The Tubos Reunidos Group expects that the last quarter of 2020 and the first half of 2021 will be “very, very difficult” for the company, although does not contemplate reducing employment in their factories.
The president of Tubos Reunidos, Francisco Irazusta, and the CEO, Carlos Lopez de las Heras, have analyzed the situation of the company, which until September “has weathered the storm relatively well” thanks to the “strong” order book that it accumulated until the start of the Covid-19 pandemic.
Thus, the gross operating profit (ebitda) for the first nine months of 2020 is negative at 4 million euros and the profit before interest and taxes (ebit) without extraordinary items is “practically like last year” López de las Heras has commented.
However, the pandemic has had a “very strong impact” on the sector with a 50% drop in orders “which will be seen now and in 2021” because the production of the accumulated portfolio is ending and no new orders are coming in and, in fact, currently the Amurrio plant and the two Tubular Products plant are at 50% of their production capacity.
Tubos Reunidos trusts to “take advantage of the crisis” by having a “good” treasury and an “adequate” strategic plan, in which the OCTG tube loses importance for others with greater added value and there is also a greater market diversification.
To face this “complicated” period, the Alava group will maintain employment adjustments with the continuity of an eight-month ERTE for its Basque plants and the more drastic measures it has already taken at its plant in the United States, where it reduced the workforce by 34% and also lowered salaries by 25%.
“We will do it as we need it but we do not believe that the solution is to lower the staff. We will seek creative measures with minimal social impact, “said the CEO, while the president stressed that Tubos Reunidos” can never compete on costs “and has to seek quality and innovation with a plan that is” of added value and clear growth “in the coming years.
Tubos Reunidos plans for the next year are based on the continuation of the main problems in the sector, such as a 50% production “overcapacity” that forces prices down, the low price of oil, the commercial war between States States and China and the North American tariffs on European steel.
The positive, according to Irazusta, will be the growth of the energy sector that demands higher quality tubes, the renovation of refineries to meet environmental requirements and the reactivation of maintenance and renovation work that has been postponed during the pandemic but they cannot be delayed much longer.
What Irazusta does not expect is that tariffs will fall in the United States even if Trump loses the presidency in November because industrial unemployment in the country is still very high, although with the Democrats there could be an approach to Europe for a “common front” before the “Beastly macrodependence on Chinese manufacturing”.
Regarding the high volume of movement of the shares of Tubos Reunidos in recent weeks, the president has assured that there has been no corporate movement and no one has taken over 3% of the capital and that it has possibly been due to “interest s “of investors by the company. “We see it as something positive,” said Irazusta.
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