Light & Wonder goes to Mexico to get around US taxes.

Light & Wonder goes to Mexico to get around US taxes.

 Light & Wonder wants to move some of its supply chain to Mexico so that it can take advantage of that country's trade deal and avoid the effects of US taxes.
 US company Light & Wonder, which makes machines and games, told analysts on Wednesday that it was thinking about moving part of its supply chain to Mexico to take advantage of that country's trade deal with the US. This is part of its plan to deal with US tariffs.

 CEO Matt Wilson said that the company was "dynamically reconfiguring" its supply chain to get around the rules that were already in place.  You know, one great example of that is bringing goods through Mexico.

 In February, President Donald Trump said he might put tariffs on goods going into the US.  After the first statement, the financial markets shook, and financial institutions warned that the measure could have an effect on inflation and make unemployment worse in the US.

 The introduction of tariffs was put on hold for 90 days in April. This left many businesses around the world in the dark and getting ready for the worst.

 As one of the biggest companies in the US that sells slot machines to casinos, Light & Wonder could be hit hard by taxes.

 Light & Wonder's installed base in North America grew by 9% year over year in Q1, reaching 34,501 units.  The number of units sold was 497 more than the previous quarter.

 The CEO says that the way taxes are now is the "worst case scenario."
 The company's CEO, Matt Wilson, said during the Q1 results call that the way things are now is the "worst case scenario."  He does think, though, that things will get better on the market as talks with more countries continue.

 Wilson said, "This industry has shown itself to be resilient many times over, but we are not immune to the effects that operators and end consumers may have if there is a long-term shift in policies that makes the macroeconomic environment weaker."

 Light & Wonder has many different product lines and business lines, so laws that change have a "varying degree" effect on the company.

 CFO Oliver Chow of Light & Wonder told investors, "Situation is, to say the least, dynamic. It changes by the day, the hour, or the tweet."

 The company has tried to lessen the effects of the taxes by making its operations and supply chain more efficient.  It has been bringing production back to the United States and starting to get some of its supplies from places like Mexico. This is because of a trade deal between the US, Mexico, and Canada that has temporarily stopped duties.

 "If you go back three or four weeks to when the policies first came out, it was pretty tough to get goods from Asia into the US," Chow said.

 Light and Wonder duty reduction
 Light & Wonder has moved goods ahead of schedule to avoid the effects of the tariffs. This way, the company has several quarters' worth of stock and supplies that have not been affected by the tariffs.  

 Similar to what Apple did when tariffs were first threatened, the company is said to have flown 600 tonnes of iPhones to the US to avoid the duties.

 A report by Light & Wonder said that the supply chain for gaming makers is somewhat standardised.  Wilson said, "The kinds of suppliers that give us the parts we need to make slot machines are a bit scarce."

 CFO Chow told investors that tariffs are putting a "burden" on the whole business.  In his speech, he said that sellers need to step up and pay for the higher tariffs.  He did say, though, that the group's experience with the COVID outbreak showed that some costs can be passed on to customers.

 Chow said that the economy did not reflect the success of the gaming sector. He also said that GGR was an important gauge to keep an eye on because it is the "fuel that drives the engine of the gaming ecosystem."

 "GGR is the number to watch for as a possible sign of change, either going up or down."  We have our eyes on it like hawks.

 "We're not going to do this without thinking, right?"  We want to make sure we're not taking too many steps and that we know how everything ends.

 Light & Wonder stops plans to go public on the ASX
 The operator has also put on hold plans to start a single or dual primary listing on the Australian Stock Exchange (ASX).

 The company said in February that it was working with Goldman Sachs and Jarden Australia to look into moving away from the NASDAQ market.  At 1pm GMT, Light and Wonder is worth $93.63 per share on the NASDAQ.

 But because of the present lack of stability in the world's financial markets, Light & Wonder told investors this week that it would be taking a more cautious approach to the ASX.

 "With everything else going on in the world, we know investors have a lot on their minds, whether it's the macro or tariffs or something else."  "So, yeah, in uncertain times, it might be best to slow down on this project for a while," CEO Wilson told investors.

 Wilson also said that Light & Wonder is "thoughtful" about how quickly it makes the move because the company thinks that the listing is the right thing to do from a strategic point of view.

 Group sales went up by 2% in Light & Wonder's first quarter.
 When it comes to the numbers, Light & Wonder said that their group sales went up 2% to £774 million in the first quarter.

 During that time, the group made $82 million in net income, which was the same as in Q1 2024.

 Gaming made $495 million in the three months that finished on March 31, which is 4% more than the same time last year.  The group made 4% more money from iGaming last year, to $77 million.