NOKIA In 1997: Record year of high profits and strengthened global market position

Business Wire, Feb 12, 1998

With 101 million units sold worldwide in 1997, the handset business has become one of the world's largest consumer electronics businesses. While technology continues to be a key source of added value, an increasing portion of the added value is created by effective marketing and the strength of the Nokia brand. Continuous and consistent building of the Nokia brand has already given us a solid base in our markets. Our market research shows, for example, that during the past 12 months, an additional 40 million Americans became familiar with the name Nokia. We are well positioned to leverage our marketing and brand building efforts across all markets and technologies, giving us greater economies of scale. In 1998, we will continue to build our marketing strength and the Nokia brand through the effective use of advertising, sponsorship and other activities.

In 1997 a total of 59% of our sales originated from Europe, 23% from the Asia-Pacific region and 18% from the Americas. Sales continued to grow, especially in China, which became our third largest market in terms of sales. As previously reported, growth in certain Southeast Asian markets slowed as a result of the economic turbulence. These markets are, however, relatively small in the global perspective and the effect of the slowdown was matched by strong performance in other regions of the world.

While the impact of the Southeast Asian economic turbulence is difficult to forecast, it is our firm belief that these countries, as they emerge from the present financial crisis, will play an increasingly important role in the global telecommunications market. We therefore intend to continue to invest in these markets with the aim of securing and strengthening our future market position.

Our leadership in many new areas of telecommunications, as well as our increased global presence and visibility give us a sound base to face future challenges. During the next few years, we will see the shift toward 3rd generation wireless communications, as well as the inclusion of Internet Protocol based services into public networks. We feel that we are very well prepared for both developments.

We have been instrumental in the creation of future 3rd generation standards. The technology decision made by ETSI in late January is largely based on proposals presented by Nokia and gives us an excellent opportunity to be among the first companies to introduce new 3rd generation digital solutions and products. Commensurate with these developments and continued strong demand for our products and systems, we will increase our capital expenditure and our investments in R&D in 1998.

In the past years we have emphasized Nokia's openness to change to ensure competitiveness in the rapidly evolving telecommunications industry. We believe our team of dedicated and skilled professionals will enable us to also continue our good performance in the future. For 1998, we reiterate our previously stated targets of continued strong growth, good profitability and positive operating cash-flow.