Nokia has released its financial results for the second quarter of 2025, presenting a complex picture of business performance under challenging economic conditions. The company managed to maintain relatively stable revenues but faced a sharp decline in operational profitability, driven mainly by macroeconomic factors such as currency fluctuations and international trade tariffs. The report highlights the extent to which Nokia is exposed to external forces beyond its control and how it is responding through business adjustments and strategic acquisitions

Stable Revenues but Eroding Profitability

Nokia concluded the second quarter with total revenues of approximately 4.5 billion euros, a slight increase compared to the same period last year. This reflects a certain level of stability, particularly in its core markets in Europe and Asia. However, the company’s comparable operating profit fell sharply to 300 million euros, down from over 420 million euros in Q2 of the previous year. This represents a decline of more than 30 percent in operating profitability year over year, signaling increasing pressure on the company’s profit margins

Severe Impact from Currency Exchange and Tariffs

The main driver behind the decline in profitability was the weakening of the US dollar against the euro, which reduced the value of Nokia’s dollar-denominated revenues and significantly impacted profitability in local currency terms. According to the company, currency fluctuations alone caused an estimated negative impact of around 230 million euros for the quarter. On top of this, new tariffs imposed by the US government on imported telecom equipment further burdened Nokia’s cost structure, adding an additional estimated hit of 50 to 80 million euros

Revised Outlook Reflects Tough Conditions

As a result of these external pressures, Nokia was forced to lower its full-year 2025 operating profit guidance. The revised outlook now expects a profit between 1.6 and 2.1 billion euros, compared to the previous forecast of 1.9 to 2.4 billion euros. This constitutes a downward revision of nearly 20 percent, reflecting significant changes in expectations and an acknowledgment of the company’s limited ability to offset such macroeconomic headwinds in the short term

Strategic Acquisition of Infinera as a Response to Changing Market Dynamics

Against the backdrop of this complex financial picture, Nokia finalized the strategic acquisition of US-based optical networking company Infinera, a move initiated earlier this year. The acquisition is aimed at strengthening Nokia’s position in the optical networking market and expanding its portfolio of high-capacity data infrastructure solutions to support the growing demands of data centers and artificial intelligence applications. Through this merger, Nokia seeks to increase its sales volumes and product diversity while gaining a competitive edge in the critical US market

Mid-Term Synergy Potential and Profitability

Nokia stated that it expects to achieve operational synergies worth around 200 million euros by 2027 as a result of the merger. These savings are expected to come from integration of operational systems, consolidation of sales divisions, streamlined R&D, and more efficient capital allocation. The company believes that the acquisition will begin to positively contribute to its profitability as early as the first year post-integration, potentially offsetting the negative impact of external market factors and strengthening Nokia’s competitive position in the medium term

Market Reaction and Investor Sentiment

Following the revised guidance and the relatively disappointing results, Nokia’s stock experienced a sharp decline in trading, affecting sentiment across the broader telecom sector. Market analysts believe the company still faces considerable challenges in meeting its new profit targets, but they also see meaningful long-term growth potential if the Infinera integration proceeds efficiently and macro conditions begin to stabilize by year-end

Looking Ahead – Navigating Between Challenges and Opportunities

The remainder of 2025 will be critical for Nokia, especially in light of ongoing geopolitical uncertainties, volatile exchange rates, and tariff policies. Nonetheless, the company maintains a solid base of stable segment revenues, sustained market shares in advanced mobile network solutions, and a strengthened strategic foundation through targeted acquisitions. The combination of market adaptability and a broadened technological offering in optics and AI may allow Nokia to return to steady growth and improved profitability by 2026