ALTDORF, Switzerland—Datwyler Holding is "generally confident" about the second half of 2020, despite a massive slump in demand within its automotive and oil industry target markets.
First half earnings (EBITDA) fell 17.8 percent year-on-year to $106 million, on 22.7 percent lower sales of $596 million, Datwyler said Aug. 11.
The Swiss manufacturer reported an operating loss (EBIT) of $437 million, down from $99 million of profits reported in the first half of 2019.
Datwyler attributed the operating loss to the sale of its Distrelec and Nedis distribution companies, which led to a non-cash loss of $508 million in total. The company remained profitable with an EBIT margin of 11.9 percent.
Despite the weak results, the Altdorf-based manufacturer said it was generally confident about the second half of the year, due mainly to high order volumes in its health care solutions business area.
Earlier this year, Datwyler launched a restructuring program to focus on "system-critical elastomer components" sealing business.
The reorganization combined the company's market and production activities to form two business areas: Health Care Solutions and Industrial Solutions.
In its half-year press release, Datwyler said the streamlining of the business structure proved its worth, allowing the company to respond to changing market conditions "with speed and agility."
In the health care business, sales remained flat at $220 million, hit by a 5.7 percent negative currency impact of strong franc. Due to additional costs from COVID-19, operating results (EBIT) fell to $38.8 million from $46.3 million reported in the first half of 2019.
Datwyler's industrial solutions faced with "sharp declines" in demand from automotive and oil and gas customers, with many mobility customers closing their plants for several weeks.
Helped by its food and beverage business unit, the segment reported a 24 percent decline in sales to $232 million. Adjusted operating result (EBIT) was nearly halved to $23.2 million during the six-month period.
For the full year, Datwyler said it is expecting conditions in the automotive and oil and gas markets to continue to have "significant uncertainty for the foreseeable future." The company said it believed that demand would only recover slowly in the markets and a recovery to 2019 levels will be possible by 2022.
By contrast, the manufacturer said it was confident that revenue growth will remain high in the food and beverage business unit as well as its health care segment in the second half of the year.