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© baloncici dreamstime.com Electronics Production | November 01, 2012

Downturn in EMS-market: Neways reports reasonable 3Q

Neways Electronics International N.V. (Neways) has faced rapidly increasing reluctance to invest among customers in the Electronic Manufacturing Systems (EMS) market since mid-September.
While turnover increased slightly in the third quarter of 2012 to EUR 69.5 million, from EUR 69.2 million in the same period of 2011, a potentially substantial year-on-year decline in turnover in the fourth quarter is anticipated. Neways’ order book nonetheless remains relatively stable, which indicates that most orders planned for the final months of 2012 have been postponed. The order portfolio stood at EUR 66 million as per 30 September, down roughly 3% from 30 June 2012. The caution among clients noted in the past month and a half has already had a negative impact on Neways’ profit in the third quarter of the year. In view of the downward adjustment of clients’ plans, plus feedback from clients in both the semiconductor sector and in other sectors, Neways has launched an operation to reduce the workforce by around 70-80 flex-workers to lower its cost base. In addition, Neways has tightened the monitoring of its working capital and supply chain to ensure these are optimally in line with the expected lower levels of activity in the coming months. Neways has completed the necessary organisational changes at operating company Neways Electronics Production in Kassel. This operating company is now focusing primarily on acquiring more orders and the further optimisation of its cooperation with other Neways operating companies to bring capacity utilisation to a structurally higher level. Outlook In view of the persistent economic uncertainty and ensuing increase in short-term fluctuations in the EMS market, the order book has become less reliable in terms of predicting results from quarter to quarter. Based on the adjusted forecast for the fourth quarter, turnover for the full year 2012 will be well below the level of 2011. The company now expects to book a loss in the fourth quarter, which is likely to lead to a substantial drop in net profit for the full year 2012 compared with 2011.
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