Impact of Tariff Delays and Preloading on Asian Imports
Asian appliance imports increased over 20% in the first half of 2025 due to delays in tariff implementation, creating significant short-term disruption.
Estimated 60 to 90 days of excess Asian inventory in the system as of May, with a gradual flow-through expected as tariffs take full effect.
Tariff delays have extended the preloading period, impacting promotional intensity and margins into Q3 and Q4.
Management believes the full impact of tariffs will benefit Whirlpool long-term, as the company is structurally positioned to capitalize on trade policy shifts.
Free cash flow was unfavorable by approximately $140 million compared to the prior year, driven by seasonal inventory build.
Global EBIT margins held steady year-over-year at 5.3%, despite currency headwinds primarily from a weakening Brazilian real.
MDA Asia net sales declined 4% excluding currency but delivered over 7% EBIT margin with 90 basis points of margin expansion from cost takeout.
MDA Latin America net sales declined 1% excluding currency, with a solid EBIT margin of 6% driven by favorable price/mix and cost actions.
MDA North America net sales declined 5% year-over-year with an EBIT margin of approximately 6%, impacted by promotional intensity and lower volume.
Ongoing earnings per share were $1.34, negatively impacted by approximately $0.35 from a noncash loss related to Whirlpool's minority interest in Beko Europe B.V.
SDA Global segment delivered 8% net sales growth year-over-year with margin expansion driven by new product launches and direct-to-consumer sales growth.
Whirlpool Corporation reported a 3% decline in net sales excluding currency effects in Q2 2025 due to negative consumer sentiment and macroeconomic challenges.
YETI is executing a major transformation of its supply chain, with a focus on diversification to reduce reliance on China, aiming for less than 5% of COGS exposed to U.S. tariffs by year-end.
The company has made significant progress, with a multi-country sourcing strategy fully in place, supporting resilience and agility for 2026 and beyond.
Tariff costs, which impacted gross margins by approximately 220 basis points, are expected to decrease due to recent tariff rate reductions from 145% to 30% on Chinese goods, but uncertainty remains.
Supply chain transition has caused temporary inventory constraints and limited product launches, especially in Drinkware, affecting sales performance.
The company remains confident that supply chain efficiencies and cost management will help recover margins and support long-term growth.
Tariff-Driven Trade Realignment and Domestic Manufacturing Advantage
Newell has invested nearly $2 billion in North American production facilities since 2017, creating significant untapped capacity.
Over half of U.S. sales are from highly automated, tariff-free manufacturing plants in the U.S. and Mexico.
The company has secured incremental business in 13 of 19 categories with domestic manufacturing capability, leveraging tariff advantages.
Over 30 customers across nearly every domestic channel have benefited from tariff-relative sourcing advantages or tariff-free inventory.
Some tariff-related wins are large and long-term, with potential impacts extending into 2026.
The company expects to offset all permanent tariff impacts through cost reductions and pricing actions, with only a small, non-recurring impact remaining.
Tariff and Trade Environment Impact and Mitigation Strategies
The company expects around $10 million in tariff-related costs for the full year, with most impact in Q4, due to inventory pre-exposure and sourcing adjustments.
Central has reduced China purchases by nearly 50% in Q3, shifting sourcing to mitigate tariff impacts, and is working on pricing strategies to offset cost increases.
Management highlighted ongoing efforts to work with customers and suppliers to limit margin erosion, with a cautious outlook on future tariff developments.
Tariff Impact on International and Domestic Markets
Management explained that evolving international negotiations, especially in Asia, India, and the EU, are causing delays in asset trading, particularly in sectors like biopharma, semiconductors, and machine tools.
Despite international delays, North American used equipment markets remain on track, with most assets moving normally and some blips in Canada having normalized.
Used vehicle prices have softened, but the marketplace continues to see record asset listings and sales, with management optimistic about future growth once prices normalize.
Impact of Tariffs on Supply Chain and Special Order Business
Tariffs on China imports increased by 145% in April, causing temporary suspension of China-based special orders.
Tariff reduction from 145% to 30% in mid-May provided clarity and allowed realignment of production out of China.
Supply chain teams are working to fully resume special order capabilities in Q3, with ongoing negotiations and adjustments to tariffs potentially affecting future product sourcing and pricing.
Dafinchi
