Reliance Worldwide drops after downgrading earnings due to Trump tariffs
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More news: Shares in Reliance Worldwide fell after the plumbing supplies manufacturer downgraded its earnings and revenue guidance.
Reliance shares were down 1.79% to $4.12 in afternoon trade and over the past 12 months have dropped 17.54%.
The company attributed the downgrade to the impact of US tariffs and said it would end sourcing from China by FY27.
Reliance Worldwide flags tariff hit on earnings, revenue
The news: Plumbing supplies manufacturer Reliance Worldwide has downgraded its earnings and revenue guidance due to the impact of the recently-introduced US tariffs and said it will end sourcing from China by the end of FY27.
The numbers: Reliance expects earnings margin for FY25 to be lower than the previous year due to lower sales. It said economic conditions in the US have deteriorated in recent months due to the uncertainty surrounding US tariffs, because of which sales in the Americas region are now expected to be at the lower end of the guidance. Asia Pacific sales are also expected to be up in the low single digits, compared to a previous estimate of mid single digit growth.
The company said currently 48% of its cost of goods sold in the Americas are sourced outside the US and potentially subject to tariffs. To mitigate this, Reliance is switching product sourcing from China to other countries, considering cost reduction measures, and implementing price increases in the US.
As a result, it expects operating earnings in FY26 to be USD25 million ($39 million) to USD35 million ($54 million) lower, while impact in FY27 will not be material due to its mitigation efforts.
The context: Reliance said it is moving to diversify product sourcing beyond China, switching to other countries including Vietnam, Taiwan, Korea and Thailand. China-sourced cost of goods sold are on target to be USD80 million for FY25, down from a peak of USD160 million. It will be reduced to zero by FY27, Reliance said.
The source: ASX
