Encouraging financial performance and reassuring liquidity position in H1 2020 in a challenging COVID-19 environment. Continued focus on people and health, supported by effective crisis management.
Brussels – August 3, 2020 – Aliaxis SA (‘Aliaxis’, ‘the Group’ or ‘the Company’), a global leader in the manufacturing and distribution of advanced plastic piping systems, today publishes a COVID-19 News update, including high level trading update based on preliminary and unaudited results for the 6 months period ended June 30, 2020. Aliaxis will publish a press release on H1 2020 on September 25, 2020.
Koen Sticker, Acting CEO as of August 1, comments: “After a promising start to 2020, the COVID-19 outbreak began to impact our business and results from mid-March. We took immediate action to keep our people safe, to reduce costs and preserve cash. The most severe impact occurred in April, but we were able to recover some momentum in May and June.”
“Thanks to our effective response, we have reported encouraging financial results in H1. This performance demonstrated our ability to respond as market demand changes. We supported our customers, while maintaining good financial health.”
“We would like to thank all our people for their ongoing commitment and engagement during this difficult period. Together, we continue to go the extra mile for our customers, our colleagues and their communities. Everyone can be very proud of how we are continuing to navigate the consequences of the crisis. We will remain vigilant in H2 across all our operations as the pandemic develops, to ensure the robustness of our business and the continued health and safety of our employees.”
People remain our key priority
Aliaxis’ priority remains the health and safety of its employees. Across the globe, dedicated and effective crisis management teams were established immediately to monitor what continues to be a fast-changing situation, to issue guidance and enforce safety measures. Our people and operations quickly adopted new ways of working and continue to follow the right protocols to ensure a safe work environment.
“Commitment to Care” is an Aliaxis core value. That is why, in Q2 2020, we established the “Aliaxis People Solidarity Fund”, to provide support to Aliaxis employees impacted by the COVID-19 outbreak. The Board of Directors and Senior Management have contributed 20% of their Q2 compensation to this fund, created through a partnership with the King Baudouin Foundation. Aliaxis employees across the globe are also donating on a voluntary basis and the Company will match total donations to the Fund.
Aliaxis’ results in the first two months of 2020 were ahead of last year, driven by strong performance across all our divisions. The COVID-19 pandemic started to impact our business as of mid-March following a significant drop in demand and forced lockdowns in several regions where we operate. Other regions, such as the US, continued to experience strong demand throughout H1.
We immediately took action to reduce our cost base, supported our customers in every way we could and proactively managed the volatility of demand. The impact of these actions, pent-up demand in some divisions and continued strong performance in others, drove a recovery in May that accelerated further in June. This resulted in a positive financial performance in Q2, despite the current environment.
Net sales, as reported, decreased by 13.2% in the six months period ended June 30, 2020 to €1,369 million. Reported CEBITDA was €189 million, 19.4% below last year.
Strong liquidity position and lower leverage
In response to the COVID-19 outbreak, Aliaxis took immediate action to reduce costs, optimise working capital and delay certain investments. In addition, the divestment of Harrington Industrial Plastics early March increased our liquidity.
As a result, our net financial debt decreased by €190 million to €581 million (or €478 million on an IFRS-16 adjusted basis) at June 30, 2020 compared to December 31, 2019. Pro-forma leverage amounts to 1.3x CEBITDA at that date, demonstrating significant covenant headroom, compared to 1.6x CEBITDA at the end of 2019.
Aliaxis has a strong balance sheet, €1.4 billion of committed financing and ample liquidity headroom, with more than €700 million of cash immediately available (including undrawn lines).
The outlook for the second half of 2020 remains highly uncertain. The COVID-19 crisis is deepening in some markets and in others recovery may be fragile if we face a second wave, potentially resulting in further lockdowns.
We have managed the situation well so far and will continue to monitor developments in real-time. We will pro-actively take all necessary contingency measures to make sure we can protect our employees, businesses and customers.
We are confident that Aliaxis is well placed to meet current challenges and protect its position in the market. We are persuaded that our current financial position and effective response to COVID-19 will allow us to comply with our financial covenants on a full year basis.