Costs forecast to increase under new US tariff regime
| Stock | Fisher & Paykel Healthcare Corporation Ltd (FPH.ASX) |
|---|---|
| Release Time | 3 Feb 2025, 7:30 a.m. |
| Price Sensitive | Yes |
Costs forecast to increase under new US tariff regime
- 25% tariff on products imported from Mexico and Canada, 10% tariff on products from China
- 45% of volume manufactured in Mexico, 55% in New Zealand
- 43% of revenue from US, 60% of US volumes supplied from Mexico
Fisher & Paykel Healthcare Corporation Limited has announced that the United States will be imposing a 25% tariff on products imported from Mexico and Canada, and a 10% tariff on products imported from China, effective from 4 February 2025. The company currently manufactures approximately 45% of its volume in Mexico and 55% in New Zealand, and for the first half of the 2025 financial year, approximately 43% of the company's revenue came from the US. Approximately 60% of US volumes are supplied from the company's Mexico manufacturing facilities. The company does not anticipate a material impact on its net profit after tax for the 2025 financial year due to the new tariffs. However, for the 2026 financial year, the company's costs would likely increase due to the introduction of the new tariffs, acknowledging that the economic environment, global response to US tariffs and foreign currency movements may be fluid over this period. The company continues to expect to reach its gross margin target of 65% through its long-standing continuous improvement activities across the entire business, coupled with efficient growth into existing infrastructure. The US tariffs announced may have added two to three years to that expectation. The company is currently working through the complexities associated with the imposition of the tariffs and will provide an update on outlook for the 2026 financial year as well as an updated estimate of the timeframe to return to the gross margin target, at its full year results at the end of May.
The company does not currently anticipate a material impact from the announced tariffs on its net profit after tax for the 2025 financial year. For the 2026 financial year, the company's costs would likely increase due to the introduction of the new tariffs.
The company continues to expect to reach its gross margin target of 65% through its long-standing continuous improvement activities across the entire business, coupled with efficient growth into existing infrastructure. The US tariffs announced may have added two to three years to that expectation.