BRUSSELS—Bekaert S.A.'s Rubber Reinforcement business unit has been most affected by the COVID-19 pandemic, but the Belgian steel products manufacturer expects a recovery in the second half of the year.
Segment consolidated sales contracted 30 percent to $865 million in the first half of 2020, on 25 percent lower volumes, the group announced in a July 31 statement.
The volume contraction, including a 36 percent drop in the second quarter, was the result of a collapse in demand within the tire and automotive markets, Bekaert said.
Particularly, the group's rubber reinforcement joint venture in Brazil saw a sales impact of negative 60 percent in the second quarter and negative 40 percent over the first half, which noticeably lowered overall sales.
Operating results (EBIT) fell 56 percent to $33.4 million, despite "significant number of measures" to reduce fixed costs. EBIT margin stood at 3.9 percent in the first half, compared to 9.1 percent reported a year ago.
The Belgian group linked the sharp declines in the profit margin to the "severe impact" of the pandemic on tire and automotive demand and a significant decline in volumes.
According to the Bekaert, over the six-month period, tire demand was down 25 percent in China, 30 percent in EMEA and 40 percent in North America.
However, after hitting a low point in April, sales and profitability improved significantly in the month of June, Bekaert said.
In addition, the business unit projects further recovery over the remainder of the year, subject to how the pandemic will evolve.
"At present, the tire sector anticipates improving demand conditions in the third quarter and a moderate rebound in the last quarter of the year," the company said.