Alamo Group left with plenty of room for positivity despite second quarter profit setback

Published by Rhys Taylor-Brown on August 31st 2020, 12:12pm

Alamo Group recently announced that its second quarter profits fell by 37 per cent compared to last year as the effects of the Covid-19 pandemic took hold, but the impact was offset by a $51.5 million reduction in debt and a 5.3 per cent backlog reduction compared to the second quarter of 2019.

Founded in 1969, Alamo Group is a leader in the design, manufacture, distribution and service of high-quality equipment for infrastructure maintenance, agriculture and other applications. The business operates an industrial and agricultural division and has member companies throughout Europe, North America, South America, and Australia.

The hit to the company's profits came as the Covid-19 pandemic forced the business to close factories in Europe and North America.

The group’s net sales for Q2 of 2020 were down to $268.6 million compared to net sales of $285.2 million in the second quarter of 2019, a decrease of 5.8 per cent. Net income for the quarter was $13.0 million, compared to $20.7 million, in the second quarter of 2019, a decrease of 37.2 per cent.

The decreases came after the Covid-19 pandemic forced manufacturers across the world to close factories, with Alamo Group seeing several of its premises in England and France close in March and April in accordance with government guidelines at the time. Four Canadian plants also had to close, along with one of its factories in the US state of Wisconsin.

As of the end of June, 550 of its 4,300-strong workforce were furloughed according to the company's Q2 results statement, as the company pivoted to deal with the pandemic.

However, all of Alamo’s factories returned to operation at the end of July, and alongside the reduction of its backlog and debt, the firm enjoyed record net sales for the first six months of the year, up 6.6 per cent to $583.1 million.

Those numbers showed some continuation of the company's record sales in 2019, which saw the business recognised by the San Antonio Business Journal by being named in its Business of the Year Award finalists.

The record sales over 2019 did overlap into the first quarter of this year before the Q2 drop-off, but the impact of the business' strong performance last year continues to be felt after two of the firms that the group acquired in 2019, Dutch Power and Morbark, contributed $58 million to Alamo's second-quarter 2020 sales and helped fuel a strong cash reserve.

Alamo Group CEO Rob Robinson was pleased that the company’s factories were once more operational and took a positive if cautious stance as he paid tribute to its worldwide workforce for their efforts in helping the business through.

He said: "While our second quarter results were down, given the environment in which we continue to operate, they were in line with our expectations. I am proud of all the dedicated people at our company who have worked so hard to achieve these results, given the many operational challenges we experienced...but we managed to continue to function throughout this time and generally deliver our products when and as required.

"Our customers are also operating at a more effective level than at the beginning of the crisis as communication levels have generally improved. We hope the progress we are seeing does not move in a negative direction as many areas in which we operate are dealing with increased levels of cases related to Covid-19."

Photo by Dietmar Reichle on Unsplash

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Authored By

Rhys Taylor-Brown
Junior Editor
August 31st 2020, 12:12pm

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