Networks is to achieve substantially all of the EUR 2.0 billion of targeted annual cost synergies by the end of 2008, as previously announced.
OUTLOOK FOR FINANCIAL IMPACT OF NAVTEQ
Nokia expects NAVTEQ to be slightly dilutive to EPS in 2008, approximately neutral in 2009 and accretive thereafter, excluding purchase price accounting related items arising from the NAVTEQ acquisition. On a reported basis, Nokia expects NAVTEQ to be slightly dilutive to EPS in 2008, 2009 and 2010, and accretive thereafter. Nokia currently expects to recognize approximately EUR 2 billion of intangibles related primarily to the navigable map database and customer relationships. We expect these intangibles to be amortized over approximately five years. Net of deferred taxes, we expect the impact on our Consolidated Profit and Loss Account of the purchase price accounting related items arising from the NAVTEQ acquisition to be approximately EUR 250 million on an annual basis.
Q2 2008 FINANCIAL HIGHLIGHTS
(Comparisons are given to the second quarter 2007 results, unless otherwise indicated.)
Nokia Group
Nokia's second quarter 2008 net sales increased 4% to EUR 13.2 billion, compared with EUR 12.6 billion in the second quarter 2007. At constant
currency, group net sales would have increased 11% year on year and 7% sequentially.
The following chart sets out the year on year and sequential growth rates in our net sales on a reported basis and at constant currency for the periods indicated.
The complete press release with tables is available at http://www.nokia.com/results/results2008Q2e.pdf.
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