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28
February
2012

Neways books record turnover, profitability lags

Neways Electronics International booked net turnover of € 283.9 million in 2011, up 12% compared with 2010, partly on the back of a strong fourth quarter.
The result exceeds the company's old record of € 281.0 million set in 2007. Demand was particularly strong in the industrial, automotive and semiconductor sectors.

Net profit (excluding exceptional reorganisation charge) increased slightly, by 2% to € 5.2 million, but lagged turnover growth due to temporary materials shortages at suppliers, a considerable underutilisation of capacity at one of Neways’ German operating companies and a relatively high tax burden.

Net profit, including the reorganisation charge, came in at € 3.8 million. At € 67.1 million, Neways’ order portfolio was healthy at year-end 2011 and provides a good starting position for 2012.


Group results

In 2011, Neways recorded a rise in gross turnover to € 308.7 million, an increase of 12.7% compared to 2010. Internal turnover rose by 27.2% compared with the previous year, largely due to an increase in development and system engineering activities, combining the expertise from various operating companies.

On a year-on-year basis, net turnover was up 11.6% at € 283.9 million. The acquired part of DHV, which Neways consolidated as from 1 May 2011, contributed several millions. The turnover from activities in the industrial sector, the semiconductor sector (primarily in the first half of the year) and the automotive sector showed particularly strong growth.

The turnover in less cyclical activities in the medical sector remained more or less stable in 2011. This is a good performance in view of the spending cuts governments across the world have introduced in the health care sector. Neways felt the impact of government spending cuts more clearly in the defence sector. In 2011, there were relatively few new and large multi-year contracts on the market, and many companies in the sector postponed investments.

The order portfolio at year-end 2011 stood at € 67.1 million, down 7% compared with year-end 2010 and 2% when compared with end-June 2011.

Personnel

The operating companies in Western Europe employed an average of 1,372 employees in 2011 (in FTEs), an increase of 10% compared with 2010, partly due to the addition of 54 employees from DHV. The average number of employees in 2011 (in FTEs) in Eastern Europe and China was 798, around 37% of Neways total workforce. This ratio was more or less unchanged from 2010.

Developments after the balance sheet date

In February 2012, Neways received a number of multi-year (2012-2018) defence contracts with a value that may be in excess of € 30 million.

Outlook

With market demand normalising towards the end of 2011, Neways’ order portfolio stood at € 67.1 million at year-end 2011, down 7% from the end of 2010. The order portfolio increased in the first weeks of 2012, giving the company a good start of the year as to its results. This puts Neways in an encouraging starting position for 2012.

In 2012, Neways will continue to invest in the latest production technology and in the improvement of the information exchange as part of its ongoing quality and efficiency improvements. Investment will focus primarily on the replacement of a number of SMD production lines with more advanced production lines equipped with the latest technologies, as well as the expansion of clean-room facilities and testing equipment. In addition, as part of the Next Generation’ project, once the test phase is completed, Neways will launch the gradual implementation of the new ERP LN system from INFOR, to replace the current BaaN IV system. Total investments in 2012 will be comparable to the levels seen in 2011.
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