Day: 23 April 2020

Gestamp, the Spanish-headquartered supplier of components to the global automotive sector, has cancelled its original 2020 guidance given the current uncertain situation due to the Covid-19 outbreak. The company is “… drastically” reducing its planned investments in 2020 while preserving projects that have been committed with customers, says Gestamp during its latest market presentation on 21 April monitored by Kallanish.

“As a result of the current situation, the group’s plants, with exception in China, saw gradual shutdowns during the second half of March beginning from Europe, and extending to North and South America. Some of our operations are restarting and we expect a gradual re-opening of most of our facilities during the coming weeks,” Gestamp says.

In China, Gestamp`s 11 production plants and two R&D centres are operating and returning to normal. “The implementation of operational efficiencies and labour flexibility measures have allowed the company to have a satisfactory first-quarter performance. We expect to improve our results throughout the rest of the year. Activity levels in some of our plants in April are already in line with foreseen targets,” Gestamp adds.

The company has implemented a contingency plan to adapt to the current market environment by managing liquidity and cost efficiencies in order to protect its cash generation over the coming months.

“During the first quarter, Gestamp`s liquidity position amounted to €2.0 billion ($2.17 billion). Actions currently being taken include extension of credit lines, an increase in existing financing facilities and new long-term loans,” the company continues.

Gestamp is in ongoing discussions with financial institutions in the different countries in which operates to secure additional funding through support programs related to Covid-19.

The group will publish its Q1 results at market close on 18 May.

The European trade commissioner Phil Hogan this week opened the door to a possible review of the EC steel safeguard measures in a more restrictive way.

Hogan said in a video meeting with the European Parliament that there is growing concern that third countries could flood Europe with steel imports, to gain share in an already shrinking steel market.  As planned the new quotas will become available at the beginning of July, but a review is ongoing and should be finished before the new quotas are available. He added the review needs to ensure that the measures are still effective. He also aknowledged the ongoing contacts he has with stakeholders concerned about the possibility of imports disrupting the steel sector at a time when demand is falling due to the Covid-19 emergency.

Since the beginning of April, a number of groups have supported the original request made by Eurofer to cut the safeguard quotas available from July by -75%. This would be in order to align them to falling steel demand in Europe. This week the European trade unions IndustriALL sent a letter to Hogan (see Kallanish 21 April) and support was also confirmed by a wide group or members of the European Parliament earlier last week.