Ram Krishnan on tariff mitigation
From Emerson Electric Co ($EMR) Q2 2025 Earnings Call · · Castify Earnings Call
“We have a gross exposure of $245 million in 2025, which we expect to fully mitigate. We are mitigating these impacts through targeted search charges and pricing actions, production reconfiguration using our global manufacturing footprint, and additional supply chain regionalization initiatives. In 2025, we're targeting $190 million of incremental price and search charges in the fiscal year with another $55 million of operational mitigation benefits from inventory on hand and supply chain actions. These mitigation actions will completely offset the tariff headwinds in the fiscal year with carryover benefit to completely cover the full annualized impact we will encounter in 2026 under these assumptions.”
On , Ram Krishnan, Executive VP & COO at Emerson Electric Co, spoke about tariff mitigation during Emerson Electric Co ($EMR) Q2 2025 Earnings Call on Castify Earnings Call.
About Ram Krishnan
Ram Krishnan, Executive Vice President and Chief Operating Officer of Emerson Electric, participated in the company’s fiscal 2025 first, second, and third quarter earnings calls. During these calls, Krishnan and other executives discussed the company’s financial performance and strategic initiatives. Krishnan stated that Emerson had a gross tariff exposure of $245 million in fiscal 2025, which the company expected to fully mitigate through price and surcharge actions, production reconfiguration, and supply chain regionalization. By the third quarter, Krishnan noted that the annualized gross incremental tariff impact had decreased to approximately $210 million from a prior estimate of $455 million, and the company implemented $115 million in price actions for the fiscal year. He also said that the company retained its safety and productivity business after a strategic review, citing demand drivers such as reshoring and domestic manufacturing. Krishnan reported that discrete orders were expected to turn slightly positive in the second quarter with a more meaningful ramp in the second half of the fiscal year. He described the strategic project funnel as $11.4 billion in size, with $375 million in awards during the second quarter, broad-based across LNG, power, life sciences, and sustainability. Krishnan added that the company increased its expectations for operating leverage for the year to the 70s from the mid-40s. He also noted that the dynamic tariff environment persisted and that the company’s exposure was less than expected in the third quarter, leading to a decision to ease the scope of surcharge actions, which meaningfully impacted third-quarter sales growth.