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Johnson Elec H:direct sales exposure to 301 not large
11 Jul 2018
(Infocast News) Johnson Electric Holdings (00179) said that the Group's sales for the quarter ended 30 June 2018 were US$872 million compared to US$753 million for the same quarter in 2017; an increase of 16%. Excluding currency movements and the one month effect of the acquisition of Halla Stackpole, which became an 80% owned subsidiary in May 2017, sales increased by 10% to US$826 million.


Foreign exchange rate movements had a positive effect of US$34 million on the Group’s sales during the quarter. This was due to the impact of the stronger Euro, Chinese Renminbi and Canadian Dollar against the US Dollar, comparing average exchange rates for the quarter ended 30 June 2018 to the same quarter
last year. The acquisition of Halla Stackpole increased sales by US$12 million. On a pro-forma basis, excluding currency movements, Halla Stackpole grew by approximately 12% compared to the same quarter last year.

Concerning the first quarter’s sales performance, the Chairman and Chief Executive, Dr. Patrick Shui-Chung Wang, said, "Johnson Electric is continuing to experience robust demand for its motion products and technology solutions which is driving very healthy sales growth. At present, the main operational
challenges for the business are higher raw material and labour costs that are running at levels well ahead of the prior year.”

Dr. Wang further commented: “Looking further ahead, we remain concerned about the risk that the trade dispute between the US, China and European Union will ultimately have a negative impact on global economic growth. Our current analysis of Section 301 tariffs on goods imported into the USA from China,
covering those already implemented and those recently announced but not yet implemented, indicates that these tariffs will apply to Johnson Electric product lines that amount to less than 5 per cent of the Group’s total annual sales. While this estimated direct sales exposure to Section 301 tariffs is not large in the context of the Group’s highly diversified global sales base, it remains difficult to assess what impact a further ratchetting up in tit-for-tat tariffs could have on customer demand, buying behaviour and on Johnson Electric’s component input costs over the medium to longer term.”

(SY)
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