Nokia faces global tariff turbulence, but UK arm holds firm
Nokia is bracing for disruption from renewed US trade tensions, with its new chief executive signalling a possible expansion of American manufacturing to soften the blow of potential tariffs.
But while the Finnish firm’s global profits have taken a hit, its UK business has quietly bucked the trend – posting steady growth and highlighting the differing fortunes within the firm’s major markets.
The telecoms equipment maker warned this week that tariffs could dent its second quarter profits by up to €30m.
The firm’s overall first quarter performance missed expectations, with operating profit falling to €156m – well below last year’s €600m.
The impact of a €120m one-off charge and weaker licensing revenue weighed heavily on the results.
But in the UK, the picture appears to have been more stable.
Recent filings show Nokia’s UK revenue rose to £448.9m in 2023, with pre-tax profits climbing to £18.5m.
The Bristol-based arm will also benefit from avoiding the headwinds that are buffeting other parts of the firm, setting it ahead of its parent group which announced job cuts affecting up to 14,000 staff last year.
Tariff-driven rebalancing
Chief executive Justin Hotard, just weeks into the role, said Nokia is open to increasing its US manufacturing footprint to navigate a volatile trade environment.
The US market already plays an outsized role for the firm, accounting for the largest part of its telecoms infrastructure footprint.
“If there are opportunities to strengthen US manufacturing and drive growth, we’ll look at that”, he said.
The strategy comes amid growing political noise in Washington over supply chains and national tech resilience.
US regulators have hinted that Nokia and Ericsson could receive regulatory incentives if they ramp up domestic production.
Nokia currently operates five sites within the US, including facilities in California, though it may now need to lean further into this footprint to protect margins.
Pressure mounts across markets
The backdrop of these decisions is a mixed operational picture.
Network infrastructure grew 11 per cent year on year, and cloud services were up eight per cent, but mobile network profits were dented by legacy project costs.
Nokia also closed its acquisition to US optical networking firm Infinera to bolster scale and hyper-scale market share, which is particularly relevant as demand in data-heavy sectors like AI and cloud reach all time highs.
Hotard acknowledged that the broader economic and political environment could complicate the firm’s outlook.
“We’re not immune to the evolving global trade landscape”, he said. Yet, he insisted the firm would leverage global manufacturing to limit disruption.
UK remains steady
In the UK, Nokia’s continued growth stands out amid industry volatility.
Its local performance suggests resilience in key European markets, even as broader global uncertainties cloud the outlook.
The challenge now for Nokia is how to align its global operations with emerging geopolitical factors while preserving gains in more stable markets.
Upcoming quarters will test whether the firm can balance expansion in politically charged markets with continued strength in Europe’s more predictable regulatory environment.