Business

Nokia returns to profit but drops dividend payment

Nokia Lumia
Image caption Nokia sold 4.4 million of its new Lumia smartphones during the three months

Nokia, the struggling mobile phone maker, swung back into profit in the last three months of 2012.

But Nokia said the trading outlook was tough and that no dividend would be paid, the first time in 20 years that shareholders have missed out.

Pre-tax profit for the quarter was 375m euros (£316m), against a 974m-euro loss last year.

Nokia said it sold 15.9 million smartphones in the quarter, down from 19.6 million a year earlier.

Paying no dividend would help the company preserve cash, and ensure "strategic flexibility", Nokia said in a statement. The rate at which Nokia was burning through cash as it invested in new products had been a worry for investors.

The company finished 2012 with net cash of 4.4bn euros, down 22% from a year earlier.

Nokia has fallen behind in the smartphone race against rivals Samsung and Apple.

However, the Finnish company has recently flagged that its turnaround strategy was starting to work and that sales of its new Lumia phones were strong, contributing to a 70% rise in Nokia's share price in past months.

The company sold 86.3 million devices during the quarter, including 4.4 million Lumia smartphones, its new flagship product developed with Microsoft - figures which it had flagged earlier this month.

"We are very encouraged that our team's execution against our business strategy has started to translate into financial results," chief executive Stephen Elop said. That strategy has involved announcing almost 20,000 job losses.

Nokia's market share reached more than 50% before rivals began eating into its business.

Ben Wood, a research analyst at CCS Insight said that on the face of it, this was positive for Nokia in isolation.

"But you have to take the 4.4m Lumia smartphones that they sold in the context of the 48m that Apple announced last night, and you can see that they have a long journey ahead."

On Wednesday, Apple said it had sold 47.8 million iPhones during the final quarter of 2012.

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