Brussels – Bekaert SA’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% to €725 million in the first half of 2020, on 25% lower volumes, the group announced in a 31 July statement.
The volume contraction, including a 36% drop in the second quarter, was the result of a collapse in demand within the tire and automotive markets, Bekaert added.
Particularly, the group’s rubber reinforcement joint venture in Brazil saw a sales impact of negative 60% in the second quarter and negative 40% over the first half, which noticeably lowered overall sales.
Operating results (EBIT) fell 56% to €28 million, despite “significant number of measures” to reduce fixed costs. EBIT margin stood at 3.9% in the first half, compared to 9.1% reported a year ago.
The Belgian group linked the sharp declines in the profit margin to the “sever 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% in China, 30% in EMEA and 40% in North America.
However, after hitting “the lowest point” in April, sales and profitability “improved significantly” in the month of June, Bekaert said.
In addition, the business unit projects further recovery in 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.