To avoid US tariffs, Light & Wonder goes to Mexico.

Light & Wonder hopes to use its trade deal to its advantage and sidestep US tariffs by shifting some of its supply chain operations to Mexico.
As part of its strategy to reduce the impact of US tariffs, US machine and games supplier Light & Wonder RouletteX informed analysts on Wednesday that it was thinking about moving some of its supply chain operations to Mexico. This would allow the company to take advantage of its trade deal with the US.

"We are dynamically reconfiguring [our] supply chain to circumvent the policies that are in place," CEO Matt Wilson stated. Shipping goods via Mexico is a prime illustration of that.

Tariffs on foreign goods entering the United States were a threat made by President Trump in February. As soon as the announcement was made, financial markets began to react negatively. Financial institutions were quick to warn that the policy could have an effect on inflation and increase US unemployment.

Many companies around the world are still trying to figure out what's going to happen now that tariffs have been delayed for 90 days, which happened in April.

A major US supplier of gaming machines to casinos, Light & Wonder stands to lose a lot if tariffs are imposed.

With an increase of 34,501 units, Light & Wonder's North American installed base increased by 9% year-over-year in Q1. There was a 497-unit rise from the previous quarter.

'Worst case scenario,' according to CEO on tariff issue
Present circumstances constitute what CEO Matt Wilson deems the "worst case scenario," as stated during the company's Q1 earnings call. The market climate, nevertheless, will improve, in his opinion, as talks with different countries progress.

"This industry has shown to be resilient time and time again, but we are not safe from operators' and consumers' ripple effects in the event of a long-term policy shift that creates a weaker macroeconomic climate," Wilson said.

Because of the breadth and depth of Light & Wonder's operations, the company is subject to "varying degrees" of policy change.

"The situation is very dynamic and can change at any moment," Light & Wonder's CFO Oliver Chow informed investors.

The business has been working to reduce the effect of the tariffs by making its supply chain and operations more efficient. As part of a trade agreement between the US, Mexico, and Canada, which has temporarily halted tariffs, it has been sourcing part of its supply chain in regions like Mexico and has been onshoring production.

It was a little bit scorched earth getting stuff into the US from the Asian supply base when the policies initially came out, if you rewind back three or four weeks, Chow remarked.

The alleviation of tariffs for Light & Wonder
Keeping one step ahead of the tariff's potential impact, Light & Wonder has moved inventory forward by several quarters, ensuring that the company's stock and supply will remain unaffected.

Apple allegedly transported 600 metric tonnes of iPhones to the United States at the outset of the tariff threat in an effort to evade the impending levies.

According to Light & Wonder, there is some standardisation in the gaming industry's supply chain. The number of vendors providing the components needed to construct slot machines is relatively small, according to Wilson.

Investors were informed by Chow, the CFO, that tariffs impose a "burden" on the entire business. As he pointed out, suppliers are the ones who will have to pay the higher tariffs. Nevertheless, he emphasised that the group's COVID-19 experience demonstrated that expenses might be, to a certain extent, passed on to customers.

Chow stated that GGR is an important indicator to track since it is the "fuel that drives the engine of the gaming ecosystem" and that the economy did not reflect the gaming sector's performance.

Whether you're looking for an upside or downside catalyst, [GGR] is the number to watch. We are closely monitoring the situation.

It's safe to say that we won't hesitate on this. So that we don't come across as dramatic, we need to figure out how this all works.

Plans for Light & Wonder to list on the ASX deferred
The operator has also put a hold on any intentions to begin a primary listing on the ASX, either as a solo trader or with a second listing.

The business said in February that it was talking to advisors Jarden Australia and Goldman Sachs about potentially delisting from the NASDAQ. Light and Wonder shares were trading at $93.63 on the NASDAQ at 1pm GMT.

In light of the present worldwide instability in financial markets, Light & Wonder informed investors this week that it will be taking its time and giving the ASX more thought.

Considering everything else going on in the world, we are aware that investors have a lot on their minds, be it the macro or tariffs or anything else. In an effort to ease investors' minds during this period of uncertainty, CEO Wilson advised them to "probably take the foot off the accelerator" with this endeavour.

L&W is being "thoughtful" about the speed with which it implements the move, according to Wilson, but the company thinks the listing is the correct strategic step.

Light & Wonder Q1 figures show a 2% increase in group revenue.
Light & Wonder's group revenue increased 2% to £774 million in the first quarter, according to the company's figures.

Compared to Q1 2024, the group's net income for the period remained constant at $82 million.

The gambling industry brought in $495 million for the quarter ending March 31, a 4% increase from the previous year. The group's iGaming revenue reached $77 million, an increase of 4% compared to the previous year.