Nokia has suspended dividend payments for the first time in 20 years, after it revealed a full year loss of Eu2.303bn.
It fared better in its fourth quarter, with it posting a profit of Eu439m, compared to a Eu954m loss last year. Nokia has burned through cash in a bid to turn around its fortunes. It ended the quarter with reserves worth Eu4.36bn, down 22% on the previous year but a 22% improvement on its position during the third quarter.
Its mobile wing, dubbed devices and services, was boosted by a turnaround in operating profit, from a Eu683m loss to a Eu276m profit. However, sales remained challenging. Net sales for the quarter were Eu3.85bn, down 36% on 2011 but up 8% on the previous quarter. It had smartphone sales of 6.6m units, up 5% on its third quarter but down 66% on 2011 because of the shift away from Symbian to the Windows Phone OS. Smartphone sales were worth Eu1.23bn, up 26% on Q3 but down 55% on 2011. The average selling price of a Nokia smartphone was Eu186, up by a third on 2011 and an increase of a fifth on its previous quarter.
Nokia said it sold 4.4m Lumia devices during the quarter, the first carrying the new Windows Phone 8 operating system. Microsoft pay Nokia platform support payments of Eu250m. Elop, a former Microsoft exec, has tied Nokia's future to the Windows Phone OS after his infamous 'burning platform' memo of 2011. However, the Lumia sales are a fraction of the 47.8m iPhones that Apple said it sold during its latest trading quarter.
Feature phones continued to be the main driver of sales, worth Eu2.47bn for the quarter, a year on year decrease of 19% but up 4% on Q3. Nokia shifted 86.3m units during the quarter, down by almost a quarter on the previous year but up 4% on its last quarter.
The division has seen its staff drastically cut during the past 12 months. It had around 33,200 employees by the end of 2012, a reduction of around 16,500 staff. It has spent a total of Eu1.4bn restructuring the business.
Nokia CEO Stephen Elop said: 'We are very encouraged that our team's execution against our business strategy has started to translate into financial results. Most notably we are pleased that Nokia Group reached underlying operating profitability in the fourth quarter and for the full year 2012.
'While the first half of 2012 was difficult for Nokia Group, in Q4 2012 we strengthened our financial position, improved our underlying operating margin in Devices & Services, introduced the HERE brand to expand our mapping and location experiences, and drove record profitability in Nokia Siemens Networks.
'We remain focused on moving through our transition, which includes continuing to improve our product competitiveness, accelerate the way we operate and manage our costs effectively. All of these effors are aimed at improving our financial performance and delivering more value to our shareholders.'
Author: Graeme Neill