Nokia proposes not to pay out a dividend to shareholders for the first time in 20 years
Nokia made a profit of €202 million during the fourth quarter of 2012, but for the first time in 20 years it has no plans to pay a dividend.
The struggling Finnish manufacturer’s share price had been boosted earlier this month by strong sales figures for its Lumia handsets, but investors may be concerned by its proposal, made in the company’s Q4 and full year 2012 Interim Report.
Last year, Nokia paid out €0.20 per share, but the decision not to offer investors a return this year could be seen as part of a wider cost-cutting programme that has seen job losses and the offload of several assets such as its Vertu luxury phone subsidiary.
Nokia dividend proposals
“To ensure strategic flexibility, the Nokia Board of Directors will propose that no dividend payment will be made for 2012,” said Nokia. “Nokia’s Q4 financial performance combined with this dividend proposal further solidifies the company’s strong liquidity position.”
Nokia has enjoyed recent success with its range of feature phones, but it is a widely held view that it must improve its share of the smartphone business if it is to survive. Sales dropped 20 percent year on year to €8.041 billion, with sales of smart devices falling by 55 percent.
The €202 million profit achieved during the quarter ends a pattern of six successively quarterly losses and is a far cry from last year when Nokia recorded a loss of €1.072 billion. Nokia said that it achieved underlying profitability during the period and strengthened its net cash position by around €800 million, of which €650 million was generated by the better than expected performance of its Nokia Siemens Networks joint-venture.
“We are very encouraged that our team’s execution against our business strategy has started to translate into financial results,” said CEO Stephen Elop. “Most notably we are pleased that Nokia Group reached underlying operating profitability in the fourth quarter and for the full year 2012.”
“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,” he continued. “All of these efforts are aimed at improving our financial performance and delivering more value to our shareholders.”
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