("Dialight" or "the Group")
Dialight plc (LSE: DIA.L), the global leader in sustainable LED lighting for industrial applications, is today issuing the following update on the impact of COVID-19 on the business, its trading and outlook.
Our people and our facilities
The health, safety and well-being of our people remains the first priority. We are supporting our teams fully, whilst following all applicable government health advice and directives.
Our Mexican manufacturing facilities remained operational until last week, though with a reduction in headcount due to the social distancing measures that, in line with government guidelines, we had put in place. We have now voluntarily suspended manufacturing operations, pending the review of our application to the Mexican government for an "essential business" order. We believe that a significant proportion of our manufacturing operations should qualify due to the number of critical infrastructure and medical equipment customers we have.
Our Malaysian manufacturing facility has been closed since 17 March 2020. Whilst most Malaysian manufacturing operations are not expected to re-open until after 28 April 2020, given the government's directive, we have also applied for an "essential business" order and are awaiting a decision.
To date, component supply has been resilient, but we are monitoring supply chains closely.
Order intake during Q1 was in line with our expectations until the latter part of March where we saw some softening in Lighting.
- Whilst the US project business has softened, MRO orders increased substantially, improving our overall order intake in our largest end market.
- Our smaller EMEA business has been significantly impacted due to governments' actions across northern Europe.
- APAC orders have been more resilient with an uptick in the Australian mining sector.
- The components business has seen robust trading with a significant increase in orders to supply parts for medical equipment. We are working through supply chain challenges to deliver these critical components on a timely basis.
The Group has acted decisively to reduce costs with all discretionary spend curtailed. The Board and executive team are taking a 20% reduction in salaries and the Chairman forgoing all fees, until the immediate crisis is over.
Regretfully, we have also had to furlough a number of employees and have taken additional salary reductions across the majority of our employees. All capital expenditure on new products has been paused temporarily while we evaluate which projects will derive the highest return when the crisis is over.
Net debt at 20 April 2020 was £16.2 million compared to £16.5 million at 31 December 2019. The company remains focused on strict cash management and continues to unwind working capital with good progress being made on reducing inventory levels.
The Group renewed its bank financing in February 2020 with a committed revolving credit facility of £25.0m to February 2023 plus a two-year option. The facility is provided by HSBC UK Bank PLC. We are in early stage discussions with HSBC to arrange additional liquidity and covenant headroom, should that be required.
The Group faces a background of short-term increased uncertainty and challenges in the global economy. It is thus more difficult to provide guidance on FY2020 performance, but our current expectations for the 2020 half year and 2020 full year have significantly reduced since the time of our 2019 full year results announcement. We continue to closely monitor and adapt to all developments whilst focusing on meeting customer demands and managing cash tightly.
Dialight's long term prospects remain excellent given the ongoing conversion to industrial LED lighting. The key industries that we operate within are critical to society, including: utility companies, waste water companies and those in power generation and food and beverage, amongst others. Longer term, we are confident Dialight is well positioned to grow profitability.
Tel: +44 (0)203 058 3542
Fariyal Khanbabi - Group Chief Executive
Tel: +44 (0)203 058 3542
Ronan Sheehy - Interim Group Finance Director
Dialight (LSE: DIA.L) is a global leader in sustainable LED lighting for industrial applications. Dialight's LED products are providing the next generation of lighting solutions that deliver reduced energy consumption and create a safer working environment. Our products are specifically designed to provide superior operational performance, reliability and durability, reducing energy consumption and ongoing maintenance and achieving a rapid return on investment.
The company is headquartered in the UK with operations in the USA, UK, Germany, Malaysia, Singapore, Australia, Mexico, Dubai and Brazil. www.dialight.com.
1. Cautionary Statement: This announcement contains certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and objectives for the management of future operations of Dialight plc and its subsidiaries is not warranted or guaranteed. These statements typically contain words such as 'intends', 'expects', 'anticipated', 'estimates' and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Although Dialight plc believes that the expectations will prove to be correct. There are a number of factors, many of which are beyond the control of Dialight plc, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.
2. This announcement contains inside information (in relation to the financial impact on the Group of the Covid-19 pandemic) for the purposes of article 7 of EU Regulation 596/2014.
3. The Group's interim results are expected to be published in early August 2020.
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