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Neways Electronics International N.V. announces its results for the financial year ending on 31 December 2018.
- Net turnover of €506,8 million, an increase of 15.5% due to strong demand, primarily in the semiconductor and automotive sectors
- Order book rises 15.3% to above the €300 million mark, increases in all market sectors
- Normalized operating result increases by 43.8% to €22.0 million as a result of higheractivity levels and increased scalability
- Net resultup 45.5% at €14.4 million; dividend proposal 37.1% higher at €0.48 per share
Message From The CEO
Huub van der Vrande: “Last year was a record year for us, both in terms of turnover and profit. We passed the turnover mark of €500 million. We are seeing a continued rise in the demand for more complex box-build systems and that our positioning as a product life-cycle partner is gaining traction. However, the high demand from clients in combination with the scarcity of components is putting pressure on our organization and creating extra challenges. We had to do more to serve our clients and get our orders delivered. This led to extra costs and higher use of capital. At the same time, this also showed that there is a good deal of room for improvement.
Despite these additional challenges, we managed to further improve our effectiveness and responsiveness. Our organization is again more professional and more robust than a year ago. As a result, we work more efficiently and we are more aware of the risks that go hand in hand with the larger and more complex projects Neways is involved in. To facilitate our continued growth with our clients, we have expanded our production capacity in Germany and China.
Our order bookwas well filled at year-end 2018. On the basis of our order book and the potential to improve within the group, we are anticipating a good start to 2019. And barring unforeseen macro-economic developments, we expect to record higher turnover and a higher operating result for the full year.” On the basis of the strong improvement in our result, in combination with the positive expectations for 2019, at the upcoming General Meeting of Shareholders we will submit a proposal to raise the dividend to €0.48 per share.
Net turnover increased entirely organically by 15.5% to €506.8 million in 2018. The order book increased by 15.3% to €304.0 million on the back of higher orders in all five market sectors. The order increase was highest in the semiconductor sector.
The turnover growth was largely driven by higher turnover in the semiconductor and automotive (especially e-mobility) sectors.
The gross margin came in 14% higher as a result of the higher activities levels. As a percentage of turnover, the gross margin declined slightly to 38.5% from 39% in 2017 as a result of a further shift in the mix towards more complex box-build systems.
Operating expenses rose by 11%, less than turnover, largely due to the improvement of our operational processes. Personnel expenses as a percentage of the gross margin declined to 68.6% in 2018 from 70.3% in 2017, which shows that we have improved the scalability of our organization and that we were able to deploy employees more efficiently. As a result of this, the normalized operating result increased by 43.8% to €22.0 million, which translates into a margin of 4.3%. The operating result including one-off items rose by 46.9% to €21.0 million, compared with €14.3 million in 2017.
The higher use of customer finance programmes and the increase in working capital as a result of the rising turnover led to a 25% increase in financing expenses.At 24.3% in 2018, the tax rate was higher than in 2017. In 2017, this included the recognition of a tax credit of €0.7 million in Germany. Net result and earnings per share were up by 45.5% and 39.5% to € 14.4 million and €1.20 per share respectively, on the basis of 11,957,624 outstanding shares at year-end 2018.
Our order book was well-filled at year-end 2018 and we have made a good start to 2019. At the same time, we are faced with a growing number of uncertainties in the global economy,while the shortage of components is set to continue for the foreseeable future. The chain is highly dependent on these components. Any breakdowns or delays among our own or other suppliers could result in our clients making adjustments to their plans. It is up to us to work with our clients and other players in the chain to respond as effectively as possible to these market conditions. As a product life-cycle partner, we want to fulfil that role more effectively. In 2019, we will therefore continue with the implementation of our strategy with a clear focus on improvements to our operational processes and scalability, our client focus and our role as a chain director. Barring unforeseen macro-economic circumstances, we expect our net turnover and operatingresult for the full year 2019 to be higher than in 2018.
Neways Electronics International N.V. 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 defense industries. Neways has operating companies in the Netherlands, Germany, the Czech Republic, Slovakia and China, and the United States with a total of 2,998employees at 31 December 2018. Neways recorded net turnover of € 506.8 million in 2018.