HELSINKI (AFP) - The Finnish company slashes its full-year forecasts.

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The world's top mobile phone maker Nokia reported a 40-percent plunge in second-quarter net profit on Thursday to 227 million euros but maintained its earnings forecast for its key devices and services unit.

The Finnish company had slashed its second-quarter and full-year forecasts for its key devices and services unit last month, citing fierce competition.

From April to June, Nokia posted a net profit of 227 million euros (290 million dollars), down 40 percent from 380 million euros for the same quarter a year earlier.

Analyst expected a profit drop of 30 percent, according to estimates published in the Finnish press.

Nokia said its net sales were up 1.0 percent on a year-to-year basis to 10.0 billion euros, and that the sales in its devices and services unit were up 3.0 percent on a year-to-year basis, but down 2.0 year-to-year in constant currency.

CEO Olli-Pekka Kallasvuo, who according to the Wall Street Journal could soon lose his job because of his inability to raise Nokia's performance in the competitive smartphone market, said that the second-quarter earnings gave reasons to be optimistic.

"Despite facing continuing competitive challenges, we ended the second quarter with several reasons to be optimistic about our future. For one, the global handset market has continued to grow at a healthy pace, led by some of the less mature markets where Nokia is strong," he said.

Nokia continues to lead the cellphone market, but is under pressure from the likes of Apple's iPhone and Research in Motion's (RIM) BlackBerry in the high-end segment, with competitor's phones seen as faster and easier to use then Nokia's, which are based on outdated Symbian technology.

Kallasvuo said the company would continue to renew its portfolio in smartphones.

"We believe that the Nokia N8, the first of our Symbian^3 devices, will have a user experience superior to that of any smartphone Nokia has created," he said, adding the new model would "kick-start Nokia’s fightback at the higher end of the market."

Shares in company, which had recently plunged to their lowest level in 12 years, were up 1.43 percent to 7.09 euros on a Helsinki Stock Exchange up 0.9 percent shortly after the announcement.