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By the numbers
Q1 revenue: $5.74 billion
Roughly 1% decrease year over year
Q1 net earnings: $954 million
12% decrease year over year
Danaher has joined the chorus of companies predicting hundreds of millions of tariff costs in 2025. Yet, the company, which made the forecast in its first-quarter earnings Tuesday, expects to largely offset the impact on operating profits through actions including changes to its manufacturing footprint.
The company, which sells diagnostics through subsidiaries such as Cepheid, predicted the tariff impact in its first-quarter financial filing. Abbott and Johnson & Johnson made similar predictions last week.
Danaher CEO Rainer Blair made a more specific forecast on an accompanying earnings call, telling analysts he expects the impact to be “something like $350 million.” The company is well positioned to “largely offset” the tariffs, the CEO said, by taking a range of actions.
“We've been executing to regionalize our manufacturing network of over 100 plants for several years now, which allows us to rebalance these trade flows over time. Think China for China,” Blair said. “We have a combination of both short-term and long-term countermeasures such as surcharges, supply chain management, again, cost actions, but also relocating manufacturing.”
Danaher forecast earnings per share above the expectations of RBC Capital Markets analysts despite the tariffs. The company based its prediction on the tariffs that were enacted and in effect as of April. Blair said “we don't think that the current state of where we sit today is where things ultimately end up.”
Tariffs on U.S. trade with China and Europe are the main drivers of Danaher’s costs. CFO Matt McGrew told analysts on the call that China and Europe each account for around half of the anticipated tariff impact. If the trade war escalates, for example because paused tariffs on Europe are reenacted, Danaher may step up its response to mitigate the effects.
“We can be much more aggressive if we need to be. We've got all those levers to pull,” McGrew said. “I would say everything is on the table here in that situation, if that's what we get to. I think we'd be looking at more significant surcharges. I think we'd be going after costs even harder, and we'd probably be looking at our manufacturing footprint even harder.”