NEW YORK – Illumina said Monday after the close of the market that it is implementing cost cuts of approximately $100 million in fiscal year 2025 in response to China's recent ban on the import of the company's sequencers.
According to Illumina, the cost-reduction program, which involves "optimizing stock-based compensation and non-labor spending and accelerating certain productivity measures," is designed to "mitigate the impact of a range of potential scenarios for a reduction in revenue and related operating income" from the company's business in greater China.
Illumina now expects fiscal 2025 adjusted EPS of approximately $4.50 from its core business. This is on the lower end of the $4.50 to $4.65 EPS guidance the company announced in February, before the China import ban.
"Our new fiscal 2025 guidance provides for limited further earnings contribution from China and assumes a continuation of the macro trends we see today," Illumina CFO Ankur Dhingra said in a statement. "We will continue to invest in our growth strategy, while taking actions to achieve EPS of approximately $4.50 in 2025, and then grow from there."
"While China has been a material uncertainty and revenue impact details are thin, a very modest cut in EPS reflecting China drag should be viewed positively," TD Cowen analyst Dan Brennan noted in a report.
In response to the Chinese Ministry of Commerce's sanctions — announced last week, moments after the Trump administration initiated tariffs on all Chinese exports to the US — Illumina said the company "continues to serve its clinical and research customers."
"We remain focused on achieving high-single-digit revenue growth by 2027, while expanding our margins," Illumina CEO Jacob Thaysen said in a statement. "We are confident in the large global market opportunity for our solutions, the strength of our business, and our strategy to continue to lead innovation in genomics and multiomics in support of our customers."