Nokia confirms second-quarter sales, profit miss

Nokia reported a significant 29% decline in second-quarter operating profit to 301 million euros, missing market expectations and prompting a profit warning attributed to the impact of a weaker U.S. dollar and tariffs. Despite these immediate headwinds, CEO Justin Hotard anticipates a stronger second half of 2025, signaling a potential recovery for the network equipment maker.

Analysis

Nokia has revised its 2025 outlook downward, issuing a profit warning after reporting a significant second-quarter earnings miss. The company's comparable operating profit fell 29% to 301 million euros, falling short of market expectations despite marginal revenue growth to 4.55 billion euros. This divergence between top-line stability and bottom-line contraction points to severe margin pressure, which management attributes directly to two macroeconomic headwinds: a weaker U.S. dollar and tariffs. Despite these immediate challenges, CEO Justin Hotard has guided for a stronger second half of the year. This creates a cautious but pivotal narrative for the company, where near-term performance is clearly hampered by external factors while management signals confidence in a future recovery.

Key Decisions for Investors

• Investors should closely monitor movements in the U.S. dollar and any developments in trade tariffs, as these have been identified as the primary drivers behind the current profit warning and will dictate near-term performance.
• The sharp contrast between the 29% profit decline and the CEO's guidance for a stronger second half requires a cautious stance; consider holding positions and await concrete signs of margin stabilization in subsequent earnings reports before committing new capital.
• Focus on the company's ability to manage costs and protect margins in upcoming quarters, as the slight revenue growth was insufficient to offset the negative impact on profitability.