Bell Equipment says sales down 30% due to the lockdown
The manufacturer and distributor of heavy equipment has reduced its planned production capacity and volumes due to the lockdown
Manufacturer and distributor of heavy equipment Bell Equipment has said sales for its 2020 financial year are down 30% due to the coronavirus lockdown that halted its operational activities.
The group, which released its full year results to December 2019 on Friday, was due to report in March but delayed reporting as a result of the coronavirus update. The JSE gave time concession to listed companies.
It expects a drop in sales volumes and profit if the lockdown persists. and there is still uncertainty around the world about what the full impact of the Covid-19 pandemic will be. The company also has a presence in the UK, Spain and Germany, among other countries.
SA’s lockdown, which came into effect at the end of March, forced the majority of its local sales outlets to close, including the Richards Bay factory, which ceased operating for five weeks, which affected inbound and outbound supply chains and production, the company said.
“This, together with various restrictions in other countries, has already resulted in lower sales and profit than expected in the month of April and, to a lesser extent, May 2020, particularly in the group’s SA operation, and this will negatively impact cash inflows in coming months,” it said.
Bell said it has responded to the outbreak by reducing its planned production capacity and volumes and expects a drop in sales and profit for 2020. The group identified a reduction in sales during the last quarter of 2019, which led to a significant cut in the company’s production plan. The company is currently selling from its existing inventory levels, it said.
“As a result of the outbreak, we have so far seen delays but no significant cancellation of customer orders at the date of this report,” it said.
While the impact on liquidity has been muted since the beginning of the lockdown, the group said its focus during theses uncertain times is on cost-cutting initiatives, cash generation and cash preservation, as well as managing working capital.
Capex has been significantly reduced and any non-essential expenditure has been halted
“The group is still carrying excess component and finished goods inventory and this will assist in maintaining production and sales operations in coming months, and the group intends drawing on this and liquidating excess inventory over the next 12 months.”
It said that the Richards Bay factory is operating at 60% of its 2019 production level and that exports of equipment to customers and kits from SA to its facility in Germany, where restrictions didn’t interrupt operations, have normalised.
Revenue grew 4% to R7.82bn. Profit for the year was down 78% to R60.9m.
The company’s directors also elected not to declare a dividend for the year.
Shortly before the JSE’s close on Friday, Bell’s shares were up 12.27% to R4.85.
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