In the face of the Covid-19 pandemic, fixings specialist Hilti is bracing for a modest sales loss of 10% (in local currencies; 14% in Swiss francs).
Q2 is predicted to be the worst hit – sales slumps of 30% and more are expected. Hilti said its direct sales business model, with very high fixed costs, will quickly see it drop in profitability, so it has a two-stage programme of measures planned to mitigate that.
- A freeze on hiring, large events and most business travel is effective immediately and no later than by the end of May. There will also be short-time work in manufacturing plants, warehouse operations and for sales staff.
Corporate HQ staff will forgo a voluntary 5% of their salary in exchange for compensation days in solidarity with colleagues on short-term work. The savings generated will go to a social fund designed for worldwide Hilti employees severely affected. Selected non-strategic projects and investments will be shelved or slowed, including current and planned construction at its corporate HQ in Schaan, Lichtenstein and at its Kaufering, Germany site.
“The company hopes that these temporary measures will preserve as many jobs as possible and prevent the need for structural adjustments in selected market organizations and at headquarters. Whether these additional measures will be necessary in a second stage will depend on the course of business over the coming months.”
- Secondly, the Martin Hilti Family Trust – sole shareholder of the company – will strengthen the company’s liquidity by making available a standby credit facility of CHF 200 million and by waiving the right to any dividend for 2020.
“It’s impossible to assess the level of economic damage this crisis will cause from today’s standpoint,” said CEO Christoph Loos. “However, it is already clear to us that we have to expect a considerable reduction in sales and a very significant drop in profitability. With the package of measures, we are now initiating, we want to counteract this negative trend. Developments in the coming months will show whether this is sufficient or whether we may have to decide to implement a second stage of measures involving structural adjustments. Despite the temporary measures that have now been adopted, we will not change our long-term focus and will continue to pursue our key strategic projects.
“Our overriding goal is to protect both our employees and our jobs. At the same time, we are doing everything in our power to provide our customers with the best possible support in this difficult situation and in the ensuing recovery.”
Sales grew last year for Hilti, which recently introduced a line of smart traceable fasteners.
Naturally, Hilti is not the only company taking countermeasures in the face of difficult trading around the Covid-19 pandemic. Arconic has actions planned, amounting to around $200 million, to mitigate the impact of the virus on trading.
