Neways Posts Higher Results in First Half 2016

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Neways Electronics International N.V., today announced its results for the first half (H1) ending 30 June 2016.


  • Net turnover at € 197.9 million, up 4.7% year-on-year, primarily driven by Automotive and Defence.
  • Order intake increased by 11% year-on-year, driven in particular by new orders in Automotive and Semiconductors. Order book stood at € 184.4 million, compared to € 163.0 million at end-June 2015.
  • Gross margin increased by 2.6% year-on-year to € 77.6 million. Positive effect of higher volume was partly offset by increased material components, mainly due to mix changes.
  • Normalized operating result came in at € 7.2 million, up 22.0% year-on-year, mainly driven by better capacity utilisation and strict cost controls. The first benefits of the organisational adjustments are becoming visible.
  • Net income came in at € 4.4 million, up 29.4% due to operating leverage and slightly lower finance expenses.

CEO Statement

Huub van der Vrande, CEO: “In the first half year, our order book increased strongly, reflecting the effect of our diversification programme, and the strengthening of our market position in Automotive. We added new clients and won orders in areas such as control systems for e-Mobility. We have largely completed the organisational adjustments we announced at the end of last year and these are now starting to make a positive contribution to the improvement of our normalized operating result, which was more than 20% higher year-on-year.

We will continue to invest in improving our operational processes and customer relationships, which will help to become the trusted technology partner at every stage of our customers’ product life cycle management.

Based on the strong order book and our increased visibility, we expect a solid second half of the year.

The increase in net turnover was primarily driven by higher sales in the sectors Automotive, driven mainly by e-Mobility, Industrial, Semiconductors and Defence, which was partly offset by a decline in Medical.

The gross margin came in 2.6% higher on the back of the increase in net turnover. Relative to net turnover, gross margin declined to 39.2% in H1 2016 from 40% in H1 2015 (H2 2015: 38.9%). Demand for more complex box-built systems increased, which in turn led to an increase in the level of material components.

Operating expenses increased by 1.0%, mainly as a consequence of higher activity levels. Additional costs related to changes in the organisational processes and the ongoing implementation of the new group ERP system were offset by the improvement in operational execution and initial savings from the largely completed organisational adjustments at two operating companies. The normalized operating result came in 22.0% higher at € 7.2 million, which translates to a margin of 3.6%.

Financial expenses fell by 25%, mainly due to lower effective interest rates in the period under review. In the 12 months to 30 June 2016, Neways has repaid a total of € 5.3 million in loans that carried higher interest rates.

The tax rate increased to 23.8% in H1 2016, compared with 17% in H1 2015. Last year’s tax rate was positively impacted by a € 0.4 million revaluation of tax credits. As a result, net income increased by 29.4% to € 4.4 million, while earnings per share came in 30% higher at € 0.39 per share, based on 11,406,301 shares outstanding as per end-June 2016.

Operating cash flow came in at - € 1.6 million, a € 1.6 million or 50% improvement, mainly due to higher operating income and lower financing costs. The operating cash flow in the first half year is influenced by seasonal patterns that require a higher working capital.

Net working capital increased to € 69.5 million, up from € 63.8 million at end-June 2015. Both inventories and receivables increased, driven by higher activity levels. Neways has initiated measures to reduce inventory levels. The company is also developing additional plans for the reduction and more effective control of inventories, the first results of which are expected to become visible in 2017. DSI increased to 82 days versus 77 days at end-June 2015. DSO was stable at 36 and this is supported by the use of supplier finance programmes for a number of larger OEM clients, encouraging rapid payments. Neways has managed to reduce the level of outstanding accounts payable despite the higher activity level.

Capex was in line with last year and was primarily related to replacement investments in equipment and tooling, R&D and the implementation of the new group ERP system. Return on invested capital came in at 7.6% compared to 6.5% in H1 2015.

Net debt amounted to € 36.8 million at end-June 2016, down 7% versus end-June 2015, largely due to reduced bank loans, while LTM EBITDA increased by 7% to € 18.3 million versus € 17.1 million. Net debt / EBITDA stood at 2.0, a clear improvement compared with end-June 2015.

Interest coverage improved sharply, driven by the reduced interest costs and improved profitability.

Solvency was stable and stood at 39.2% at end-June 2016, compared with 39.8% at year-end 2015 and 37.4% at end-June 2015. Adjusted for the deferred tax asset and intangible fixed assets, solvency improved to 35.4% from 33.6%, which is in line with the bank requirement of 35%.


Neways will continue to roll out its group-wide improvement programme “Up to the next level” in the second half of 2016. The order book is at a relatively high level when compared to the same period last year. Based on this, Neways expects to record higher net turnover and operating result for the full year 2016 than in 2015.

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 semi-conductor, medical, automotive, telecom and defence industries. Neways has operating companies in the Netherlands, Germany, the Czech Republic, Slovakia and China, with a total of 2,543 employees at 30 June 2016. Neways recorded net turnover of € 374 million in 2015.  



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