Welbilt has taken steps to adjust its cost structure in a bid to protect profitability during what it calls a “soft patch” within the industry.
The Garland and Frymaster owner said market softness in the Americas during the fourth quarter had spread from large chains to the general market.
Global net sales fell 6% to $381.8m during the last three months, with organic sales in the Americas down 5% as operators held back purchases. Lower KitchenCare aftermarket sales also affected the results.
Earnings from operations declined 28% to $37.4m.
“Looking at sales, we continued to see delays in some projects by large chain customers globally while the general market was weaker than expected in both the Americas and EMEA,” explained Welbilt president and CEO Bill Johnson.
“APAC grew again this quarter with strong general market sales. Operationally, our adjusted operating EBITDA margin increased 70 basis points year-over-year from a combination of higher net pricing and lower selling, general and administrative expenses that helped overcome the impact from lower production volumes on fixed cost absorption.”
Johnson said manufacturing cost inefficiencies decreased sequentially from the third quarter as it worked aggressively to reduce its cost structure to better align with the current lower volume environment.
It believes it can deliver in excess of $75m of run-rate savings by the end of 2021 through manufacturing efficiencies.
It has already completed two stages of a factory transformation program and has just begun a third involving two more plants.
Johnson said Welbilt was anticipating a slow first half of the year, including a mid- to high-single digit decline in its first quarter, but growth in the second half of the year would bring it into its guidance range of -2.0% to +1% growth.
He added: “We are positive on the long-term growth prospects for the commercial foodservice industry despite the recent soft patch it is in.
“We are committed to successfully executing our Transformation Program and are confident that our portfolio of leading brands and our innovation pipeline will leave us well-positioned for profitable growth when industry conditions improve.”