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Project delays by large chain customers put brakes on Welbilt growth

welbilt

Delays in projects by large chain customers in the Americas gave Welbilt cause for concern in its latest quarter, putting the skids on regional sales growth.

Organic net sales increased just 0.1% in the Americas segment with higher general market sales offsetting lower sales to large chains.

The company could have done with some schemes coming to fruition but overall it said it was satisfied with business after experiencing softness in the more developed markets for the three months to the end of September.

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“Despite experiencing softer than expected end market conditions in the Americas and EMEA in the third quarter, we are generally pleased with our operating performance,” said Bill Johnson, Welbilt’s president and CEO.

“We saw delays in some projects by large chain customers in the Americas while the general market in EMEA softened through the quarter. APAC grew again this quarter with strong general market sales.”

Overall company net sales fell 0.6% to $410.5m while earnings from operations slipped 19% to $54.8m.

Welbilt said the sales decline was primarily driven by a decrease in the EMEA segment due to the negative impact of foreign currency translation, but was partially offset by growth in the APAC segment.

“We adjusted our organic sales guidance to reflect the delays in large customer sales in the Americas and for softer market conditions in EMEA,” said Mr Johnson. “We also adjusted our 2019 adjusted operating EBITDA margin expectations slightly to reflect the impact of lower sales.

“We are implementing cost reduction actions across the business to limit the impact from the softer end markets while we continue to push ahead aggressively with the Transformation Program to permanently improve our cost structure.”

Welbilt’s Transformation Program, which involves a series of procurement activities and factory consolidation, remains on track to deliver run-rate savings of $30m by the second half of 2020 and in excess of $75m by the second half of 2021.

Welbilt’s portfolio of brands include Cleveland, Convotherm, Crem, Delfield, Frymaster, Garland, Kolpak, Lincoln, Manitowoc® Ice, Merco, Merrychef and Multiplex.

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Andrew Seymour

The author Andrew Seymour

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