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© batman2000-dreamstime.com Electronics Production | April 18, 2013

Improved Q1 results for Neways

Neways Electronics saw some improved Q1 turnover and results after the dip of Q4 in 2012 – but still no signs of structural improvements in the EMS market
Neways recorded net turnover of EUR 63.8 million in the first three months of 2013, a decline of 13% from the EUR 73.3 million reported in the same period of 2012 but an increase of 6% on the EUR 60.4 million recorded in the fourth quarter of 2012.

Neways booked a slight loss (excluding exceptional items) in the first quarter, but this was a significant improvement compared to the fourth quarter of 2012. Due to the relocation of the production activities of Neways Electronics Echt, announced in January, the first quarter also includes a gross extraordinary reorganisation charge of EUR 3.7 million. The order portfolio increased by 3% to EUR 64.5 million, compared with EUR 62.5 million at year-end 2012.

The imbalance in capacity utilisation across the Neways Group remained at a relatively high level in the first quarter of 2013 due to market volatility. At the end of January, Neways announced the relocation of the production activities of Neways Electronics Echt. The relocation of both machines and the production activities will result in improved capacity utilisation within the Neways Group, as well as cost savings and reduced investment levels.

Following the announcement, Neways made further agreements with the works council and the relevant trade unions. The majority of the around 100 employees of Neways Electronics Echt will be transferred to other Neways operating companies in the region. Around 10 developers will continue to act as an R&D team and operate as a development partner for Neways customers in the region.

The relocation of clients, staff and materials will result in structural annual cost savings roughly equivalent to the extraordinary reorganisation charge of EUR 3.7 million gross (EUR 2.8 million net) taken in the first quarter of 2013. Neways expects the savings from the relocation to become apparent in its results from mid-2013.

"The company’s bank debt remains at a low level. In recent months, we have made solid progress in terms of working capital and inventories management. We expect these measures to result in an improvement in the turnover rate of inventories by year-end 2013," the company writes.

Outlook

"Neways does not expect to see a clear improvement in the EMS market in the coming months. We also expect the high volatility in the EMS market to persist. In 2013, Neways will focus primarily on capacity utilisation improvements across the group and on increasing the flexibility of the organisation. Progress in terms of improved control of purchasing processes and inventories management were already priorities for Neways, but in the current market conditions these improvements have become even more important to safeguard margins," the company writes.

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