Limited negative effects for Kongsberg Automotive related to imposed and potential new tariffs

05 Feb 2025 07:47 CET

Kongsberg, February 5, 2025: Kongsberg Automotive (KA) sees limited negative
effects from imposed tariffs on imports from China. KA will seek full
compensation for increased customs tariffs from its customers to recover any
additional costs imposed by these tariffs, similar to what others in the
industry will do. The impact of new tariffs will be limited also with less than
full customer compensation.
President of the United States (US) Donald Trump signed executive orders on Feb
1, 2025, to implement 25% tariffs on Mexican and Canadian goods, while imposing
a 10% duty on Chinese goods. On February 3, 2025, President Trump agreed to hold
off imposing tariffs on Mexico and Canada for 30 days, while the plan to levy
tariffs on China came into effect on February 4, 2025.

"It is important to note that it is not a challenge that KA is facing alone, it
is a global vehicle and automotive industry challenge. KA has the ambition to
fully recover any additional cost related to the imposed tariffs-passing the
cost on to our customers ultimately means that the vehicles will be more
expensive. We see a risk that higher vehicle prices will lower the overall
market demand, which then would impact negatively on KA's orderbooks," says KA's
interim President & CEO and CFO Christian Johansson.
KA has two manufacturing plants in Mexico: In Ramos Arizpe for the Flow Control
Systems product range and in Nuevo Laredo, for the Drive Control Systems and
Driveline product range. KA's customers are primarily commercial vehicle and
passenger car manufacturers, or Tier 1 suppliers to the automotive industry.
Products are shipped to customer production sites in the US and in Mexico. KA
has three manufacturing sites in the US, selling primarily to US-based
customers. In Canada, KA has a smaller manufacturing plant supplying to
primarily a local Canadian customer.
Based on the information available to date, all material and components sourced
by KA from China to KA's US plants are subject to increased tariffs. In
addition, materials delivered to KA plants in the US by US suppliers having sub
-supplies from China are on that portion subject to increased customs tariffs.
The customs tariffs increase is estimated to be approximately MEUR 2 for the
full year 2025, based on present purchasing volumes.
Potential tariffs for exports from Mexico to the US will have to be assessed
when the regulations for how this will be implemented will be fully known and if
these tariffs will be imposed. Based on present information, the company's
assessment is that the negative effect would be fairly limited since the
material and components under temporary import to Mexico from the US are
exempted.
KA is continuously preparing to be able to act quickly if increased tariffs on
Mexican and Canadian goods take effect after the 30-day postponement.

KA believes in the importance of local presence in North America and continues
to have ambitions to increase sourcing locally in the region. As a company, KA
is continuously considering its supplier base footprint based on total landed
cost. Tariffs are one important existing parameter in the sourcing process
today. With the new tariffs in place and preliminary future changes, the
supplier sourcing strategy will be adapted where necessary going forward.


Media and Communications contact:
Therese Sjöborg Skurdal - Director Group Marketing and Communications
therese.skurdal@ka-group.com
+47 982 14 059

Investor Relations contact:
investor.relations@ka-group.com

About Kongsberg Automotive ASA
Kongsberg Automotive provides cutting-edge technology to the global vehicle
industry. We drive the global transition to sustainable mobility by putting
engineering, sustainability, and innovation into practice. Our product portfolio
includes driver and motion control systems, fluid assemblies, and industrial
driver interface products. Find more information at:
https://www.kongsbergautomotive.com

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