UK sales stalling Nokia growth

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CEO Stephen Elop admits Lumia handset sales in the UK have been challenging as handset manufacturer posts a loss of £1.1 billion 

Nokia CEO Stephen Elop has admitted that establishing momentum in the UK through sales of its Lumia handsets has been difficult.

His comments came as the company posted a loss of £1.1 billion in the first quarter of 2012. The loss was compared to the £359 million profit made in the same quarter last year and the £780.3 million loss made in Q4 2011.

Sales were down 29 per cent year-on-year to £6 billion and also fell 26 per cent from the £8.2 billion figure reported for the previous quarter.

Within its handset division, Nokia posted a loss of £179.1 million compared to the £166 million profit in the previous quarter and the £596.1 million profit in the same three month period last year.

Sales for the first quarter were £3.47 billion – down 40 per cent year-on-year and a decrease of 29 per cent from the previous quarter.

Smartphone sales fell 52 per cent year-on-year to £1.39 billion and were down 38 per cent from Q4 2011.

Feature phone sales also fell to £1.88 billion – down 32 per cent and 24 per cent year-on-year and from Q1 2011 respectively.

Handset volumes decreased 24 per cent from Q1 2011 and 27 per cent from the previous quarter to 82.7 million units. From this, smartphone volumes fell 51 per cent compared to the same period last year, and 39 per cent from the previous quarter.

Nokia CEO Stephen Elop said: “We are navigating through a significant company transition in an industry environment that continues to evolve and shift quickly. Over the last year we have made progress on our new strategy, but we have faced greater than expected competitive challenges.

“We have launched four Lumia devices ahead of schedule to encouraging awards and popular acclaim. The actual sales results have been mixed. We exceeded expectations in markets including the United States, but establishing momentum in certain markets including the UK has been more challenging.

“At the same time, the lower price tiers of our industry are undergoing a structural change, and traditional feature phones are challenged by full touch devices.

“As a result we are taking deliberate measures to continue to renew our Series 40 platform, and we plan to strengthen our line-up in Q2 2012. We are making investments in our Mobile Phones business unit aimed at addressing the gaps in our offering.

“We have a clear sense of urgency to move our strategy forward even faster. We are pursuing step function changes by having launched the Lumia 610 and Lumia 900 in the first quarter, expanding market coverage, increasing advertising, introducing key customer-requested features and broadening our most successful go-to-market activities.

“At the same time, we have focused our efforts in the low-end of smartphones and feature phone asset to drive improved business results and conserve cash.

“We are confident in our strategy and focused on responding urgently in the short term and creating value for our shareholders in the long term.”

Meanwhile Nokia executive vice president of sales Colin Giles will leave the company on June 30 to be closer to his family.

Nokia said it will now restructure the sales business by reducing a layer of sales management to “ensure greater customer focus and providing senior leaders greater visibility into market dynamics”.

Nokia’s four regional senior vice presidents – Chris Weber for the Americas; Shiv Shivakumar for India, Middle East and Africa; Olivier Puech for Asia Pacific and Victor Saeijs for Europe and Eurasia will now report to executive vice president of markets Niklas Savander.

Giles joined Nokia in 1992 and has served in a number of marketing and sales roles across the company. Most recently he led the global sales organisation. He will now help to establish the new structure.

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