Breville 'unfavourably exposed' to US tariffs: analysts

Morningstar flagged that Breville earns almost half of its revenue in the US and almost all of this comes from goods made in China.

"If asked to bucket companies into 'winners' and 'losers' of a trade war, the simple answer would be to group Breville amongst the latter," said Morningstar market strategist Lochlan Halloway.

"On the surface, it's unfavourably exposed to import tariffs," he said.

However, Halloway noted that the company's pricing power is "exceptional" and during the US-China trade war of Trump's first presidency, Breville's margins "hardly budged". This was due in part to its premium branding and exposure to a "more affluent, price-inelastic demographic", allowing it to pass tariffs directly onto the customer.

In November, Breville warned about the impact of Trump's planned tariffs on China. The company, which is 30% owned by retail billionaire Solomon Lew, announced it would 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.

Elsewhere, Halloway said that while Australia would not be among the "most obvious candidates" for new US tariffs, "it doesn't mean we're completely out of the woods".

Morningstar estimates that ASX 200 companies generate at least 18% of revenue in North America, with technology companies generating more than 80% of revenue there. However, the threat from tariffs to big software companies such as WiseTech and Life360 is "probably low" as they are not importing goods to sell to the US.

Consumer cyclical, industrials and healthcare companies, many of which import goods into the US, may be at risk, said Holloway. These include Fisher & Paykel, which already released a profit warning this week.

Meanwhile, utilities, financial services and consumer defensive generate most of their sales in Australia and generally have limited direct exposure to tariffs, the analyst said.

Holloway also flagged that ASX's second largest sector, basic materials, earns almost half its revenue in China. If Trump's tariffs put further pressure on China's slowing economy, this could weigh on iron demand, with BHP, Rio Tinto and Fortescue exports at risk.