HP Inc. Targets $2 Billion Savings Amid Tariff Pressures

Published 1 days agoHPQ

HP Inc. Targets $2 Billion Savings Amid Tariff Pressures

HP Inc. has set a strategic goal to save $2 billion by the end of fiscal year 2025, primarily as a response to the challenges posed by U.S. tariffs impacting its supply chain. As part of this initiative, HP has lowered its fiscal 2025 adjusted earnings per share (EPS) forecast to a range of $3.00 to $3.30. This is a reduction from the previous estimate of $3.45 to $3.75, driven by expected slowdowns in the PC market and continued economic volatility globally. Reuters reported that these shifts are mainly due to inflationary pressures linked to these tariffs.

Among the cost-cutting strategies, HP has announced plans for up to 2,000 layoffs, which aim to save approximately $300 million annually. This is a component of their "Future Ready" restructuring program, which now targets $1.9 billion in savings by fiscal year 2025. Additionally, HP is focusing on diversifying its supply chain away from China, with the expectation that over 90% of its products sold in North America will be manufactured elsewhere by the end of the designated year, according to CRN.

In the financial results for the second quarter ending April 30, HP reported revenue of $13.22 billion, slightly exceeding estimates, yet earnings per share fell short of expectations at 71 cents compared to the expected 80 cents. The Personal Systems segment, which includes PCs, has faced elevated costs due to tariff-related expenses. Despite efforts to move production to countries like Vietnam, Thailand, India, Mexico, and the U.S., the second-quarter results did not meet targets, illustrating the ongoing impact of external economic challenges.

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