Gestamp foresees challenging 2020, adopts transformation plan

Spain’s Gestamp saw revenue fall year-on-year in the second quarter and first half of 2020 as a result of the Covid-19 crisis, the company says in its quarterly report monitored by Kallanish. Gestamp is a major supplier of components to the global automotive sector.

“The company has experienced two challenging months during Q2, April and May, due to the shock in production in most of the continents due to the coronavirus pandemic,” Gestamp says. “Activity levels plummeted during the period at practically all our plants.”

According to market analysts, Q2 was the toughest period experienced by the automotive sector and the global economy in the last 75 years, with global light vehicles production plummeting -45% on-year. The automotive industry is not seen recovering 2019 production levels until 2024, although activity is expected to improve in H2.

As a result of the current market situation, Gestamp has implemented a transformation plan. “We reacted to the decline in revenue in the current scenario and adapted our cost structure and consolidated our operations after a high investment and growth period,” says Gestamp chief executive officer Francisco Riberas. “Gestamp’s strategic relationship with customers will remain intact and the company will keep focusing to offer solutions for the growing electric vehicle market.”

The group’s plan includes a workforce adjustment in Western Europe and America to adapt to lower production volumes. It also plans a “…rationalisation” and “…consolidation” of its UK footprint, as well as plant closure and labour expenses reduction in Germany.

Gestamp’s total net revenue amounted to €1.03 billion ($1.23 billion) in Q2, -55.9% lower on-year. Body-in-white and chassis revenue accounted for €797.5 million. Q2 operating loss was €233m versus €134.9m profit a year earlier.

H1 sales fell -32.5% over January-June 2019 to €4.51 billion, as Gestamp saw reduced performance in all regions and markets.