Nilfisk announces Q1 results

Nilfisk announces first quarter results, impact of COVID-19 outbreak.

Nilfisk has announced its results for the first quarter ended March 31, 2020.

The professional cleaning equipment supplier said its first quarter performance was in line with expectations up until mid-March. During the latter part of March, however, the COVID-19 outbreak had a significant negative impact on demand across most markets, which negatively impacted revenue.

In the branded professional business, revenue amounted to 185.8 mEUR in Q1 2020, corresponding to organic growth of -10.4 per cent, significantly impacted by the COVID-19 outbreak in the latter part of March. EMEA delivered -6.8 per cent organic growth largely impacted by low demand in the South European region.

Americas posted -12.3 per cent organic growth particularly due to a decline in demand in the US also negatively impacted by low demand in late March. In APAC, low activity in China in particular led to ‑25.0 per cent organic growth

Other APAC markets also experienced negative impact from the COVID-19 outbreak, but mostly towards the end of Q1 2020 with variations from market to market.

The consumer business performed above expectations during the quarter and posted organic growth of -0.7 per cent, whereas private label performed as expected with organic growth of -21.8 per cent.

For the business in total, revenue in Q1 2020 amounted to 219.1 mEUR compared to 246.6 mEUR in Q1 2019, leading to organic growth of -10.3 per cent.

The gross margin was 42.8 per cent in Q1 2020 compared to 42.9 per cent in Q1 2019, positively impacted by mix effects following the exit of the consumer business in the Pacific region in 2019 and lower raw material prices, which off-set the negative impact from US imposed tariffs and lower capacity utilisation.

In April, the first month of Q2 2020, an organic revenue drop of more than 30 per cent was recorded.

To mitigate the negative impact of the COVID-19 outbreak, Nilfisk has implemented several measures to scale down production capacity and has taken a number of actions to reduce variable cost and capital expenditures.

Nilfisk is preparing a restructuring plan to adjust and structurally lower its cost base. Measures are intended to include a reduction in the workforce by an estimated 250 full-time positions globally, across functions and regions. The first reductions will be implemented in Q2 2020.

Commenting on the results, Hans Henrik Lund, CEO of Nilfisk, said: “As the COVID-19 outbreak escalated throughout the quarter, we implemented extensive safety measures across our business to protect our employees and continue servicing our customers.

“As a result, we have been able to continue our production, distribution and service activities throughout the crisis with little to no interruptions. Up until mid-March our financial performance was in line with expectations, despite lower-than-usual activity in China.

“Beginning in mid-March, we saw a steep decline in customer demand across most markets as restrictions in response to COVID-19 forced many customers to scale down or temporarily close their operations, except for vital institutions and businesses, consequently impacting our results.

“To sustain our position as a leading player in the industry and prepare for the post-COVID-19 market, where we see a strong potential in cleaning solutions, we will adapt our cost base which regretfully includes adjusting our workforce to the new situation.”

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