Games Workshop gets tariff reprieve
Games Workshop pocketed a £7.8 refund from the US administration after the Supreme Court rules Donald Trump’s ‘liberation day’ tariffs to be illegal, the company has said in another positive trading update.
The Warhammer maker told investors it had initially paid US customs £12m to continue trading across the Atlantic, a considerable hit to the firm’s balance sheet. But it managed to reclaim £7.8m of those charges, after the US’s Supreme Court deemed them to be illegal, it said on Tuesday.
The group now expects to shoulder roughly £13m in tariff costs over the next full year to pay for the replacement import duties Donald Trump introduced following the ruling.
“I thought this would be drama free, how wrong I was” the company told investors in its full-year trading update, adding: “The continuous hard work on efficiency gains to improve our gross margin has continued. Unlike some companies, we do not consider tariffs as an exceptional item, but rather part of the uncertainty of operating globally.”
Despite the uncertainty over the United States’ trade policy – one of Games Workshop’s largest export markets – the FTSE 100 figurine maker posted another year double-digit sales and profit growth.
Revenue jumped by 11 per cent to £626.8m, in the 12 months to June, while profit at the Nottingham-headquartered group rose by more than 16 per cent. The firm pointed to steady growth in its core miniature and retail divisions. But it also suffered a hit in its smaller licencing arm, which shrunk by 37 per cent.
It declared a dividend of 485p, down from 520p per share the previous year.
“Games Workshop and the Warhammer hobby are in great shape,” said Kevin Rountree, boss of Games Workshop, who added that it was “exciting times” for the Warhammer maker.
The firm’s tariff bill provides an insight into the wranglings that British exporters have faced since Donald Trump’s reelection last year. British exporters were made to foot a 10 per cent tariff on almost all trade with the US, which despite its outsized hit to Games Workshop remained lower than some countries.
The Supreme Court deemed the first wave of blanket trade duties – which Trump used an arcane national emergency pretext to push through – illegal in a February ruling. And in a rare move, the judgment forced the US administration to issue refunds to companies that had footed large tariff bills.
But Trump has since reintroduced a fresh round of permanent tariffs on dozens of the US’s trading partners, including making the UK with a 10 per cent duty on all its exports to America.
Analysts at Peel Hunt said Games Workshop had “delivered a strong performance” against a tough comparative period. They reiterated their ‘buy’ rating for the group, which they said had an impressive year.
Shares fell 2.5 per cent at market open, which analysts attributed to its forecast for tariffs next year and its lower licencing revenue.
““It’s also worth noting the dip in licensing doesn’t look like a loss of interest in Games Workshop’s intellectual property,” said Duncan Ferris, analyst at Freetrade.
“There has been continued progress in its partnership with Amazon to create films and television set in the Warhammer universe. The attachment of director Mike Flanagan shows tangible progress, but it sounds like we could be waiting some time before tabletop action hits the big or small screen.”