Nokia has recorded first-quarter earnings below market expectations, with the company suggesting that short-term returns may have been impacted by Trump's steep tariffs.

In its quarterly report published on Thursday, the Finnish tech giant revealed that over the period net revenue declined by three per cent to €4.39 billion.

Operating profit also dropped to €156 million ($176.9 million) in the first quarter. According to analysis from the London Stock Exchange Group, the figures represent a 36 per cent decline from the average forecast of €243.8 million.

Chief executive at Nokia Justin Hotard said that the company had experienced short-term disruptions due to US tariffs, with an expected impact of between €20 million and €30 million on profits in the second quarter.

He attributed the current decline in operating margin to the previous year’s performance in Nokia Technology, making it challenging to match or exceed those results this year.

Hotard also mentioned “extraordinary charges in the Mobile Networks segment”, citing significant one-time charges in the Mobile Networks segment, including a contract settlement charge with a net impact of €120 million.

“Net sales grew, but profitability was impacted by an unusual one-time contractual agreement with a net impact of €120 million,” continued Hotard.

Hotard highlighted higher sales returns in both the Network Infrastructure and Cloud and Network Services segments, citing growth in the network infrastructure segment by 11per cent, with the cloud and network services segment also growing by eight per cent.

The chief executive said that the highlight of the first quarter was the completion of its acquisition of Infinera, which led in part to a 15 per cent growth in net sales to the company’s Optical Networks segment, along with several important design wins.

Last June, Nokia announced the buyout of the US IP transport tech and optical equipment company for around $2.3 billion, signalling an increased focus on AI.

Nokia said that Infinera's advanced optical networking solutions will help strengthen its data centre offerings, which are critical for AI workloads that require high-speed, low-latency data transmission.

Over the past five years, Nokia’s financial performance has seen fluctuations, reporting an annual gross profit decline by $858.27 million, an 8.21 per cent decline over the past three years.

In November 2023, Nokia announced plans to cut its workforce by up to 14,000 people following a 15 per cent sales decline in the third quarter. The move formed part of a programme announced by the telecoms provider which aimed to lower its cost base by between €800 million and €1.2 billion over a three-year period.

---