Power tools giant Techtronic ready to make more in the US if Trump raises tariffs on imports from China
The company this week reported record-high numbers for the ninth consecutive year, with profit increasing 15.4pc to a record US$409 million
Shares in power tools giant Techtronic Industries (TTI) gained nearly 7 per cent in Hong Kong, after the company said it is prepared to move some its production to the US if President Donald Trump rolls out protectionist policies against China.
But the Hong Kong-based company, which ships most of its products from China, has pledged to continue investing in facilities there to support sales growth in non-US markets.
“We can move very quickly if the law favours manufacturing in the US,” said Joseph Galli Jr, TTI’s chief executive officer. “We have kept them (the US factories) open, just in case something like this happens.”
Shares in TTI surged 6.95 per cent to close at HK$31.4 on Wednesday after rising just 4.92 per cent all of this year.
Trump has threatened to impose a 45 per cent tariff on imports from China to bring back jobs to the US, triggering concerns that more manufacturers will move out of the world’s factory. But the president has offered no details of any possible punitive policies since he took office this year.
TTI, which makes Hoover vacuum cleaners and Milwaukee power tools among other products, operates five factories in the US, but its largest is in an industrial park in Guangdong province.
The company on Tuesday reported record-high profits for the ninth consecutive year, citing strong sales of its new products, including a cordless vacuum cleaner that automatically identify floor types.
Profit attributable to shareholders increased 15.4 per cent to a record US$409 million last year from US$354 million in 2015, the company said in a statement.
Revenue hit a record-high for the seventh consecutive year, rising 8.8 per cent to US$5.5 billion from US$5.0 billion a year ago. Gross profit margin added 0.5 per cent in 2016 to 36.2 per cent.
The strong earnings also came as consumer confidence continues to recover in North America, which contributed to more than 78 per cent of the company’s sales last year.
Sales of US homes residential property surged to a 10-year high in January, while jobs growth remained strong last month, according to the latest government data.
Executives also expect the company to benefit from President Trump’s plan to boost infrastructure spending.
TTI plans to launch more than 50 products this year that target infrastructure building, Galli said.
“We are very grateful for the US president to emphasise an area in which we have been investing for a long time. TTI will benefit like crazy if the president of the United States is able to push forward the infrastructure programme,” he added.
Galli said the company will keep its 11,000 workers in China, where engineers are working “around the clock” to design new power equipment and floor cleaners for foreign consumers.
“China is perfectly positioned to supply the rest of the world for TTI,” Galli said.“We have made great success in China in recent years. We are still going to be an important citizen in China.”
Besides the US, the company is eyeing revenue growth in Canada, Europe, Australia, South Korea and Taiwan.
“We have to sell to those countries too,” Galli said. “And Donald Trump has nothing to do with that.”