Breville shares drop as Citi outlines tariff risks
Make us a preferred source
Make us a preferred source on Google
The news: Breville Group was one of the worst performing ASX 200 companies after morning trade, with new US tariffs expected to substantially impact the kitchen appliances maker.
The numbers: Breville shares were down 5.1% to $30 at 12:15pm AEDT, having plunged nearly 12% at market open.
Americas is a key market for Breville, accounting for 48% of FY24 sales. US President Donald Trump announced a further 34% tariff on China, where 40% of the Breville's purchases will be from as of July, falling to 10% by January 2026.
The US will also implement tariffs on countries that Breville is increasingly sourcing from, including new duties on Cambodia (49%), Indonesia (32%) and Vietnam (46%).
The context: Breville released a statement this morning stating that it "does not anticipate any material impact" from the new tariffs on its full-year result and reiterated its earnings guidance. However, it flagged that "it is likely that the group's input costs will increase for FY26", subject to iterations to the measures and any country-specific responses.
The company said it will continue to make "tactical adjustments" where appropriate, to lessen the potential short-term impacts from the tariffs.
Citi analysts flagged increased earnings risk and operational uncertainty for Breville. Tariffs have been imposed on countries that Breville was increasingly sourcing from, they noted, and US consumers are likely to have less propensity to spend due to the new measures.
The analysts said that while most competitors are also likely to be adversely impacted by the new tariffs, they expect consumers to increasingly move to more value-orientated brands, with Breville operating in the mid- and high-end.
What they said: "While we will continue to manage the short-term challenge — as we did throughout the Covid period — our primary focus will remain the continued execution of our global, long-term growth strategy," said Breville managing director and CEO Jim Clayton.
"Nothing announced today changes that strategy."
The sources: ASX, Citi research
