Nokia, once the world's largest phone company, has returned to profitability after an 18-month spell in the red.
The Finnish technology group posted a pre-tax profit of €375m (£315m) during the last three months of 2012, compared with a €974m loss a year earlier.
The company sold 15.9 million smartphones during the period but opted to scrap its dividend for the first time in 20 years to conserve cash.
Analysts said the results reflected some of the group's restructuring measures. These include scrapping its in-house phone software, Symbian, in favour of Microsoft's Windows Phone in 2011, to catch up with larger rivals Apple and Samsung.
Stephen Elop, the chief executive, said: "While the first half of 2012 was difficult for Nokia Group, during the fourth quarter we strengthened our financial position. We remain focused on moving through our transition, which includes continuing to improve our product competitiveness."
Nokia said its net cash stood at €4,360m, down 22 per cent.