Axalta Coating Systems provided an update on second quarter sales trends through May. Axalta had withdrawn its guidance for the full year 2020 in March due to the uncertainty in the outlook for customer demand as a result of the COVID-19 pandemic and committed to offering an intra-quarter update in June.
For April and May, total net sales declined in the aggregate by 48% excluding foreign exchange and divestiture impacts, and declined 53% including those impacts, versus the same months in the prior year. The decline versus the prior year in May was slightly less than April, with May sales increasing approximately 15% in total compared to April on a sequential basis, given a notable pickup in net sales partly from the restart of automotive OEM production in mid-May.
Performance Coatings segment net sales declined during April and May by 37% excluding foreign exchange and divestiture impacts, and declined 42% including those impacts, compared to the same months in the prior year.
The company expects that its refinish customers are benefiting from the return to traffic volume in the US that has recovered to 75% of pre-COVID-19 seasonally adjusted levels as of early June. Global traffic data is still highly variable but there also appears to be broad based improvement in Western Europe, while Latin America recovery is delayed due to ongoing COVID-19 impacts in the region.
Axalta said that at the body shop level, it has seen signs of re-opening, and expect Refinish coatings demand to correlate to the recovery in total miles driven over time.
Transportation Coatings segment net sales declined by 69% for April and May combined, excluding foreign exchange and M&A impacts, and declined 73% including those impacts, versus the same months in the prior year.
According to the company, the production rates for global automotive OEMs are showing steady improvement after many of the automotive OEM sites it supplies in North America and EMEA resumed production beginning the week of 18th May. Production rates are largely expected to normalize to current demand levels in the coming weeks.
“Our combined April and May net sales were largely in line with the expectation that we noted on our May 6, 2020 first quarter earnings conference call, though automotive OEM plant restarts were slightly delayed versus our expectation at the time,” noted Robert W. Bryant, Axalta’s President and CEO. “We remain encouraged by the continued economic re-opening and believe this should support ongoing recovery of Axalta’s net sales over time. We further expect that net sales in June will show sequential improvement versus April and May.”
Bryant concluded: “Throughout this pandemic, we have continued to focus on delivering Axalta’s products to meet customer demand, while also ensuring the health and safety of our employees, customers, and communities. We thank all of the Axalta family for remaining committed and supporting our operating goals during this challenging period.”
This article courtesy of Russell Thrall III, publisher CollisionWeek. Check out their website at: www.collisionweek.com.