Impact of Tariffs and Trade Uncertainty on China Service Volumes
China service container volume decreased 14.6% YoY in Q2 2025 due to market uncertainty and trade volatility.
Freight demand was significantly affected by tariffs, with a rebound observed after the US-China tariff agreement in May.
Expectations for lower freight rates and volumes in China for the full year 2025, with a focus on supporting customer diversification and transshipment growth.
Strategic Focus on High-Margin Revenue Mix and Tariff Mitigation
Thermon's strategic shift toward higher-margin OpEx revenues across diverse end markets has contributed to a 30 basis point gross margin improvement despite volume declines.
Tariff mitigation measures, including prebuying materials, sourcing shifts, and price increases, began to take effect late in Q1, supporting margin expansion.
Management emphasized that operational discipline and proactive tariff strategies are key to maintaining profitability amid global trade uncertainties.
While revenue was impacted by delays, the company expects these to translate into future revenue recognition, indicating a focus on long-term margin stability.
Operational Performance and Supply Chain Management
CF maintained a high utilization rate of 99% for ammonia production, with 5.2 million tons produced in H1 2025.
Operational safety was highlighted with only 3 recordable incidents and zero lost time days, demonstrating operational excellence at scale.
The company effectively managed logistics and inventory, delaying UAN fill programs to optimize supply and meet customer needs amid tight global inventories.
Impact of Tariffs on Business Strategy and Operations
Hyster-Yale is actively managing tariff impacts through monthly price adjustments based on actual product costs, reflecting a flexible pricing strategy to offset tariff-related cost increases.
The company has built in a 10-15% tariff impact into its outlook, with ongoing negotiations and adjustments, especially in China and India where tariffs remain high.
Tariffs have caused a $10 million negative impact on product margins in Q2, prompting proactive measures such as global sourcing and cost management to mitigate effects.
Management expects tariffs to negatively affect financial results in the second half of 2025 despite mitigation efforts, with some uncertainty about the timing and magnitude of tariff stabilization.
Dafinchi