New US tariffs could prompt Signify to move some production from China, CEO says

Amsterdam: Lighting maker Signify is considering moving some of its production out of China if the company is confronted with a new round of US tariffs, its chief executive said on Friday.

Signify, the world's biggest maker of lights, is looking at production sites in India, Indonesia and changing existing operations in Mexico, CEO Eric Rondolat said on a call with analysts after the company reported third quarter earnings.

Former US President Donald Trump has proposed a tariff of up to 60 per cent on imports from China, where Signify has much of its production, if he is elected for a second time on November 5. "We have a ... plan A, we have a plan B, and we have a plan C, depending where the political decisions are going to go," Rondolat said.

Signify had been affected by the introduction of tariffs under Trump in 2017-18, with about 40 per cent of company sales in the Americas. Rondolat estimated tariffs continue to run at the rate of about 20-25 per cent 'throughout our business."

In response, the company looked at sourcing and producing in the US or Mexico but only did so for a limited part of its portfolio as Chinese production remained more efficient and cost-effective.

"Now things may change and we are preparing ourselves," he said. "We are very well positioned, and probably much better than when the tariffs increased the first time."

He estimated the company and broader industry would be able to respond to new tariffs in 6-9 months.

Signify's stock was up 9.4 per cent on Friday following the earnings, which showed margins recovering after a cost-cutting program, despite persistent economic weakness in Europe and China.