Neways Reports Revenue Growth in 1H

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Neways Electronics International N.V. has announced its results for the first half of the year ending on 30 June 2019.

Highlights

• Net turnover increased by 7.1% to €264.5 million, largely driven by a stronger contribution from the semiconductor and automotive sectors and to a lesser extent from the industrial sector. Medical and defense remained stable.
• Order intake was 6.8% higher than in the first half of 2018, largely due to new e-mobility orders. The order book stood at € 342.6 million at end-June 2019, compared with €300.8 million at the end of June 2018.
• Gross margin rose by 5.2% to €101.6 million, largely as a result of higher activity levels.
• Normalized operating result comes in at € 8.9 million, a decline of 19.1%, mainly due to an imbalance in client demand across Neways’ locations and the associated costs incurred to move production between the locations. In addition, higher start-up costs related to the start of production for new products had a negative impact on the result.
• EBITDA rises to €15.6 million (including an IFRS 16 impact of €2.6 million), compared with €15.1 million in the first half of 2018.
• Net result declines by 25.0% to €5.1 million.

Message from the CEO

CEO Huub van der Vrande said, “Following the record turnover recorded in 2018, we continued on our growth path in the first half of 2019, due in part to the strong demand for e-mobility solutions. Our order book remains well filled across the board, and pressure on deliveries is continuing, although geopolitical tensions have led to a slight decline in the pace of growth and certain clients are postponing orders, mainly in the semiconductor sector.

The fact that we are continuing to grow despite a deterioration in market conditions shows that we have a good spread of our turnover, not just across market sectors but also within those sectors. Our  continuing growth in the e-mobility segment within the automotive sector shows that we are making the right strategic choices.

Growth was also less predictable in the first half of 2019, which led to a temporary imbalance in the capacity utilisation within the group. In addition to the extra costs related to the relocation of certain products within the group, we also made investments in the start-up for new products. Disciplined cost controls and the improvement of our operational processes remain among our highest priorities as we strive to improve our results on a structural basis.

A number of measures we took over the first half of the year have led to efficiency improvements, a relative improvement of our inventories position and, after a long period of increases, we are now seeing a moderate reduction in inventories when compared with the position at year-end 2018. We expect the uncertain market conditions and geopolitical tensions to play a significant role in a number of the markets in which we are active in the second half of 2019.

Despite the increased instability in the market, we will continue to execute our long-term strategy: on the one hand, we will maintain our focus on our selected growth sectors and customer philosophy; at the same time, we will intensify the cost-saving measures we have initiated to offset the  decline in our productivity. Barring any unforeseen deterioration in the market, we expect to record higher turnover for the full year 2019 when compared with 2018, and an improved result in the second half of the year when compared with the first half of 2019.”

Outlook

Neways is well positioned to continue to profit in the coming years from the expected growth in the market sectors in which we are active. The order book is currently at a clearly higher level than at end-June 2018,but the uncertain economic conditions in Europe and Asia, together with geopolitical tensions, are expected to play a significant role in a number of the markets in which Neways is active in the second half of 2019. In this context, our priority is to ensure that the Neways organisation is able to respond more effectively to the potential postponement of orders by its clients, and in the second half of 2019 we will intensify the measures initiated to improve our productivity levels. Barring any unforeseen deterioration in the market,we expect to record higher turnover for the full year 2019 compared to 2018, and an improved result in the second half of the year, when compared to the first half of 2019.

About Neways

Neways Electronics International N.V. (Neways) is an international company active in the EMS (electronic manufacturing services) market. Neways offers its clients custom-made solutions for the complete product life cycle (from product development to after-sales service) of both electronic components and complete (box-built) electronic control systems. Neways operates in a niche of the  EMS market and focuses primarily on small to medium-sized specialist series, in which quality, flexibility and time-to-market play a crucial role. Neways products are used in sectors such as the semiconductor, medical, automotive, general industry and defence industries. Neways has operating companies in the Netherlands, Germany, the Czech Republic, Slovakia and China, and the United States with a total of 2,998 employees at 31 December 2018. Neways recorded net turnover of €506.8 million in 2018.