By Adria Calatayud

Nokia expects to take an earnings hit in the second quarter from trade tariffs, after it slid to a net loss for the first quarter due to a one-time charge in its mobile networks business.

The Finnish maker of telecommunication equipment said Thursday that reaching the high end of its outlook range for the year now looks more challenging as a result of the unexpected charge in mobile networks. However, Nokia confirmed its guidance for a comparable operating profit--its preferred earnings metric--of between 1.9 billion and 2.4 billion euros ($2.15 billion-$2.72 billion).

The company anticipates an impact of between 20 million and 30 million euros to comparable operating profit in the second quarter, it said. Nokia hasn't factored in any assumption related to tariffs for the second half due to uncertainty.

The expected tariff hit in the second quarter stems mainly from potential supply-chain disruptions, Nokia President and Chief Executive Justin Hotard said in a call with reporters. The company hasn't experienced any impact on demand and early customer feedback indicates its markets should prove resilient, he said.

In Hotard's first set of earnings results as CEO since he took the helm at the beginning of the month, he said recently acquired Infinera experienced strong order intake in the first quarter, with growth among hyperscalers--or large cloud-infrastructure providers. The company sees big growth opportunities in that market, he added.

For the first quarter, Nokia reported a net loss of 60 million euros that compares with a profit of 438 million euros in the year-earlier period, on sales that declined 1% to 4.39 billion euros. Comparable operating profit fell 74% to 156 million euros.

Analysts had forecast Nokia's sales at 4.44 billion euros, comparable operating profit at 300 million euros and net profit at 126 million euros, according to consensus estimates provided by FactSet.

The company said its results reflected a contract settlement charge in its mobile networks business that had a net impact of 120 million euros. This one-time charge was tied to a specific customer project dating back to 2019 and settled the issue in its entirety, Hotard said.

Nokia's network infrastructure segment was its main growth driver in the quarter, with sales up 11% when adjusted for currency and portfolio changes.

The company also said it secured a significant multiyear extension to its partnership with T-Mobile US to expand the telecommunications operator's 5G connectivity. Financial details of the contract weren't disclosed.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

April 24, 2025 02:32 ET (06:32 GMT)

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