CAREL’s strategy to manage the impact of coronavirus (COVID-19)

The CAREL Group has always invested in a resilient business continuity strategy. This is why today Carel can leverage its strong portfolio of assets to ensure production continuity, with nine production plants on four different continents and a diversified network of partners in our supply chain.

Our production plant management strategy has always been unique. We have never been concerned with minimizing the cost of production by operating production sites that specialize in one or just a few production lines. Our risk management strategy has led us to manufacture as many products as possible at each plant. The vast majority of our products are manufactured in at least two plants in two different countries.
Furthermore, from 2017 to 2019 we made significant investments in production, essentially doubling our potential capacity, well exceeding short-term demand.

The same flexibility is shared also by our R&D, with three main development centers located in three different continents, as well as by our customer support, spread across 28 subsidiaries around the world.
The recent outbreak and spread of COVID-19 is having a significant impact globally, however CAREL has been able to cope with this scenario, limiting the negative impacts on the Group itself and on the business of our customers.
CAREL has in fact activated all of its backup procedures and alternative production lines and accessed its second sources.
Currently, all of our offices and factories are open and operating:

• the Italian plants and HQs, based in northern Italy, are not affected by the virus and are running at full capacity (see the additional comments below );
• the Chinese plant is operating at 60% of nominal capacity, and we are expecting to reach 80% of capacity by the end of March;
• our Chinese suppliers resumed operations in February and are working at approximately 50% of their capacity. Our European suppliers have never stopped operating;
• capacity at our other factories (i.e. Croatia and Brazil) has already been increased since the beginning of February, to offset the impact of the temporary shutdown of the Chinese plant;
• carriers are in general ensuring standard services both via air and sea freight (some rate increases may be applied).

Situation in Italy: production in northern Italy has not stopped
On the night between 7 and 8 March, a Decree was issued by the Italian Prime Minister’s Office containing rules intended to stem the spread in Italy of the emergency due to COVID-19 (coronavirus). Measures include certain restrictions in the movement of people to and from several provinces in northern Italy, including Padua and Milan, where the Group’s Italian plants and headquarters are located.

It must be stressed however that the Decree permits travel for professional reasons (among other exceptions): this includes the possibility for Carel Group employees to commute to our facilities.

Additionally, on 8 March an explanatory note to the aforementioned Decree was published by the Ministry of Foreign Affairs and International Cooperation, specifying that: "goods can enter and leave the territories concerned. The transport of goods is considered as an essential work requirement: drivers of transport vehicles can therefore enter and leave the territories concerned and travel inside them, however only for the purposes of delivering or collecting goods".