Brussels — Recticel generated first half 2020 sales which were down 18% on H1 2019 at EUR374.3m but business came back as the half progressed.
Adjusted EBITDA across the business fell 45% and hit EUR19m in the half. In the same period in the previous year the figure was EUR34.6m.
Chapelle: Business returned as half progressed
CEO Olivier Chapelle said that coronavirus had hit the company in the first half of the year, but things are getting better. 'After reaching a low point of -51.5% in April 2020 versus April 2019, the sales shortfall versus last year has improved to -35.4% in May and -9.3% in June. This recovery trend continues with July 2020 being -4.1% lower than July 2019.'
To cope with the fall in demand, Recticel, cut production; laid off workers temporarily; and, strictly controlled spending and capital expenditure.
'As a consequence, the cash consumption of our continued operations and the negative impact on Adjusted EBITDA have been reduced to the maximum extent possible,' he said.
Chapelle finished his comments on a high note following recent M&A activity. He said: 'the Group ended the second quarter with a net positive cash position of EUR11.4m and ample financial headroom to focus and engage in the execution of its growth strategy in its higher value-added business segments.'
Looking at key divisions at the company. The Flexible Foams business sales dropped by 22% between the first half of 2019 and 2020 and reached EUR147.1m. Recticel said that there was a rebound in demand for comfort foams in June. However, technical foams remained more subdued, mainly due to the slower restart of automotive and industrial customers.
At the same time, adjusted EBITDA in the division declined by 45% and was EUR10.3m. This is because fixed costs in the business were could not be fully offset by cost savings in the period.
In the insulation business sales shrank by 22.3% between the 2019 and 2020 halves. Coronavirus lockdown's hit the business between March and May. But pent-up demand from the building sector took May demand this year above that in 2019. But lower raw materials prices depressed the prices that Recticel could get for its products.
This fed through to Adjusted EBITDA which shrank by 33.9%. It was EUR11.3m compared with EUR17.1m in the period last year. Lower volumes and a 'competitive pricing environment' contributed to the decline in profitability. Recticel's new plant in Mantsala, Finland is gradually ramping up to full production, the company said.
Looking ahead to the rest of the year Recticel confirmed its earlier guidance. The company said that if coronavirus remains under control, the second half of 2020 should compare with the second half of 2019.
