DUESSELDORF (dpa-AFX) - German defense contractor Rheinmetall AG (RNMBF.PK) said it will recognize non-cash impairment charges of 300 million euros in the second quarter of fiscal 2020 for the Group's Automotive sector. The impairment charges were primarily due to dramatically reduced production volumes in the international automotive industry for 2020 in the wake of the COVID-19 pandemic and to current expert assessments. The company is also currently examining strategic options in the Automotive sector.
The impairment charges relate almost entirely to Automotive's Hardparts division. The current expert assessments anticipate significantly lower growth for passenger cars and light commercial vehicles even over the medium term. They are projecting a global production downturn of over 20% on 2019 levels in the current year, with experts' projections suggesting that production will not return to pre-crisis levels before 2024.
The company said it will end the second quarter of 2020 in better shape than anticipated with regard to its key figures and will exceed the recent consensus of analysts' estimates for consolidated sales performance and operating earnings.
Rheinmetall Group reported that its preliminary second-quarter sales declined to 1.239 billion euros from 1.471 billion euros last year. Quarterly operating result dropped to 36 million euros from the previous year's 110 million euros. The corresponding analysts' estimates are 1.146 billion euros for sales and negative 18 million euros for operating reults.
Rheinmetall is also currently examining strategic options in the Automotive sector. Restructuring provisions of 40 million euros are anticipated in the third quarter of 2020 in this regard and will become cash-effective in the years 2020 to 2022.
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