COVID-19 Causes Revenue Drop for Some Companies in Q1 2020

The COVID-19 pandemic’s effects on the economy made a noticeable impact on several companies’ first quarter financial results. Those that came away largely unscathed expect to see the hit in their second quarter results.

Tecnoglass Inc. was one of those companies reporting a decrease in first quarter 2020 total revenues compared to the first quarter of 2019. Total revenues were $87.3 million compared to $107.2 million in the prior year quarter. The decrease was attributed to fewer days of invoicing in the second half of March as a result of the company’s decision to temporarily suspend plant operations in accordance with shelter-in place guidelines by the Colombian government in response to COVID-19.

Revenues in January and February were comparable to the same period in the prior year despite five days of scheduled maintenance in January 2020, which did not occur in the first quarter of 2019. Changes in foreign currency exchange rates had an adverse impact of $0.8 million on Colombia and total revenues in the quarter. U.S. revenues were $78.8 million compared to $92 million in the prior year quarter.

As a percent of total revenues, operating expenses were 19.8% compared to 16.5% in the prior year quarter, primarily due to lower sales.

Given the uncertain scope and duration of the COVID-19 pandemic, and uncertain timing of a global recovery and economic normalization, Tecnoglass has withdrawn its previously communicated full year 2020 revenue and adjusted EBITDA outlook. The company has suspended all future financial guidance for the balance of the year.

Primary Glass

Among the primary glass manufacturers, AGC Inc. also reported its total net sales and net sales for its glass segment were down compared to the same period of 2019. For the three months ended March 31, 2020, AGC’s net sales were $3.33 billion*, down 1.1% from the same period of 2019. Net sales for the company’s glass segment were $1.58 billion in the first quarter, down from $1.74 billion in Q1 2019.

While Q1 2020 net sales decreased compared to Q1 2019, AGC’s operating profit experienced a 7% increase. Operating profit for the three months ended March 31, 2020 was $208 million compared to $194 million in the same period last year. However, the company’s glass segment experienced an operating loss of $24 million in Q1 2020 compared to an operating profit of $32.6 million in Q1 2019. That’s a 173.8% decrease.

AGC has revised net sales downward from nearly $7 billion to $6.06 billion, a 13.3% reduction. Operating profit has been updated from $466 million to $233 million.

Nippon Sheet Glass (NSG) Co., another primary glass manufacturer based in
Japan, reported that its total revenue and operating profit for the fiscal year 2020, ended on March 31, 2020, were both lower than those of fiscal year 2019. The same decrease happened in NSG’s architectural glass segment, according to NSG’s FY 2020 Annual Consolidated Financial Results.

NSG’s revenue for FY 2020 was $5.17 billion** compared to $5.7 billion in FY 2019. Operating profit decreased to $196.8 million from $342.5 million in FY 2019.

Architectural glass represents 42% of NSG’s cumulative sales. FY 2020 revenue for the segment was $2.17 billion, down from $2.3 billion in FY 2019. Operating profit also experienced a drop to $161 million from $239.9 million in FY 2019.

Machinery

Glaston Corp.’s orders received and net sales were up in the first quarter of 2020 when compared to the pro forma amount reported for the same period of 2019.

Orders received were $49.5 million*** compared to $49.2 million. Net sales grew from the pro forma amount of $48 million in Q1 2019 to $50.9 million in Q1 2020. The pro forma financial information for Q1 2019 is presented as if Glaston’s acquisition of Bystronic Glass would have already been completed on January 1, 2019.

The company estimates that comparable EBITA for 2020 will decline from 2019. Due to low visibility and rapid market movements, the extent of the decline cannot be reliably assessed at this stage.

On March 20, 2020, Glaston Corp. published a stock exchange release which stated that it was withdrawing its guidance issued on February 11, 2020.

*Editor’s Note: The financial results were converted from Japanese Yen to U.S. dollars on May 18, 2020.
**Editor’s Note: The financial results were converted from Japanese Yen to U.S. dollars on May 26, 2020.
***Editor’s Note: The financial results were converted from Euros to U.S. dollars on April 29, 2020.

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