Chargeurs’ new initiative, focused on the development and production of personal protective equipment (PPE), will allow the group to leverage the expertise of its PCC Fashion Technologies division to meet rising demand given the current global sanitary crisis caused by the Coronavirus. Acknowledging any potential execution risks given the volatile context, the new business line would allow Chargeurs to help off-set the expected hit to the group’s core activities brought by the ongoing crisis.
In the context of the sanitary crisis brought by the Coronavirus outbreak, Chargeurs, like many industrial conglomerates, faces a challenging outlook due to the major disruption that has prompted a global economic crisis.
With an historical know-how in the textiles business, housed under the PCC Technologies division, last week’s announcement of the launch of a new business line for the development and mass production PPE products, under the banner ‘Laninière Santé’, puts in evidence that Chargeurs’ management has been quick-witted in assuring the continuity of its activities in the current market environment.
The group will be leveraging the expertise, production capacity and supplier network of its PCC Fashion Technologies division for the development of this new activity. The group’s global footprint would allow it to secure orders from major customers including governments and large private institutions. Nonetheless, major efforts in logistics and distribution networks are needed in order to meet the skyrocketing demand for PPE products.
Subject to any execution risks that may transpire by the launch of a major industrial effort in this volatile market environment, and dependent on the evolution of demand, the new business line would partly off-set the decline in Chargeurs’ core activities. It appears investors are confident in the management’s skill in facing the crisis, given the remarkable share price recovery over the past 10 days with the Chargeurs share returning to its pre-Coronavirus price levels.
We will incorporate the new business line into our forecasts. Nonetheless, despite the positive contribution from Laninière Santé, we hold the view that, globally, the group’s activities will be significantly disrupted by the ongoing Coronavirus crisis, resulting in an overall negative effect for FY2020.
