Nokia's Q2 Profits Plunge 29% Amid Dollar Weakness, Tariffs

Nokia Corporation, a multinational telecommunications, information technology, and consumer electronics company based in Finland, reported a significant decline in its second-quarter profits, which fell by 29%. The primary factors contributing to this downturn were the weakening of the U.S. dollar and the impact of tariffs. These two elements combined to create a challenging environment for the company, which specializes in 5G equipment manufacturing.

The weakening of the U.S. dollar has had a profound impact on multinational corporations like Nokia. As a significant portion of its revenue is generated in foreign currencies, the depreciation of the dollar reduces the value of these earnings when converted back into the company's reporting currency. This currency fluctuation has eroded Nokia's profitability, making it more difficult for the company to maintain its financial performance.

In addition to currency fluctuations, tariffs imposed on imported goods have also taken a toll on Nokia's operations. The company relies on a global supply chain to manufacture its 5G equipment, and the imposition of tariffs has increased the cost of raw materials and components. This has led to higher production costs, which in turn have squeezed the company's profit margins. The tariffs have also created uncertainty in the market, making it difficult for Nokia to plan for the future and invest in new technologies.

Nokia's second-quarter financial report showed a slight increase in revenue, rising 2% to 45.5 billion euros. However, this figure fell short of market expectations. The company's adjusted operating profit for the quarter was 3.01 billion euros, a 29% decrease from the same period last year. This decline was significantly worse than the average analyst prediction of 3.99 billion euros.

Earlier this week, Nokia lowered its performance guidance for 2025. The trade war initiated by the Trump administration has disrupted global supply chains and upended the economic landscape of nearly every industry. Nokia, along with other network equipment manufacturers, is struggling with business adjustments due to the trade turmoil. The market, already challenging, has become even more difficult for these companies as operators hesitate to invest in expensive network upgrades. Nokia and its competitor Ericsson are vying for business in this tough environment.

Nokia's new CEO, Justin Hotard, who took office in the previous quarter, is facing a series of challenges, including tariff threats and currency volatility. The company announced on Tuesday that it would lower its full-year operating profit forecast to between 16 billion and 21 billion euros, down from a previous high of 24 billion euros.

In a statement, Hotard said, "We need to continuously improve our operations to accelerate our actions, enhance production efficiency, and focus on our core businesses that create value for our customers. To achieve this, we are integrating our corporate functions, simplifying workflows, building a more cohesive corporate culture, and leveraging operational efficiencies."

Ericsson, a competitor, predicted last week that its network sales growth for the third quarter would fall short of expectations. The seasonal growth outlook indicates that the 5G network equipment market remains sluggish.