(Bloomberg) — Brazil’s WEG SA, a supplier of business equipment for world oil and energy firms, mentioned its purchasers are delaying long-term investments because of rising geopolitical tensions and new tariffs.
Chief Monetary Officer Andre Luis Rodrigues mentioned the corporate is getting ready actions to mitigate potential US tariffs of fifty% on Brazil which can be scheduled to take impact on Aug. 1.
“WEG has a powerful world footprint and will reallocate its export routes,” Rodrigues mentioned on the corporate’s earnings name. For instance, India could possibly be used to serve the US market whereas Brazil provides different international locations, he mentioned. Changes to manufacturing might take months, he added.
WEG isn’t anticipating to boost costs as a result of that might create openings for opponents, he mentioned, including that the corporate at present has good margins.
The corporate, based mostly in Jaragua do Sul, Brazil, has already partially handed on to purchasers the preliminary 10% tariffs imposed by the US, and it hasn’t skilled any materials impression on its monetary outcomes.
WEG reported second-quarter internet revenue and Ebitda, a measure of profitability that excludes gadgets reminiscent of taxes and depreciation, that missed analysts’ estimates.
The shares fell as a lot as 3.2% in Sao Paulo buying and selling on Thursday, extending the inventory’s decline following Wednesday’s 8% drop that was sparked by the lower-than-expected outcomes. The shares have declined about 30% to this point this yr, in contrast with an 11% achieve for the benchmark Brazilian inventory index.
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-With Help from Barbara Nascimento.
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