[HELSINKI] Finland's Nokia on Thursday reported quarterly profits clearly below market forecasts at its main telecom network equipment business, citing lower software sales, higher costs and challenging conditions in Europe and Latin America.

Nokia, which earlier this month announced a plan to take over of its French rival Alcatel-Lucent, said the core operating profit at the network unit fell to 85 million euros (S$124.4 million) in the first quarter, or 3.2 per cent of sales, from 216 million euros a year earlier.

Analysts in a Reuters poll had on average expected a profit of 226 million euros and a margin of 8.7 per cent.

Sales at the networks business were slightly ahead of analyst forecasts, up 15 per cent from a year ago at 2.67 billion euros, also topping market consensus of 2.59 billion euros.

The company also specified its full-year networks profitability forecast, saying it expects the unit's non-IFRS operating margins around the midpoint of 8 to 11 per cent. In January, it had expected a margin in line with that target range.

REUTERS