Fisher & Paykel Healthcare (ASX:FPH) Addresses Impact of New US Tariffs
Tariff Impact
The United States has implemented new tariffs on products manufactured outside the US, including a 10% tariff on those from New Zealand. Earlier in March, a 25% tariff was placed on non-compliant Mexican imports under the US-Mexico-Canada Agreement (USMCA). Nearly all Fisher & Paykel Healthcare products imported from Mexico comply with USMCA requirements.
Operational Capacity
Fisher & Paykel Healthcare manufactures approximately 45% of its volume in Mexico and 55% in New Zealand. For the first half of the 2025 financial year, around 43% of revenue originated from the US, with 60% of US volumes supplied from Mexico and 40% from New Zealand. The company’s facilities in both countries have spare capacity to increase production if needed.
Financial Outlook
The company does not expect the US tariffs to materially impact its net profit after tax for the 2025 financial year ending March 31, 2025. However, for the 2026 financial year, costs are likely to rise due to the new tariffs. Fisher & Paykel Healthcare aims to achieve its gross margin target through continuous improvement and efficient growth, though US tariffs may extend this timeframe. An update on the 2026 outlook and gross margin target timeframe will be provided in the full year results at the end of May.
Executive Comments
Managing Director and CEO Lewis Gradon said, “As always, long-term thinking is guiding our decision-making. Our team is well-versed in navigating supply chain complexities, and we continue to prioritise stability for our customers, employees and operations.”
Motley Fool contributor Aaron Shaw has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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