Nokia profits take a tumble as distributors cut back.

Mobile phone maker Nokia has reported a 96% drop in operating profits to €55 million (£48m) for the first quarter of 2009, from €1.5 billion (£1.3bn) in 2008.

The world’s leading mobile phone supplier has also seen net sales of €9.3bn, down 27% year on year, and its market share took a slight hit down to 37% compared to 39% in quarter one 2008.

Reacting to the results, Nokia’s CEO Olli-Pekka Kallasvuo said: “In what has been an exceptionally tough environment, we continue to invest in a focused manner in consumer internet services delivered across our broad portfolio of mobile devices.

“Regarding the health of the overall mobile device market, the inventory already in the sales channels decreased substantially during Q1 due to extensive destocking by operators and distributors. This adversely impacted our sales volumes in the quarter. However, it has also resulted in the demand picture becoming more predictable as we enter the second quarter."

However, Mr Kallasvuo commented he was pleased with the performance of the Nokia 5800, Nokia’s first mass market touch product, a response to the Apple iPhone, which sees the manufacturer keeping pace with consumer demand.

Nokia said they expected mobile device volumes to fall 10% in 2009 with a sharper fall in the first half of the year.

Competitor Sony Ericsson are expected to reveal first quarter 2009 results on 17 April 2009.