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- Net sales were EUR 6 773 million (EUR 7 014 million in 1Q 2002), down by 3%.

- Pro forma operating profit was EUR 1 187 million (EUR 1 286 million), down by 8%. This included a gain of EUR 56 million in 1Q 2003 from the sale of the remaining shares of Nokian Tyres. Pro forma operating margin was 17.5% (18.3%).

- Pro forma adjustments for 1Q 2003 were EUR 183 million, including:

-Goodwill amortization of EUR 43 million

- Positive adjustment of EUR 226 million to 3Q 2002 customer finance impairment (MobilCom)

- Pro forma net profit was EUR 860 million (EUR 915 million), down by 6%.

- Pro forma earnings per share (diluted) were EUR 0.18 (EUR 0.19). The sale of the shares of Nokian Tyres contributed approximately EUR 0.01.

- Reported operating profit increased by 11% to EUR 1 370 million (EUR 1 234 million).

- Reported net profit increased by 13% to EUR 977 million (EUR 863 million) and reported earnings per share (diluted) increased to EUR 0.20 (EUR 0.18).

- Operating cash flow in the first quarter continued strongly at EUR 1.4 billion.

 

JORMA OLLILA, CHAIRMAN AND CEO:

During the first quarter 2003, we were pleased to see mobile phone market volumes growing year on year for the fourth consecutive quarter, rising by 10% to approximately 98 million units. Nokia's own volumes grew by 13% to around 38 million units, marking faster-than-market growth. Again, profits in our mobile phone business exceeded our expectations, rising 9% on very healthy margins of 24%. With this strong performance from our mobile phones, we succeeded in substantially reducing the impact of difficult operating conditions in our network infrastructure business and were able to post solid overall first-quarter results.

Mobility has a lot to offer, and together with our operator customers we are providing consumers and companies a growing range of products to enhance the already rich world of mobile communication. In early 2003, we began seeing an increased impact of color and multimedia on the mobile phone market. While the network market remains very difficult, we have announced strong abative measures in our network infrastructure business to bring down costs and improve operational efficiency and profitability.

 

Reducing personnel is always difficult for our whole organization and particularly for the people directly involved. However, the actions we are taking are necessary in order to build a healthy and viable networks business going forward. In the second quarter, we plan to take a charge that is currently estimated to adversely impact our pro forma and reported operating profit by EUR 350 to 400 million. 

 

During the first quarter, we strengthened our product offering with the announcement of 17 new mobile phones. In the Americas, in particular, we launched seven new CDMA phones, most of which will begin shipping during the current quarter. We also announced our first TDMA color models as well as several new GSM models tailored for the Americas markets.

 

The Nokia 3650 imaging smart phone, with its video recording and streaming video capability, began shipping globally and has met with a favorable response from operators and consumers in all key markets. As a high-volume imaging phone, it is of particular strategic importance for us as it brings the mobile multimedia experience to a broader base of consumers.

 

We have also seen an enthusiastic response to our growing number of color screen phones, with the Nokia 3510i color model now becoming the second-best selling phone in our portfolio. This clearly indicates a definitive shift from black and white to color in the mobile communications experience.

 

In February, we entered the games industry with the launch of our first mobile game deck, the Nokia N-Gage. This fan-shaped device, with large color screen and games optimized controls, is just one of many transformatory models in our product lineup. Nokia N-Gage and other new devices coming on stream, such as the Nokia 3300 music device and the Nokia 6800 messaging device, illustrate our innovative design strength as we lead the industry in reshaping people's understanding of what a mobile device should look like. 

BUSINESS DEVELOPMENT AND FORECASTS

Nokia's first-quarter sales of EUR 6.8 billion declined by 3% compared with the first quarter 2002, reflecting continued weakness in the company's network infrastructure business. First-quarter pro forma operating profit for the Nokia group showed a slight year-on-year decline to EUR 1.2 billion. This included a gain of EUR 56 million in 1Q 2003 from the sale of the remaining shares of Nokian Tyres. Pro forma operating margins for the group in the first quarter continued solidly at 17.5%. Pro forma EPS (diluted) for the group reached EUR 0.18, slightly above guidance given in March, with the sale of the shares of Nokian Tyres contributing approximately EUR 0.01 to pro forma EPS (diluted).

 

 

NB: All pro forma 2Q figures can be found in the tables on page 8. A reconciliation of the pro forma figures to our reported results can be found in the tables on page 11.

 

NB: All pro forma 1H figures can be found in the tables on page 9. A reconciliation of the pro forma figures to our reported results can be found in the tables on page 11.

 

BUSINESS DEVELOPMENT AND FORECASTS

Second-quarter sales

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