Johnson Electric (0179.HK): 1H FY26/27 Profit Warning Misses on Adverse FX Swing and Gross Margin Pressure

Johnson Electric's profit warning guides 1H FY26/27 reported net profit to decline 56–62% YoY (or US$75–83 million) to US$50–58 million, versus US$133 million in 1H FY25/26. The key downside surprise was an adverse US$49–55 million YoY FX swing, as the company benefited from substantial FX gains in 1H FY25/26 but recorded no comparable benefit in 1H FY26/27. The implied remaining decline (US$26–28 million) was mainly attributable to gross margin pressure from: (a) pricing actions in response to competitive market conditions in the China auto market; (b) provisions for customer credits and claims under negotiation; (c) elevated raw-material and other input costs, particularly for copper, silver, aluminium, steel and electronic components;