Neways Witnessed Year of Transition in 2015; Revenue Up 21%

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NEWAYS ELECTRONICS INTERNATIONAL N.V.  recorded net turnover of € 374.1 million in 2015, a rise of 21% compared with 2014 (€ 308.6 million). Neways booked an operating result of € 10.1 million, compared with € 9.0 million in 2014. Net profit from ordinary operations came in at € 6.2 million in 2015, up from € 5.3 million in 2014.

Neways’ turnover increased by 21% in 2015. In the first half, this growth was due entirely to the consolidation of BuS Group. Turnover stabilised in the second half of the year, due to a large extent to more stringent inventory controls by our clients.

Huub van der Vrande, CEO:

“The year 2015 was an important year of transition for Neways. A better spread across the various market segments, to which the acquisition of BuS Group made a clear contribution, has transformed Neways into a structurally stronger company. In 2015, we also introduced the group-wide improvement programme ‘Up to the next level’, the aim of which is to align the organisation optimally with increased market dynamics. The basic goals are to create a more efficient organisation and a better balance in capacity utilisation. The first effects of this are already becoming visible, resulting in a more stable performance of the various operating companies.

In line with the improvement programme, in December 2015 we announced that we were making changes to the organisation of the operating company Neways Cable & Wire Solutions and planned to reallocate Neways Micro Electronics activities in China. These changes will result in the loss of 15 jobs in the Netherlands.

The introduction and implementation of the improvement programme will put the Neways organisation in an even better position to support our clients and continuously take our services and production capacity to a higher level in a more efficient, more productive and smarter manner.”

Group Results

Turnover and Order Book

In 2015, Neways’ net turnover increased by 21% to € 374.1 million, compared with € 308.6 million in 2014. Turnover development was more stable in 2015 than in 2014.

Sales in the second half 2015 were at the same level as the first half of the year, and 6% higher than in the second half of 2014. While growth in the first half of the year was due entirely to the former BuS Group, the growth in the second half, compared with the second half of 2014, was realised by a combination of the Neways operating companies and BuS.

At year-end 2015, the order book stood at € 167.6 million, compared with € 155.9 million at year-end 2014. Due in part to the acquisition of BuS Group, the order book was more evenly and more broadly spread across the various sectors in which we are active. Turnover remained relatively stable during 2015, with the exception of the last quarter, in which clients’ decisions to postpone orders resulted in fluctuations.

Gross Margin

The gross margin, including an exceptional item of € 0.5 million, increased by 18.1% to € 147.5 million in 2015, compared with € 124.9 million in 2014. This was largely the result of the acquisition of the former BuS Group. Excluding exceptional items, the gross margin, as a percentage of net turnover, came in slightly lower at 39.6%, compared with 40.5% in 2014. In the second half of the year, margins were under pressure due to clients introducing more stringent inventory controls.

Operating Expenses

Operating expenses consist for the most part of personnel costs. The personnel costs increased by 16.4% to € 102.4 million in 2015, due to the consolidation of the former BuS Group. As a percentage of net turnover, normalised personnel costs came in slightly lower than in 2014 (28.5%), at 27.4% of net turnover. At year-end 2015, the number of FTEs stood at 2,530, 3.1% lower than at year-end 2014.

Depreciations and Amortisation

In 2015, Neways booked depreciations of € 8.3 million, compared with € 6.3 million in 2014. This increase was largely due to the consolidation of the former BuS Group. With the exclusion of the PPA amortisation, depreciation stood at € 6.9 million, compared with € 4.8 million in 2014.

Exceptional income and expenses

In the previous year, 2014, Neways reported a number of exceptional items, which on balance had a positive impact of € 2.4 million (gross) on the operating result. In 2015, the exceptional expenses before tax amounted to € 4.1 million; these expenses included the reorganisation costs for NME and NCWS (€ 2.7 million) and the PPA expense of € 1.4 million.

Operating Result and Operating Margin

The operating result  came in at € 5.9 million in 2015, compared with € 6.6 million in 2014. Excluding exceptional income and expenses, the operating result increased to € 10.1 million, compared with € 9.0 million in 2014. Based on the normalised operating result, the operating margin stood at 2.7% in 2015 (2014: 2.9%).

Financing Expenses

Financing expenses increased to € 2.1 million in 2015, compared with € 1.1 million in 2014. This was largely due to the financing of the acquisition of the former BuS Group.

Net Result

The net result from ordinary operations came in at € 6.2 million in 2015, compared with € 5.3 million in 2014. Including exceptional income and expenses, Neways recorded a net result of

€ 3.2 million in 2015, compared with € 7.0 million in 2014.

Earnings per Share and Dividend

The basic premise of the current dividend policy is a pay-out ratio of 40% of the net profit. This is subject to the condition that the company is in a solid financial position, which includes a solvency ratio of at least 35%. In accordance with this dividend policy, Neways will propose to the Annual General Meeting of Shareholders that a dividend of € 0.11 per share will be paid out in cash, representing a pay-out ratio of 40%.

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