Chief Financial Officer Andre Luis Rodrigues said the company is preparing actions to mitigate potential US tariffs of 50% on Brazil that are scheduled to take effect on Aug. 1.
“WEG has a strong global footprint and may reallocate its export routes,” Rodrigues said on the company’s earnings call. For example, India could be used to serve the US market while Brazil supplies other countries, he said. Adjustments to production could take months, he added.
WEG isn’t expecting to raise prices because that could create openings for competitors, he said, adding that the company currently has good margins.
The company, based in Jaragua do Sul, Brazil, has already partially passed on to clients the initial 10% tariffs imposed by the US, and it hasn’t experienced any material impact on its financial results.
WEG reported second-quarter net income and Ebitda, a measure of profitability that excludes items such as taxes and depreciation, that missed analysts’ estimates.
The shares fell as much as 3.2% in Sao Paulo trading on Thursday, extending the stock’s decline following Wednesday’s 8% drop that was sparked by the lower-than-expected results. The shares have declined about 30% so far this year, compared with an 11% gain for the benchmark Brazilian stock index.
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-With Assistance from Barbara Nascimento.
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