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Tuesday, 24 March 2020 15:50

Axalta Provides Update in Response to Coronavirus Impact


Axalta Coating Systems Ltd. on March 24 provided an update regarding the impact of the coronavirus (COVID-19) pandemic on its business and actions it is taking to protect its communities, employees, customers and shareholders.

"First and foremost, we are focused on protecting public health and the health and safety of our employees and customers, consistent with guidance issued by relevant authorities," said Robert W. Bryant, Axalta's president and CEO. "Where possible, our employees are working remotely, and we have instituted global travel restrictions for all employees. We are taking steps to promote social distancing and have instituted robust on-site hygiene practices and restrictions on visits to our facilities. We are continuing to monitor the situation closely and will take further action as appropriate."


Additionally, given inherent uncertainty in the outlook for customer demand, Axalta is withdrawing previous financial guidance for 2020, which did not reflect the impact of the coronavirus. Management expects to provide updated guidance when it has more visibility into demand.


Management has taken swift action to both plan and address the near-term impact on the decline in demand in certain areas of Axalta's business. The focus is on dynamically adjusting the company's cost structure as needed and has already included initial actions related to reducing discretionary spend across the organization.


"The fundamentals of our business remain strong," Bryant said. "From a manufacturing standpoint, we continue to operate and meet customer demand around the world. We are also activating contingency plans designed to ensure our ability to continue to serve our customers in the event of possible operational limitations and also exploring ways to 'flex' as demand from customers changes.


"While near-term demand is uncertain and has caused us to withdraw our financial guidance for 2020, we are confident that we can continue serving our customers in a manner that is safe, compliant and meets customer needs globally.


"The coatings industry in general has a very high variable cost structure, and Axalta is no exception---our costs are approximately 64% variable at the cost of goods sold level," Bryant said. "Through a combination of variable and directed fixed cost structure actions, coupled with a strong balance sheet, we believe we are well positioned to weather near-term reductions in customer demand and come out of this crisis an even stronger company."


Supply Chain Impact


Axalta is actively monitoring and managing supply chain challenges, including logistics, but thus far, there have been no significant disruptions. Axalta's supply chain team is coordinating with the company's suppliers to identify and mitigate potential areas of risk and manage inventories.

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