HP Expects Profit Hit From Halt in Shipments to Russia
HP has suspended shipments to Russia “in compliance” with the Biden administration’s sanctions over the Ukraine invasion, CEO Enrique Lores said Feb. 28 on an earnings call about fiscal Q1 ended Jan. 31. “The difficult situation in Ukraine is the latest in a series of global challenges we have faced,” he said.
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The company has “an experienced cross-functional team in place” on the ground in Ukraine that’s “focused on business continuity,” Lores said. “The environment is very fluid and we are preparing for a range of scenarios.” The well-being of HP’s “people, their families and our customers and partners is our top concern,” he said. “We are doing everything we can to keep them safe.”
HP is doing its best to gauge the financial impact of the “unfolding situation in Ukraine, including the current sanctions on Russia,” Chief Financial Officer Marie Myers said. “We are factoring in our best assumptions at this time, recognizing that the situation remains fluid and highly uncertain.”
For fiscal Q2 ending late April, “we expect a negative impact to our top line and bottom line as a result of the sanctions that have been imposed,” Myers said. The company has “factored in” a profit hit of between 2 and 3 cents a share to its Q2 guidance, she said. Q2 revenue results will be “incrementally constrained by a volatile supply chain and logistics environment and also the dynamic macro environment, including the Russia situation, all negatively impacting our top line,” she said. “For the second half of 2022, the broad ramifications of the situation in Europe and beyond are uncertain, and we are monitoring this closely.”
HP continues to navigate “a complex environment of industrywide component shortages and logistical constraints,” Lores said. “Despite steady progress against our plans to strengthen our operational processes, it will take time before the gap between supply and demand fully dissipates. We are securing more parts for products, sourcing from alternate part suppliers and allocating available parts to optimize our product mix.”