By Jacob Gronholt-Pedersen
COPENHAGEN (Reuters) -Danish jewellery maker Pandora maintained its full‐year growth forecast on Friday and said price rises and cost cuts would help it offset the impact of tariffs on imports to the U.S. – its largest market – and rising raw material expenses.
Pandora, which produces all its jewellery at two factories in Thailand, is among the European companies most at risk from steep tariffs.
The U.S. tariff rate for goods from Thailand stands at 19% – a level significantly below the 36% announced in April – after the countries struck a deal this month during President Donald Trump’s broader overhaul of U.S. trade relations.
Pandora, whose biggest market is the U.S., said the current level of tariffs would cost the company 200 million Danish crowns ($31.3 million) this year and 450 million next year.
Still, the charm bracelet maker stuck to its full-year guidance of 7-8% organic sales growth, with an operating profit margin of around 24%.
It said it expects to be able to offset “a material part” of the effect of higher commodity prices, tariffs and foreign exchange rates “through a combination of pricing, cost efficiencies, and operating leverage”.
The company would consider further price increases and new cost-cutting measures to cover the impact of tariffs, it said. The company raised prices by 4% in April and by a “low-single-digit” rate in August in response to higher commodity prices.
Silver, a key material for its jewellery, is trading near its highest level in 15 years.
Operating profit for the second quarter was 1.29 billion crowns, matching a forecast by analysts in a company-compiled poll. Organic revenue growth stood at 8%, also in line with analysts’ expectations.
As a result of tariffs, the company has shifted its sourcing of raw materials used for jewellery sold in the U.S., and started shipping jewellery directly to Canada and Latin America rather than through its normal distribution centre in Baltimore.
Sales totalled 7.08 billion crowns in the second quarter, slightly below the 7.17 billion forecast by analysts.
($1 = 6.3995 Danish crowns)
(Reporting by Jacob Gronholt-Pedersen; Editing by Terje Solsvik and Jan Harvey)
