Is working with suppliers to increase production capacity in Malaysia and reduce tariff costs, but the company’s efforts are hampered by coronavirus limits and semiconductor shortages.
Sonos, which sells voice-activated Internet-connected speakers and other audio electronics based in Santa Barbara, California, plans to procure all U.S. products from Malaysia by the fall, Chief Financial Officer. Said Brittany Bagley. The United States is the company’s core market, generating more than half of its revenue.
Bagley, who became CFO of the company in 2019, said:
That year, Sonos began moving orders from Chinese suppliers to Malaysia to diversify its supply chain. Since then, tariff costs have fallen, but the company wants to cut them further. Tariffs remain the same Between America and China. Sonos has refused to offer a percentage of US products currently manufactured in China.
The company said it will continue to procure products from China for sale in Europe, the Middle East, Africa and the Asia Pacific region. Any plant.
The company’s plan to increase orders from Malaysia faces obstacles. Pandemic-related regulations had to temporarily close domestic manufacturing plants, and Sonos faced challenges in hiring workers. The company did not disclose the number of suppliers it owns or the cost of increasing orders from Malaysian manufacturing partners.
Additions to the assignment Strong demand Its product and global Semiconductor shortageThis makes it difficult for companies and many others to maintain inventory levels. Semiconductors are used in speech recognition software for wireless speakers and other electronic devices. Sones declined to comment on semiconductor suppliers.
The company said this month that sales for the quarter through April 3 were $ 332.9 million, up 90.2% year-on-year. Net income totaled $ 17.2 million, up from a net loss of $ 52.3 million in the previous year.
By reducing the tariff costs included in cost of goods sold, Sonos was able to offset the cost increases due to rising shipping, logistics, and semiconductor costs. Sonos’ revenue costs in the latest quarter increased 63.8% to $ 167.2 million, the company said.
The company also recorded a $ 1.7 million refund from the United States for tariffs paid over the past period as a temporary exemption was granted by the government last year. It expects to receive a $ 27.5 million refund in connection with the exemption indefinitely.
“The amount paid for tariffs has dropped significantly,” Bagley said, referring to the shift to Malaysia and the reduction in tariffs on imports from China last year. Tariff rates were reduced from the previous 15% to 7.5% in February 2020 as part of a trade agreement between the United States and China. Bagley refused to provide figures on how much Sonos would pay for tariffs.
The Biden administration Tough approach It maintains the trade tariffs and other hard-line policies set by the Trump administration. Mr Bagley said he is closely watching whether the administration will make changes to US trade policy and decide how to deal with potentially high tariffs.
The company should expand its supplier network to ensure adequate inventories, said Brent Till, senior analyst for technology companies at financial services firm Jeffreys Group LLC.
“The only way to counter this is to manage the supply chain better,” he said.
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Sonos is working to expand Malaysia’s business despite supply chain issues
Source link Sonos is working to expand Malaysia’s business despite supply chain issues