Shares of Johnson Electric Holdings (00179) fell more than 4% during the morning trading session. At the time of writing, the stock was down 3.66% to HK$16.86, with a turnover of HK$46.68 million.

The decline follows the company's announcement of its first-quarter financial results for the period ending in June. Revenue for the quarter reached US$936 million, marking a 2% increase compared to the same period last year. The company noted that favorable foreign exchange rate movements contributed approximately US$14 million to the reported revenue growth.

Analysis from Deutsche Bank indicated that the quarterly results were largely in line with market expectations. However, the bank cited management commentary pointing to potential challenges for the company's gross margin in the fiscal years 2026 and 2027. These challenges are expected to stem from multiple factors, including rising freight costs due to ongoing geopolitical tensions, increasing costs for plastic resins, and a broad-based uptick in the prices of raw materials such as copper, silver, aluminum, steel, and electronic components. Additionally, global production of light vehicles is projected to decline by 3% year-on-year, adding further pressure.