Nokia posts quarterly profit but annual losses spiral to $2.3bn

Finnish mobile phone maker Nokia has closed a traumatic financial year by posting annual losses of €2.3bn as sales of its handsets continue to wane.

Nokia announced sales for 2012 fell 22 percent year-on-year to €31.2bn. Sales of its smartphones were particularly badly hit, with its Smart Devices unit posting a 50 percent drop in revenues, at €5.4bn for 2012 compared to €10.8bn in 2011.

Given that the mobile market is moving towards smartphones and away from feature phones, this is particularly unwelcome news for Nokia.

The one bright point for Nokia, in an otherwise grim set of results is that its cost-cutting measures appear to be bearing fruit, swinging to a €439m profit for its fourth quarter of 2012, compared to a loss of €954m in the year ago quarter.

“We are very encouraged that our team’s execution against our business strategy has started to translate into financial results,” said Stephen Elop, Nokia's chief executive.

But Elop's optimism did little to mask the extent of the firms troubles.

In Q412, Nokia sold just 6.6 million handsets in its Smart Device unit – 4.4 million of which are believed to have been its flagship Lumia 920. But in 2011, its Smart Device unit shipped nearly 20 million handsets in the same period.

By comparison, Apple, which has also just released its latest results, sold 47.8 million iPhones over the Christmas period.

Sales in Nokia's Smart Devices units plunged 55 percent, from €2.7bn in Q411 to just €1.2bn in Q412.

The turnaround strategy underway at Nokia is also eating into cash reserves at an alarming rate. Net cash and liquid assets declined 22 percent year on year, falling by €1.2bn to €4.4bn in Q412.

“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,” said Elop.

Nokia also confirmed that it will no longer make any Symbian-based handsets. The firm had long established that it was moving to the Windows Phone platform, but had released one Symbian handset in 2012, the Nokia 808 Pureview.

The 808 Pureview was its last Symbian handset, Nokia confirmed.