HP Reports Net Profit Decline, Revises Annual Forecasts Amid Tariffs
HP experiences a 33% revenue decrease in the second fiscal quarter, trimming expectations for tariff impacts
American tech giant HP Inc. has reported a net profit of $406 million for the second quarter of its 2025 fiscal year, reflecting a 33% drop compared to the same period last year. The company attributed the decline to the impact of tariffs, prompting it to revise its annual forecasts.
The company's total turnover for the quarter reached $13.220 billion, marking a 3.3% year-on-year increase. Product sales grew by 3.1% to $12.423 billion, while service revenues decreased by 1.5%. Over the first half of the fiscal year, HP's net profit decreased by 21%, with a total turnover of $26.724 billion, reflecting a 2.8% increase.
Enrique Lores, president and CEO of HP, highlighted the company's solid revenue growth, driven by strong commercial performance in Personal Systems and the continued momentum of its future-of-work strategy. However, he acknowledged the quarter's results were affected by a challenging regulatory environment.
Changes in trade policies and additional tariffs had an approximate impact of $0.12 per share on earnings, according to Lores. To offset cost pressure, HP implemented price increases, a decision the CEO defended as essential for maintaining financial discipline.
In light of growing macroeconomic uncertainty, HP's chief financial officer, Karen Parkhill, announced an adjustment to the company's outlook. This reflects moderate demand and the net impact of trade-related costs. HP is implementing specific mitigation strategies to address these challenges, with the goal of fully offsetting these costs by the fourth quarter.
For the full fiscal year, HP expects a diluted net earnings per share of between $2.32 and $2.62, and generating free cash flow of between $2.600 million and $3.000 million ($2.299 million and $2.653 million euros).
HP's stock price experienced a significant dip at the Wall Street opening on Thursday, falling as much as 13.5%, although it later reduced the decline to less than 7% as the session progressed.
While not directly related to the company's current challenges, it's worth noting Enrique Lores is a Spanish business executive leading HP, and the company's focus on diversifying its offerings through strategic acquisitions, such as AI capabilities from Humane Inc. This could potentially help in offsetting some of the costs and improving competitiveness.
This news comes as HP navigates a difficult fiscal year, with tariffs and macroeconomic uncertainties presenting significant barriers to profit growth. The company's ability to implement mitigation strategies and offset costs will be key to its performance in the coming quarters.
The decline in HP's net profit is partly due to the impact of tariffs, a factor affecting its business operations and financial performance in the technology sector. In response, HP implemented price increases to maintain financial discipline and offset cost pressure.
Given the company's revised annual forecasts and moderate demand, HP's focus on strategic acquisitions, such as AI capabilities from Humane Inc., could potentially help in mitigating costs and enhancing competitiveness.
