Response to Covid-19
The Covid-19 pandemic has led to significant challenges across the world. We continue to work hard to respond to these unprecedented circumstances and actively manage the ongoing risks to our people, our operations and our customers.
Short-term action: protecting the business and preserving cash
In the short-term we have taken immediate action to reduce costs, improve cash flow and increase liquidity. These actions include:
- Curtailment of discretionary spend.
- A temporary hiring freeze for all but the most critical roles.
- A significant reduction in the number of contractors engaged within the business.
- Temporary salary reductions for the Executive Committee and the Board.
- Reductions to capital expenditure other than for essential health, safety and environmental matters.
- The Board announced its decision to withdraw the proposed final dividend for the 2019 full year. The Board will continue to review future dividend payments during the second half, our Half Year Results Statement provides further details.
Emerging stronger from COVID-19: Group restructuring and efficiency programme
A Group restructuring and efficiency programme is underway, accelerating our existing plans to further simplify our structure, and drive efficiency in our operations as well as to align our capacity with the anticipated lower demand levels across the business. These plans will allow us to expand our margins when volumes return to previous levels.
In response to the significant downturn in aerospace demand, and the anticipated long-tail effect of this, the Group have announced the closure of Technical Ceramics ceramic cores manufacturing sites in the UK and North America. We are also closing sites and closing under-utilised production lines in the Thermal Ceramics business. This will align our capacity to lower industrial and automotive demand. We are also restructuring other roles across the Group to align our cost base to the lower demand position.
These actions will further reduce costs by a targeted £20 million per annum by 2022, with an anticipated cash cost of £30 million to deliver these savings:
|Headline operating profit1 benefits (incremental)||5||14||20||-|
|Cash cost to specific adjusting items||(15)||(14)||(1)||(30)|
1. Definitions of these non-GAAP measures can be found in the glossary of terms on our 2020 half year results statement.
Find out more about our performance in our 2020 Half Year results.