Covid-19 Impact on our battery business

As in many countries the vaccination process has been rolled out in Belgium and is getting up-to-speed. Many governments have loosened somewhat the tight restrictions and our hope is to return soon to our pre-covid lives. Overall the future has looked brighter than it has since a very long time.

Business-wise also Battery Supplies NV/SA suffered a decline in its turnover last year as did most companies worldwide. With many equipment manufacturers closing their facilities for some months, many sectors in aviation (ground support handling) and tourism (golf carts and marine) heavily affected, the absence and cancellation of many events and the impact of the restrictions on the construction and equipment rental business (material handling and AWP) it was no surprise that our sales would suffer from these economic circumstances as well.

Nevertheless, with other market segments booming (mainly in the cleaning machine sector and the solar market) and the efforts of our resellers in their (national) markets we were able to bring down the turnover decrease to a minimum and re-start our business growth again in September.

Also in 2021 our sales results are very positive, thanks to the dedication of our loyal customers, a good commercial strategy and the efforts of our staff and partners.

Despite our very good commercial results and our positive view on the market’s future there are many challenges that we are confronted with. These challenges are also a direct result of the restrictions implemented by the governments decisions to cope with the pandemic situation.

The main challenge is currently to keep the pricing on the same level. There has been an increase of the lead price but lead cost variations happen from time to time and tend to be rather stable over a longer period of time. More challenging are the non-lead metals based price increases. 2021 has recorded sharp increases for the prices of many globally traded commodities such as petroleum, non-ferrous alloying metals (as antimony, tin and calcium), rubber and many other materials and chemicals used for components and parts that are vital in our industry. Moreover, transport costs have also increased a lot and the costs of incoming have almost tripled. Despite these tough condition Battery Supplies NV/SA has been able to keep most the pricing level of our product ranges more or less on the same level. Especially on our ranges of DGY (gel deepcycle), DAB (agm deepcycle), DLC (lead carbon deepcycle) and DAS (vrla agm batteries for UPS and back up) we kept the price increase to an absolute minimum. Also the pricing level on our LiFePO4 ranges and battery accessories has remained on the same level. We dare to consider this rather unique in our market and I am grateful for the good efforts of our teams involved in strategic purchasing, logistics and price calculation. It also explains our good sales results so far in 2021.

A more challenging situation for us, as for all battery companies, are the delivery lead times. The UNCTAD (United Nations Conference on Trade and Development) summarized in their April 2021 report that the changing in shopping patterns (including a surge in electronic commerce) triggered by the pandemic as well as lockdown measures have led to an increased import demand for manufactured consumer goods, a large part of which is moved in shipping containers. As the lockdown measures were lessened in the third quarter of 2020 and the recovery worldwide started in varying speeds, the containerized trade flows increased. This led to container freight rates reach to historical highs and a severe shortage of containers. The current surge is expected to last into 2021.

As a response to this situation we have put a lot of emphasis on our purchasing strategy to keep the impact on our business as low as possible and have proven very successful in our maintenance-free block batteries (GEL, AGM and lead carbon) and our traction ranges (2V cells and PZS monoblocks). Other product ranges are currently more complex to keep a constant availability and our direct shipments to our customers are heavily affected. Our sales teams put a lot of effort in informing their customers to keep longer shipping times in mind while our purchasing teams do as much as they can to guarantee a stock availability in our European depots.

These are challenging times, but the growth of our customer base and the positive feedback we receive from them (and we consider their feedback as the most important) strengthens our position in the market and makes our future look bright!

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