The strengthening of the dollar is already starting to have an impact on this year’s result.
AI’s view on the matter:
Currency exchange rate impact on operating profit
If the exchange rate between the euro and the dollar falls from the assumed 1.18 to 1.14, it means the dollar is strengthening against the euro. For an export company like Nokia, a stronger dollar is usually beneficial, as income received in dollars is more valuable when measured in euros.
Based on Nokia’s previous sensitivity analyses and historical updates, the impact can be estimated as follows:
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Nokia’s general rule of thumb: Previously, Nokia has estimated that a change of approximately 10% in the EUR/USD exchange rate typically affects operating profit by hundreds of millions of euros per year.
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Calculation of the exchange rate change:
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Original assumption: 1.18
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New assumption: 1.14
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The change is approximately 3.4%.
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Estimated impact in euros:
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In 2025, Nokia estimated that the weakening of the dollar (1.04 → 1.17) would cut operating profit by approximately 230 million euros.
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Applying the same logic in reverse, a shift from 1.18 to 1.14 could bring a positive impact of roughly 50–80 million euros to Nokia’s operating profit.
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Points to consider
Although a stronger dollar improves the euro-denominated result, the impact is not straightforward for several reasons:
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Hedging: Nokia hedges its currency risks with derivatives, which delays the appearance of exchange rate changes in the results.
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Cost structure: Some of Nokia’s expenses, such as component purchases and some research and development work, occur in dollars, which eats up some of the currency benefit from sales.
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Venture Fund investments: Exchange rates also affect value changes in Nokia’s venture capital funds, which are recorded in the operating profit.