Manitou releases 2020 half-year results
The Board of Directors of Manitou have closed the accounts for the first half of 2020. Taking into account the COVID-19 crisis and its economic consequences, the outlook for 2020 is for an annual turnover of around €1.5 billion.
Michel Denis, Chief Executive Officer, said, "The first half of 2020 was highlighted by the sudden COVID-19 crisis that has been disrupting our markets since mid-March, resulting in a 35% drop in our sales compared to a record first half of 2019. As soon as the health crisis emerged, we reacted very quickly to implement health and operational measures to protect our employees and continue to meet the urgent needs of our customers. A crisis management steering committee was immediately activated to define the direction and priority actions to be implemented. We established constant communication with our teams, stakeholders and Board of Directors. The agility and reactivity of our employees enabled us to maintain support to our customers and users throughout the period, particularly in terms of spare parts and technical assistance.
On the industrial side, we were able, from mid-April, to gradually restart the French and Italian plants' production lines by introducing strict health and safety procedures. Significant production re-planning work has been carried out with our customers and suppliers in order to be able to deliver the most urgent orders. This was particularly the case for those in the agricultural sector or in remote geographical areas whose seasonality required shipment before the summer shutdown. All of these measures helped us to get through this very difficult period in the best possible way and we have now returned to a market order adjusted to the current volumes of activity in our markets."
On the financial level, Manitou has deployed measures from the beginning of the crisis to reduce all expenses and investments, implemented measures to reduce working hours and certain government aid in order to protect the group's cash flow and sustainability as much as possible. These measures were reinforced by the Board of Directors' decision not to proceed with the payment of the €30m dividend that had been announced a few weeks before the health crisis erupted. The group ended the half-year with a current operating profit of 3.9% of sales.
After suffering an air pocket from mid-March to mid-May, the recovery was encouraging in June. The agricultural market remains the most buoyant, while the industrial and construction sectors recorded more significant decreases, particularly among rental companies, whose business outlook for the remaining part of 2020 and 2021 is still gloomy.
On the strength of the upturn at the end of the quarter, the group ended the first half of the year with an order book of €555m, which enables Manitou to estimate a sales outlook for 2020 that is around 30% lower than in 2019 and, in the absence of any further deterioration in the global economic context, a current operating profit in the range of 2.7% to 3.2%.
The Material Handling & Access Division achieved sales of €496.5m, down 40.2% over 6 months compared to an exceptional basis in 2019. The MHA division was strongly impacted by the COVID-19 pandemic. Its sales declined in all geographical areas, particularly in Northern Europe and APAM, in all its markets (construction, agriculture, industries).
The division's margin on cost of sales amounted to €60.9m, down 50.9% compared with the 1st half of 2019. It was impacted by the decline in activity and a 2.7 points deterioration in the margin rate following the production shutdown and the implementation of health measures when business recovered. The shutdown of production sites and the deployment of partial activity measures enabled the group to reduce indirect costs by €10.3m and limit the impact of the decline in activity.
The Compact Equipment Products Division recorded sales of €123.2m, down 30.9% over 6 months (-32.1% at constant exchange rates and scope). The division was impacted by the COVID-19 pandemic, particularly in the US and APAM zones and Telehandlers products. The margin on cost of sales reached €7.4 million, divided by 3 compared to the first half of 2019. This decline is explained by the impact of this crisis on the activity and the 7.7 points drop in the margin rate. It was penalized by an unfavorable product mix, sales efforts and higher fixed production costs.
With revenue of €141.9m, the Services & Solutions Division (S&S) recorded a decline of 8.6% over 6 months (-10.7% at constant exchange rates and scope), impacted by the COVID-19 pandemic. Business declined in all geographical areas, particularly in the APAM zone, as well as in all of its markets, with the exception of services and rental activities, which are more resilient in the current crisis period.
This decrease led to a €1.9m reduction in the margin on cost of sales compared with the 1st half of 2019, to €42.1 m. The impact of the decline in business was limited by a 1.3 point increase in the margin on cost of sales. This improvement is the consequence of the change in the product mix.
Administrative, commercial, marketing and service expenses were reduced by 14.8% (€4.4m) following the implementation of savings measures and partial activity.