Breville shares fall as Trump tariff risks weigh
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The news: Breville Group has seen positive momentum continue in the first half but warned about the impact of incoming US President Donald Trump’s likely tariffs on China, sending its shares lower.
The numbers: The appliances maker, which reported double-digit revenue growth in the Americas, Europe and Middle East in the second half of FY24, said the positive trends have continued into the current fiscal-to-date.
Shares in the company were down more than 3% to $30.52 in early trading after the company’s warning on tariff risks.
The context: Breville, which is 30% owned by retail billionaire Solomon Lew, announced it will boost inventory levels in the US and move the production of its 120v coffee machine out of China, due to the probability of increased US tariffs on China-made goods.
What they said: “Now that Trump has won the US presidential election, the near term risk of material tariff increases on consumer goods coming out of China has solidified,” chief executive Jim Clayton told investors at the company’s annual general meeting.
Analysts responded negatively to the company’s announcement.
"In our view, increased inventory build will be a negative insofar as it would increase BRG's working capital intensity, however BRG's demonstrated ability to manage through elevated Covid inventory levels in recent years should give investors some comfort this time around," RBC Capital Markets analyst Wei-Weng Chen said in a note.
"We do see some risks that a shift of production out of China may result in impacts to one or both of GM or product quality."
The sources: ASX announcement, RBC research
