FPH -7.42%: Tried to get ahead of the curve today with an announcement acknowledging the impact President Donald Trump’s tariff’s will have on the business over the coming years.
The 25% increase in tariffs on goods imported from Mexico will be significant for FPH as the business generates ~43% of its revenues in the United States. Of that portion of revenue, 60% of goods are supplied from Mexico manufacturing facilities. The business produces about 55% of global output in New Zealand (not affected by tariffs) so they do have some flexibility – management’s ability to optimize the supply chain and pivot their Mexico operations will be key as simply passing on or absorbing the cost will see a hit to earnings.
FPH management suggested net profit after tax for FY25 would remain unchanged, however the tariffs are immediate so this seems optimistic to us – we see risk to earnings in both the short, medium and long term here.
