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Welbilt makes first US factory closures, expects Q1 sales to be down $50m on last year

Welbilt

Welbilt has temporarily closed half of its manufacturing plants in EMEA and the Americas as part of new measures taken this week to address the impact of the global COVID-19 pandemic.

The manufacturer expects the closures to last for “one-to-two weeks” in early April for five of its 10 Americas region plants and three of its six EMEA region plants.

All four of its APAC region plants are currently operating on normal schedules.

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“We will continue to adjust these schedules based on governmental requirements, health, safety and demand factors on an ongoing basis as we proceed through the COVID-19 pandemic and related market impacts,” the company stated.

Welbilt has also taken other measures to manage its costs in line with changing demand.

It has executed a reduction in force in the Americas region and corporate functions of approximately 200 people, which will lead to restructuring-related charges of between $3.5m and $4.5m during the first quarter.

Welbilt’s leadership team is also participating in the cost reduction efforts. Its board of directors voluntarily reduced their cash-based fees by 50% and its executive leadership voluntarily reduced their base salaries by 50% for April and May.

Other salaried employees are taking voluntary salary reductions of generally between 10% and 25% during this period. In addition, some salaried and hourly office and production employees have been, or will be, temporarily furloughed for various periods.

Welbilt also updated its outlook for 2020 first quarter net sales, which are now expected to decrease between 13% and 14% compared to the prior year.

Last year, it posted first quarter sales of $375m, so the reduction in revenue could represent as much as $52m versus last year.

It stated: “Net sales weakened during the second half of March in the Americas and EMEA, while net sales gradually improved in APAC during March as the region began recovering from the impacts of COVID-19. Overall, consolidated net sales were weaker in the second half of March than for the quarter as a whole.”

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Sam Lewis

The author Sam Lewis

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