Nokia, the world's largest maker of mobile phones, has reported a 30 per cent fall in profits on sliding sales and a tightening up of its market share.

Third-quarter net income at the Finnish telecoms company was €1.09 billion (£850.54 million), or 29 cents a share, down from 40 cents a year ago and less than the 31 cents a share, or €1.12 billion, forecast by analysts.

Sales slid 5.1 per cent to €12.2 billion, lower than last year's €12.9 billion in sales and missing analysts' expectations of €12.7 billion.

The average cost of a Nokia handset has fallen €10 in the past year, to €72. In a statement, the company said the year-on-year fall reflected a higher proportion of products at lower prices, and the impact of a weakening US dollar.

Nokia estimated its share of the mobile market at 38 per cent, slightly down from a 40 per cent share in the second quarter of this year.

Despite the weaker-than-expected performance, investors were reassured were by Nokia's positive outlook for the industry. The company predicted industry mobile volumes would rise about 10.5 per cent to 1.26 billion phones in 2008.

Olli-Pekka Kallasvuo, chief executive of Nokia, was confident about the company's ability to weather the financial turmoil. In a statement, he said: "With our scale, brand, improving product portfolio and low cost structure, we believe Nokia is well positioned for the current times."

Nokia has faced tough competition in the high-end handset market from Apple and Research in Motion, maker of the BlackBerry, and it was far behind its rivals in bringing its own touchscreen phone to market. It finally the down the gauntlet to Apple earlier this month with the Nokia 5800 XPress Music, featuring its Comes with Music facility which allows users to download and store an unlimited number of tracks from its online music store.

In Helsinki, shares in Nokia dipped briefly before climbing 1.8 per cent to €12 euros, outperforming an otherwise flat DJ Stoxx European technology shares index.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive