Nokia makes €368 million loss in Q2 2011

Smartphone sales down by a third with CEO admitting challenges faced impacted more than expected on results, but insists progress is being made

Nokia CEO Stephen Elop has admitted the challenges the company is facing impacted in a greater way than expected in Q2 2011, leading to a loss of €368 million (£323 million) compared to a profit of €227 million a year ago.

Sales for the the group in the three month period were €9.3 billion, down 11 per cent from €10.4 billion in the previous quarter and a fall of seven per cent compared to Q2 2010. Mobile device sales fell 23 per cent to €5.47 billion from €7.1 billion in Q1 2011, with a fall of 20 per cent year-on-year.

Its device volumes also fell 18 per cent to 88.5 million in the quarter compared to 108.5 million in Q1 2011, resulting in a year-on-year fall of 20 per cent. Smartphone volumes in the period were down by almost a third to 16.7 million compared to both Q1 2011 and the same period last year.

Average selling price was down five per cent sequentially to €62 but up two per cent from €61 a year ago.

Elop said: “The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2 2011. However, even within the quarter, I believe our actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business. Most importantly, we are making better-than-expected progress toward our strategic goals.

“During this time of transition, we expect competitive pressures to continue. However, we have a clear strategy to address the concerns about our product competitiveness. In Q2, both our Smart Devices and Mobile Phones business units moved forward on their plans.”

“Thus, while our Q2 results were clearly disappointing, we are executing well on the initiatives that are most important to our longer term competitiveness. Some progress is already evident, and thus we are targeting to end this year with more net cash and liquid assets than at the end of Q2 2011. We firmly believe that our deliberate and unwavering commitment to making the changes necessary at Nokia is the right way to deal with the disruptive forces in our industry and drive value creation for our shareholders.”