HALF-YEAR REPORT 2020
The first half of 2020 was marked by a global crisis caused by the COVID-19 virus. Having already been operating in a difficult market environment in 2019, Feintool’s challenges increased significantly this year. As a result, Feintool’s net sales slumped by over one-third in the first half of 2020. Feintool is minimizing the economic impact of the pandemic by implementing a wide range of measures such as postponing capital expenditures, short-time work schedules and staffing reductions, and strengthening the company’s liquidity. Due to the considerable uncertainties that remain in place regarding the extent of the pandemic and given the high volatility of demand, it is not currently possible to conclusively predict the overall impact on sales and earnings for the full year 2020. From today’s perspective, Feintool expects slightly higher sales in the second half of the year and significantly improved profitability thanks to the cost-cutting actions the company has implemented.
A year shaped by the coronavirus
2020 has been a year of crisis, including at Feintool. The spread of the COVID-19 virus triggered a sharp drop in sales throughout the automotive industry. According to an IHS study from May 2020, the global automotive market will contract by around 27 percent this year compared to 2018. This study mirrors developments both in Feintool’s capital goods segment – Fineblanking Technology – with its range of presses, and System Parts, its parts production segment. In general, we believe that the worst of the COVID-19 crisis is over and that the markets are gradually recovering. At this point, however, it appears highly improbable that the market will recover to precrisis levels in the near term. This, in turn, means that we will have to prepare ourselves for a lower level of sales.
These developments are having a corresponding impact on Feintool’s planning and staffing levels. In this context, the company is implementing different measures depending on the region and country. In Europe, all of the plants and departments have been on short-time work schedules since April. In the United States, a large part of the workforce was furloughed in the spring in accordance with the labor market regulations in effect there. As the company is now seeing signs that the order situation is recovering, a large portion of the workforce has been called back in to work. In China, the number of employees is actually going to increase due to the launch of new products. The situation in Japan is stagnating, resulting in a slight reduction in the number of employees.
In addition to HR policy, various measures were taken to further cut costs. For example, selected capital expenditures were stopped or postponed to a later date. Available production capacities were used to insource manufacturing processes. In some cases, Feintool optimized payment terms with suppliers. The company also optimized its inventories of raw materials and products, which helped improve liquidity. Cost management has led to significant savings at all plants without jeopardizing the company’s ability to ship its products. In general, however, the same thing applies in this regard as well: Feintool is facing different conditions and market trends in the various regions, and has introduced different measures accordingly.
Looking toward the future with optimism
Despite the current uncertainties surrounding COVID-19 and the crisis in the automotive market, Feintool is optimistic about the future. In recent months, Feintool has particularly stepped up its activities in the electric mobility market through its electrolamination stamping business in Germany and China. This puts us in an excellent position to benefit from the predicted growth in electric mobility in the coming years. In the field of hybrid engines, incoming orders are clearly increasing and should continue to rise throughout the second half of the year. Feintool expects to achieve significant growth in this area as well over the medium to long term. We are also encouraged by the fact that we can supply new parts for the automotive industry, have acquired new customers not only in Japan but also in China, Europe, and the United States, and that we will soon be launching new products in the fields of fineblanking and forming.
In general, we will continue to consolidate our position in the European, US, and Asian markets on a lasting basis as part of our long-term strategy. In addition, other cutting-edge projects also remain in development. Innovation is a top priority for Feintool, even in these difficult times. For example, we believe bipolar plates for fuel-cell production hold tremendous potential, and we have successfully manufactured and shipped our first preproduction batch.
First sustainability report
Feintool published its first sustainability report for the year 2019. The report transparently communicates the company’s long-standing achievements in the areas of economics, environment, and social affairs, and makes it possible to compare them with other organizations around the globe. The company’s aim is to conserve natural resources, offer healthy and fair working conditions, and operate cost-effectively with sustainable products in order to achieve long-term market success. The environmental performance of the company’s new “FB one” high-tech press, for example, is excellent. The 2019 Sustainability Report is available at https://www.feintool.com/en/sustainability/.
Feintool is well equipped
We are confident and optimistic that we are well prepared to meet the challenges that lie ahead in the coming months. Feintool has a strong liquidity position and a solid balance sheet. We have signed a new loan agreement with our banks in Switzerland and Germany that gives us operational and financial flexibility in what is currently a challenging environment.
Thanks to its broad technological base and numerous attractive projects, Feintool can now take advantage of the opportunities arising from new vehicle mobility concepts. This area of focus is key to our future strategic development
Alexander von Witzleben
Chairman of the Board of Directors
Chief Executive Officer