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Electronics Production | February 26, 2008

Neways increase turnover by 18% in 2007

EMS provider Neways, based in the Netherlands, had an exceptionally good year last year. In 2007 net turnover increased by 18%.
This growth was almost entirely organic. An improved product mix, capacity utilisation rate and efficiency were among the factors which helped Neways increase its operational margin to 7.5%, from 7.0% in the previous year. This contributed to a 30% increase in net result to a record EUR 14.5 million. The starting position for the first few months of 2008 is sound, with a 14% higher order portfolio at year-end 2007.

In line with Neways’ strategy, gross turnover saw a slightly greater increase than net turnover. Neways’ role is changing from pure supplier to being a tactical and strategic partner for its clients. The Neways operating companies increasingly join forces to act as one-stop-provider. Gross turnover was up 20% at EUR 309.7 million in 2007, while net turnover increased by 18% to EUR 218.0 million. Turnover growth was booked in virtually all market segments. Due to the anti-cyclical character, the growth in the medical and defence sectors was particularly positive.

The order portfolio as per year-end 2007 stood at EUR 74.8 million, an increase of 14% and 2% compared with year-end 2006 and end-June 2007 respectively.

The higher turnover raised the gross margin by 16% to EUR 114.1 million. The change in the composition of turnover led to a drop in gross margin, in percentage terms, to 40.6% from 41.3%. An increasing part of turnover is derived from the construction of complete (box build) operating systems. This is accompanied by an increase in the purchase value of the turnover.

The improvements in internal efficiency and capacity utilisation meant total operating expenses (including wage costs) increased less strongly in relative terms - by 13.7% - than turnover. The operating result was up 26% at EUR 21.0 million. The operational margin rose to 7.5% from 7.0%, well above the minimum margin target of 7%.

Pre-tax profit came in at EUR 19.5 million, up 28% compared to the previous year. Interest expenses increased by 6% due to the higher capital demand related to the financing of the strong growth in the first half of 2007 and a higher interest rate compared to 2006.

The tax burden came in at 25.5%. This resulted in an increase in net profit of 30% to EUR 14.5 million. As a percentage of turnover, the net result rose to 5.2%, from 4.7%. Net earnings per share rose by 29% to EUR 1.56, from EUR 1.21.
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