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NDTV
24-04-2025
- Business
- NDTV
Tariff Turmoil: Impact On Tesla And Other Companies
New York: Uncertainty over tariffs and an unpredictable trade war is weighing heavily on companies as they report their latest financial results and try to give investors financial forecasts. Some tariffs remain in place against key US trading partners, but others have been postponed to give nations time to negotiate. The tariff and trade picture has been shifting for months, sometimes changing drastically on a daily basis. Those shifts make it difficult for companies and investors to make a reliable assessment of any impact to costs and sales. On Tuesday, Treasury Secretary Scott Bessent said he expects a "de-escalation" in the trade war between the US and China, but cautioned that talks between the two sides had yet to formally start. Here's how several big companies are dealing with the tariff confusion: Chipotle Chipotle Mexican Grill said Wednesday that its costs are rising due to the tariffs. The Tex-Mex chain said it gets some beef from Australia and packaging from Vietnam, Indonesia and Thailand. It also sources avocados from Colombia and Peru. All are now subject to a 10% tariff. The tariffs may also impact the cost of building new restaurants, since items like shelving and parts for equipment come from China, Chipotle Chief Financial Officer Adam Rymer said during a conference call with investors. But Rymer said the impact of the tariffs on imports from China is harder to predict. This week, Trump administration officials have said they expect a "de-escalation" in the trade war between the US and China. Chipotle reported weaker-than-expected revenue in the January-March period and lowered its outlook for full-year same-store sales. CEO Scott Boatwright said concern about the economy was the "overwhelming reason" consumers reduced their visits to Chipotle during the quarter. That trend has continued through April, he said. Tesla Tesla is in a better position than most car companies to deal with tariffs because it makes most of its US cars domestically. But it still sources materials from other nations and will face import taxes. The bigger impact will be seen in the company's energy business. The company said the impact will be "outsized" because it sources LFP battery cells from China. The broader trade war could also hurt the company as China, the world's largest electric vehicle market, retaliates against the U.S. Tesla was forced earlier this month to stop taking orders from mainland customers for two models, its Model S and Model X. It makes the Model Y and Model 3 for the Chinese market at its factory in Shanghai. CEO Elon Musk, an adviser to President Donald Trump, on Tuesday reiterated that he believes "lower tariffs are generally a good idea for prosperity." But he added that ultimately the president decides on what tariffs to impose. Akzo Nobel The Amsterdam-based maker of paints and coatings for industrial and commercial use said the big risk from tariffs could come in the form of lower demand for its products. The company said almost all sales of finished goods in the US were locally produced, with the majority of raw materials locally sourced. "Over the years, we deliberately localized both our procurement and production in the US," said CEO Gregoire Poux-Guillaume, in a conference call with analysts. "We also largely run China for China and use the rest of Asia instead as an export base." The company's products range from paints and coatings for the automotive industry to the do-it-yourself homeowner. Broader tariffs could squeeze consumers and businesses and hurt sales. Boston Scientific The medical device maker said it expects most of the effecs of tariffs to hit the company during the second half of the year, but that it can absorb the impact. The company raised its earnings and revenue forecasts for the year, despite the tariffs. It estimates a $200 million impact from tariffs in 2025, but said it can offset that through higher sales and reductions in discretionary spending. The company said it has a long-standing supply chain around the globe and has made significant investments in the US Boeing Boeing said much of its supply chain is in the US and many of its imports from Canada and Mexico are exempt from tariffs under an existing trade agreement. The company does have suppliers in Japan and Italy, but it expects to recover those tariff costs. The net annual cost of higher tariffs on the supply chain is less than $500 million. A bigger concern is the potential for retaliatory tariffs, which could impact its ability to deliver aircraft. China, a key target for U.S. tariffs, has retaliated in part by no longer accepting deliveries of Boeing aircraft. AT &T AT&T, like its peers in the telecommunications sector, faces higher costs for cellphones and other equipment. The company said it believes it can manage anticipated higher costs, based on the current pause in some tariffs and its supply chain. "The magnitude of any increase will depend on a variety of factors, including how much of the tariffs the vendors pass on, the impact that the tariffs have on consumer and business demand," said CEO John Stankey, on a conference call with analysts.
Yahoo
24-04-2025
- Business
- Yahoo
Chipotle Mexican Grill Inc (CMG) Q1 2025 Earnings Call Highlights: Navigating Growth Amid ...
Revenue: $2.9 billion, a growth of over 6% year over year. Comparable Sales: Decline of 0.4%. Digital Sales: Represented 35.4% of total sales. Restaurant Level Margin: 26.2%, a decrease of 130 basis points year over year. Adjusted Diluted Earnings Per Share: $0.29, representing 7% growth over last year. New Restaurant Openings: 57 new restaurants, including 48 Chipotles. Cost of Sales: 29.2%, an increase of about 40 basis points from last year. Labor Costs: 25%, an increase of about 60 basis points from last year. Marketing and Promo Costs: 3% of sales in Q1, an increase of about 10 basis points from last year. Cash and Investments: $2.1 billion with no debt. Share Repurchase: $554 million of stock purchased at an average price of $54.15. Warning! GuruFocus has detected 2 Warning Sign with SNT. Release Date: April 23, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Chipotle Mexican Grill Inc (NYSE:CMG) reported a sales growth of over 6% to reach $2.9 billion in the first quarter. The launch of Chipotle Honey Chicken has been successful, driving incremental transactions and receiving positive guest feedback. The company opened 57 new restaurants in the quarter, with plans to open between 315 and 345 new restaurants this year. Chipotle Mexican Grill Inc (NYSE:CMG) is investing in technology and innovation, including the rollout of produce slicers and a new equipment package to improve efficiency. The company maintains a strong balance sheet with $2.1 billion in cash and no debt, allowing for continued investment in growth and innovation. Comparable sales declined by 0.4% in the first quarter, indicating a slowdown in consumer spending. Restaurant level margin decreased by 130 basis points year over year to 26.2%. The company faces headwinds from inflation and higher usage costs, particularly in avocados, dairy, and chicken. Chipotle Mexican Grill Inc (NYSE:CMG) is experiencing a slowdown in underlying transaction trends due to consumer uncertainty and economic concerns. The impact of tariffs on cost of sales and new store builds remains uncertain, potentially affecting margins and capital expenditures. Q: What gives you confidence that fast casual competition won't impede your target for positive traffic in the back half of this year? A: Scott Boatwright, CEO, stated that Chipotle's strong value proposition, unmatched speed, and brand strength give confidence. Despite competition, Chipotle often sees increased traffic and garners more than its fair share when competitors open nearby. Q: How should we think about the impact of tariffs on new starts or CapEx? A: Adam Rymer, CFO, mentioned that the impact of tariffs on new store builds is still in flux, but they anticipate a mid-single-digit increase. However, recent news suggests this percentage could decrease, potentially minimizing the impact on new store returns. Q: Are you seeing any fundamental change in consumer behavior, or is it just difficult comparisons? A: Scott Boatwright, CEO, noted that consumer spending is impacted by economic uncertainty, leading to reduced restaurant visits. However, Chipotle's brand remains strong, and the slowdown is attributed to a combination of factors, including tough comparisons and macroeconomic conditions. Q: Is there room to increase marketing spend if returns are positive? A: Scott Boatwright, CEO, indicated that they have ramped up marketing spend for the summer to maintain relevance. They are focused on return on ad spend and exploring digital and social channels to reach consumers effectively. Q: How did you diagnose that the slowdown was macro-related and not specific to Chipotle? A: Scott Boatwright, CEO, expressed confidence in the brand's strength, citing strong KPIs and consumer perception. The slowdown is believed to be primarily macro-related, as internal metrics and consumer studies show no specific issues with Chipotle. Q: What are the trends in your international markets, particularly Canada and the UK? A: Scott Boatwright, CEO, reported strong performance in Canada with US-level margins and plans for growth. In Western Europe, they are seeing improved restaurant-level margins and are exploring development opportunities in Central London and Germany. Q: Are you considering more frequent LTOs (Limited Time Offers) in the future? A: Scott Boatwright, CEO, mentioned that while Chipotle is not an LTO-driven brand, they may consider up to three LTOs in the future to maintain consumer engagement and avoid asking LTOs to work too hard over extended periods. Q: What impact do you expect from the high-efficiency kitchen equipment package? A: Scott Boatwright, CEO, stated that they are testing the equipment package in 100 additional restaurants. While they anticipate margin savings, they are still determining how much will be reinvested into the consumer experience versus captured as margins. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Bloomberg
09-02-2025
- Business
- Bloomberg
Chipotle's Avocado Worries Could Be Yours Too
The burrito chain's CFO talks tariffs and inflation. Plus, a look at why convertible debt makes sense right now. By Save Welcome to CFO Briefing, a newsletter devoted to corporate finance and what leaders need to know. This week, I talk to Adam Rymer, Chipotle's new CFO, about tariffs, avocados and more, and take a closer look at the recent increase in convertible bonds. But first, here's some other news that caught my eye:
NBC News
05-02-2025
- Business
- NBC News
Chipotle downplays looming Trump tariffs, says only half of its avocados are from Mexico
Chipotle Mexican Grill said Tuesday that it does not expect costs to rise much if tariffs on key imported ingredients go into effect next month, noting that only about half of its avocados come from Mexico. A day earlier, President Donald Trump paused his plans for 25% tariffs on Mexican and Canadian imports. If implemented after the one-month suspension, imports such as avocados and beef would be more expensive for restaurants, which would likely try to pass on the increased cost to their diners. But Chipotle executives shook off the tariff fears during the company's earnings conference call on Tuesday. If tariffs aimed at Mexico, Canada and China all go into effect, Chipotle expects that its cost of sales would rise about 60 basis points, or 0.6 percentage points, according to Chief Financial Officer Adam Rymer. Chipotle only sources about 2% of its sales from Mexico, importing produce such as avocados, tomatoes, limes and peppers, Rymer said. In fact, while Mexico supplies roughly 90% of the avocados eaten in the U.S., Chipotle buys about half of its avocado supply from Colombia, Peru and the Dominican Republic, according to CEO Scott Boatwright. In recent years, Chipotle has taken steps to buy more of its avocados outside of Mexico, he told analysts. Looking beyond Chipotle's guacamole supply, less than 0.5% of Chipotle's sales are sourced from Canada and China. Trump has already imposed a 10% tariff on Chinese imports. In recent quarters, Chipotle has shown that it has pricing power, even as diners become more value-conscious. For the fourth quarter, the company reported same-store sales growth of 5.4%, fueled by a traffic increase of 4%. Chipotle's earnings topped Wall Street estimates, but a conservative forecast for its same-store sales growth sent shares down 5% in extended trading. The outlook did not include the effect of any tariffs.
