Gestamp has posted a first half net income loss of EUR120m (US$142m), while the Spanish supplier adds activity levels at practically all its plants "plummeted" during the second quarter.
"Specifically, Q2, 2020 has been the toughest period for the automotive sector as well as the global economy in the last 75 years with a drop in global light vehicles production volumes of -45%," noted a Gestamp statement.
"During Q2, 2020 and despite the decline in activity, Gestamp's revenues amounted to EUR1.034bn and EBITDA [of] EUR23m."
The supplier said in line with market analysts, activity levels are expected to improve in H2 as it is already experiencing during July in its plants. Nevertheless, Gestamp will maintain flexibility of its operational costs throughout the year to mitigate the drop in activity.
Gestamp's Transformation Plan:
The Transformation plan aims to increase the Group's efficiency by absorbing the drop in sales and improving EBITDA margin significantly by 2022, with an estimated cost of EUR103m, of which EUR90m is cash and EUR13m non-cash impact.
Among other actions, the plan includes labour force adjustment in Western Europe and America to adapt to lower volumes with rationalisation and consolidation of the UK's footprint, with announced plant closures and labour expenses reduction in Germany. Tooling capacity is to be reduced given the market outlook and the corporate headquarters cost structure will be slimmed down.
"We reacted to the decline in revenues and were able to prove our flexibility and resilience," said Gestamp executive chairman, Francisco Riberas.
"Gestamp has consistently maintained a high growth sales trend accompanying a growing auto market. The current scenario is different, and we need to adapt our cost structure and consolidate our operations after a high investment and growth period. We are a long term player.
"Gestamp has maintained its continuous communication with all clients throughout the pandemic and will preserve this strategic relationship, which remains intact as we have received important new nominations during this time.
"We will keep focusing on continuing our efforts to offer solutions for the growing electric vehicle market and other CASE trends."