Overview

2020 was fraught with extraordinary challenges for the Bell Equipment group from a fire in our Richards Bay administration building in January, which displaced a number of employees, to the outbreak of the COVID-19 pandemic a few months later that created operational complications, aggravated tough global trading conditions and kept margins under pressure.

The year started enthusiastically in South Africa with the President announcing imminent infrastructure projects. However, the failure of these projects to materialise, coupled with the reduced demand for product in most markets due to the impact of the pandemic, meant the group had to work prudently to bring high inventory levels down to acceptable levels and carefully balance sales requirements and production plans.

The protection of jobs remains a top priority, with all capex delayed and discretionary expenses halted to manage cashflow and trim expenses to match the reduced income levels. In addition, the group implemented 20% short time across all operations from May to July. GEC members took a 25% salary reduction during the same period and the non-executive directors of the board sacrificed 30% of their director’s meeting fees for six months.

The local market saw yet another significant drop in volumes of mining and construction equipment purchased. The COVID-19 pandemic and subsequent lockdown restrictions had a devastating impact on the supply chain, customer operations and purchases. The country went through further economic decline with cuts in demand and reduced spending in all sectors serviced and supplied by Bell.

The North American market, impacted by COVID-19 and presidential elections, also suffered a downward trend in the construction industry cycle. Most construction indicators were down with the ADT industry showing a 25% decline compared to 2019. Due to the cyclical nature of the business, some of the downturn was already anticipated in sales forecasts going into 2021.

Despite the ADT market conditions, distribution of the Bell ADT products in the US posted the second highest annual result since 2013 with a 1,4% increase in market share.

Business in Canada was extremely volatile and Bell was unable to recover from a woeful 2019. The distributor network into which Bell supplies, carried over large inventory of new ADTs from 2019 into 2020, which impacted on sales from production for the year and resulted in the year ending with a disappointing market share for Bell sales into this market.

Several major projects in the UK, notably the HS2 rail project, are creating opportunities as the country’s government works to strengthen the economy post Brexit. While Bell has grown market share in the UK and Germany, margins are tight throughout Europe, resulting in a stagnant market in general.

Overall global markets have shrunk and competition has increased putting margins under immense pressure.

Australia managed the lockdowns well and realised growth in Bell ADT market share attributed largely to infrastructure and mining in Western Australia. However, reduced demand for commodities due to the pandemic and the subsequent lockdowns have impacted negatively on the South East Asia and Oceanic region.

While Africa also struggled with slowing demand for commodities directly impacting the ADT market, forestry and agriculture were well sustained and provided growth in our tri wheeler and Matriarch product range.

The group continued to increase its presence and market share in the Latin American ADT market where new model launches, opening of new routes to market and the introduction of the Matriarch line also experienced growth in the forestry and agriculture sectors.

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