By Tarmo Virki
PARIS (Reuters) - Finnish Elcoteq (ELQAV.HE: Quote, Profile, Research, Stock Buzz) expects its 2006 operating profit margin to remain on a par with last year's, but Europe's largest contract manufacturer of electronics said it hopes to raise margins in the next three years.
"It would be quite difficult to raise margins (in 2006). In principle it's possible ... but we are seeing them pretty much flat on last year," Chief Executive Jouni Hartikainen said on Wednesday at Reuters Global Technology, Media and Telecoms Summit.
Elcoteq, a key supplier to the world's top handset maker Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz), said it was seeing constant pressure on its margins due to falling prices of cellphones.
Elcoteq's operating profit margin dropped to 1.8 percent in 2005 from 2.0 percent, while sales rose to 4.17 billion euros.
"The average selling prices in the whole industry are going constantly down ... when the average selling prices come down there is always huge margin pressure," Hartikainen said.
In the last two years, the average selling price of Nokia phones has dropped to 99 euros ($118) from 127 euros.
Hartikainen said the company hopes to reach its long-term target of 3-5 percent operating profit margin in the next three years.
"I believe we will make it ... when last year we were speaking that we would make it in around three years, we would say this also now," he said. Continued...
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