With the addition of the Benteler Distribution activities to our network, the Van Leeuwen Pipe and Tube Group improved its position as a leading global distributor of pipe and tube material. The unrivalled global network of people with knowledge and expertise offers our customers a broad range of products and services. Further optimization of our network and systems will take place in the near future. The family-owned company offers its employees possibilities and opportunities to further develop their skills and expertise, and to deploy their talents on a local basis or a worldwide scale.
In line with developments in the second half of 2019, we expect market circumstances in the industry segments to be less favorable in 2020. No immediate recovery of sales volumes, specifically in Europe, nor significant increases of steel prices are expected. Thanks to our current order book, we are more positive about our activities in the energy segment. The recent oil price developments, however, are of concern and may affect future, large investments in the oil and gas industry towards the end of 2020.
While the COVID-19 pandemic will not influence the 2019 financial statements, the 2020 financial performance of the company will certainly be affected. Expectations have been lowered by the corona virus outbreak, that spread rapidly in the first quarter of 2020. Whereas the effect was initially limited to the Asian region, shortly thereafter the effects also became visible in most of the world and therefore our entire company. It is not possible at this moment to fully quantify the full extent and duration of this unprecedented global event. While it is clear that our financial results in the second and third quarter of 2020 will be negatively impacted, it is not possible at this moment to assess the full impact. In addition to our risk mitigation measures, such as credit insurance, further measures have been taken with a focus on protecting our people’s safety and health and the company’s assets, profitability and continuity. Most likely, these measures will not be sufficient to fully offset the negative impact of this global event on our profitability.
We remain positive about the future of the company, however, considering our global presence and asset base and solid financial position. The transformational acquisition in 2019 is a historic event for our company and offers a great number of opportunities for the future. The effects of the COVID-19 crisis will no doubt have serious effects on the pace and scale of the steps forward. However, we rely on the resilience and strong structure of our worldwide company and first and foremost on the creativity, dedication and the fighting spirit of our management and employees.
Zwijndrecht, the Netherlands, 23 April 2020
P.L. Rietberg (Chairman)