Lennox expects a 20% hit from COVID-19 pandemic20th April 2020
USA: Lennox is predicting a 20% decline in the North America unitary HVAC and refrigeration market in 2020 due to the impact from the COVID-19 pandemic.
The gloomy picture was described as the US manufacturer announced an 8.4% sales drop to $723.8m in the first quarter of this year.
Operating income was $36m, down from $95m in the same quarter in 2019 that included approximately $47m of insurance benefit from the tornado damage to its Iowa factory in 2018.
Total adjusted segment profit was $38m, compared to $99m in 2019 that included $40m of insurance benefit.
“Weather continued to have an adverse impact on our business in the first quarter with heating degree days down significantly from last year,” said chairman and CEO Todd Bluedorn.
“In addition, we saw an increasing impact on our business in March from the COVID-19 pandemic. Operationally, HVAC is designated as an essential business in North America and Europe. On the demand side, however, we saw contractors stocking up less residential equipment ahead of the spring and summer seasons due to the economic uncertainty, and national account customers in both our commercial and refrigeration businesses pushing orders out.”
While residential revenue was down 5% and profit down from $87m to $33m, the company’s commercial business, revenue was up 3%, with profit rising 24%.
Refrigeration revenue was down 11% at constant currency. North America was down mid-single digits. Europe refrigeration and HVAC revenue was reportedly down high-teens as the impact from COVID-19 began to hit the already slower European market earlier than in North America.