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Nokia, the biggest maker of mobile phones, cut its global handset market forecast for the second time in three weeks yesterday as sales continue to slow more quickly than it expected as consumer spending declines.

The Finnish company said that it expects industry-wide mobile handset sales to drop by 5 per cent or more next year – the first time that they will have fallen for eight years.

It also said that it thinks global handset sales this year will drop below its previous prediction, made just three weeks ago, of about 330 million handsets for the fourth quarter and 1.24 billion for the full year.

Nokia cut its forecast a day after the world’s fifth-largest and sixth-largest makers of handsets, LG Electronics, of Korea, and Research in Motion (RIM), the Canadian maker of the BlackBerry, issued sales and profit warnings.

Motorola and Sony Ericsson, meanwhile, are already struggling to make a profit. Although Nokia has recently lost ground in the high-end smart-phone market to rivals such as Apple and RIM, it has maintained its dominant position with strong sales in emerging markets. However, yesterday the mobile giant gave warning that although all markets had been affected by the slowdown, “the most recent incremental impact in the emerging markets has been more pronounced than in other markets”.

Last month Nokia said that it expected its own fourth-quarter market share to be flat, or slightly up from the 38 per cent in the third quarter. However, the group said yesterday that there was “insufficient visibility” to confirm its previous outlook.

“The mobile device market slowdown has continued more rapidly than previously expected,” the group said in a statement ahead of its Capital Markets Day for investors in New York. “The industry continues to be impacted by the effects of a global consumer pullback in spending, currency volatility and decreased availability of credit.”

Despite the gloomy forecast, Nokia said that it expected to win market share, including smartphones, next year and was well positioned to weather the downturn.

Olli-Pekka Kallasvuo, the chief executive, said that Nokia was cutting costs “appropriately”. Rick Simonson, the chief financial officer, said: “Nokia’s highly variable, low-fixed-cost business model allows us to scale to a declining market.”

The mobile phone market has grown at well over 10 per cent for years, having dipped only in 2001. Analysts predict that 2009 will be the industry’s toughest year, but their estimates of how much sales will fall vary, with the consensus forecast being of a 6 per cent drop.

Richard Windsor, analyst for Nomura, believes that sales could contract by 8 per cent, while Credit Suisse analysts predict a 6 per cent fall and estimate that revenue growth will slide by 14 per cent.

Meanwhile, Gartner, the technology analysts, expect handset sales to fall by up to 2 per cent next year. Carolina Milanesi, Gartner’s research director for mobile devices, said: “Nokia’s 5 per cent fall is more negative than we see. We see the emerging markets offering enough net additions to make it a bit less painful than what Nokia predicts.” She added that the Finnish company was likely to do better than its smaller rivals.

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