Yowie Group Ltd (ASX: YOW) is grappling with significant financial headwinds due to increased US tariffs on Chinese goods and the collapse of a funding proposal related to its Keybridge Capital Limited loan. The US government has sharply increased tariffs on Chinese goods entering the US to 145%, impacting Yowie’s cost base. While Yowie manufactures its US-distributed products domestically, it sources toys from China at an annual budgeted cost of US$2.5 million. The revised tariff rate is projected to increase Yowie’s costs by US$3.6 million (A$5.8 million) annually, bringing the total cost of toys to US$6.1 million per year.
Yowie currently holds approximately US$0.85 million in Chinese-made toy inventory in China or en route to the USA. This inventory will incur an unbudgeted incremental import cost of US$1.2 million (A$2.0 million) due to the increased tariff. This significantly impacts Yowie’s profitability forecasts.
In addition to the tariff challenges, Yowie faces uncertainty regarding its loan facility with Keybridge Capital Limited (in Administration). WAM Active Limited had proposed funding Keybridge to enable the payment of creditors, including Yowie. However, this funding proposal has not been approved by the WAM Active Limited board and is therefore unavailable. This leaves Yowie’s loan repayment uncertain, adding further financial strain. Yowie will continue to monitor the Keybridge situation and provide updates as they become available. These developments present significant challenges for Yowie as it navigates increased costs and financial uncertainty.
