Hoshizaki Europe is on the road to recovery after battening down the hatches through the pandemic period.
The refrigerator and ice machine specialist recently revealed its financial results for the 12 months to 31 December 2020 in its annual review.
The report, publicly available on Companies House, detailed that sales revenue decreased by 32.5%, from £27.1m to £18.3m. Hoshizaki Europe MD Takashi Wakuri cited the main driver as a 26.3% reduction in the sales quantity of ice machines, from 28,722 units in 2019 to 21,175 units in 2020.
He explained: “Sales revenue also decreased year on year due to the transfer of the manufacture and supply of ice machines specific to the American market to Hoshizaki America in mid-2019. Volumes did increase in the second half of the year from July onwards, but with ongoing restrictions in many countries, a return to normal trading levels was not achieved by the end of 2020.”
Following the manufacturing transfer, sales revenue from the Americas decreased by 90.8%, while sales unit volumes declined in Europe and Asia, resulting in a revenue reduction of 29.7% for sales to Europe and 29.8% for sales to Asia.
Operating profit for Hoshizaki Europe was hit by 90% from £2.3m in 2019 to £0.2m last year.
Wakuri recalled all the steps the company took to mitigate the pandemic’s impact: “Government imposed lockdowns and restrictions in key markets, in particular the hospitality sector, reduced demand for ice machines in Q2. The company closed the factory for 3 weeks when the initial UK lockdown was announced in March 2020, and subsequently re-opened with reduced staff numbers operating in a Covid-19-safe manner, including social distancing, temperature checking, personal protective equipment, sanitation items, segregation screens and signage.
“During Q2 40% of employees were furloughed as the company operated to reduced demand and the business gradually increased the workforce through Q3 and Q4 as customer demand increased.
“The company reduced costs by recovering £267,287 through the UK government’s coronavirus job retention scheme, cost reduction activities, material price reductions and containment, and direct labour productivity.”
Furthermore, the manufacturer maintained higher materials stock levels in 2020 and into Q1 of 2021 to mitigate any supply chain delays caused by Covid-19, the trading impact of the agreement between the UK and the EU announced in December 2020, and to ensure materials were available to support an uplift in production demand associated with a post Covid-19 recovery.
Nevertheless, Wakuri told a positive story of Hoshizaki Europe’s fortunes this year: “Sales unit volumes have continued to grow in 2021 and the full year is forecast to be 9.7% above budget and 27.8% above 2020. As the roll-out of global vaccinations gathers momentum, the company is optimistic that normal trading levels will be achieved by the end of 2021.
“Continued planned growth in the European market, where approximately 70% of products are sold, has been significantly impacted by Covid-19 from Q1 2020 to date. However, the company considers that European sales will continue to have a positive impact on the business post Covd-19 due to the economic recovery associated with the easing of social restrictions and despite ongoing competitive pressures.”
He concluded: “The budget sales volume for 2021 is 13% above the volume achieved for 2020 with growth indicated by all group trading companies. Sales forecasts in early September indicate that sales volumes for 2021 will be 8% higher than budget.”