© Neways Electronics International Electronics Production | August 27, 2020
Neways’ turnover and profit took a hit from the automotive shutdown
Even though the company had no disruptions to the production at its own facilities, the temporary closures at its automotive clients caused a decline in the company’s turnover.
Net turnover for the first half of 2020 declined 8.1% to EUR 243.0 million, driven by a sharp decline in demand due to temporary closures at automotive clients, in April and May in particular. The company’s order book also declined by 26.4% compared to end-June 2019, once again largely due to sharp decline in order intake from automotive sector. However, according to the company the order intake within the semiconductor segment remains strong. The gross margin declined by 12.4% to EUR 89.0 million and came in at 36.6% as a percentage of net turnover (H1 2019: 38.4%). Normalised operating result for the period declined to EUR 2.2 million, due to lower turnover and margin, partly offset by cost reductions. Net profit for the first half plummeted by 84.7% to EUR 0.8 million from EUR 5.1 million during the comparable period last year. “COVID-19 has had a significant impact on the development of Neways' results. The drop in demand for automotive products, driven in particular by the complete production shutdown at a number of our clients in April and May, resulted in an 8% decline in our turnover compared with last year. Closer cooperation in the supply chain and strong cost and cash management enabled us to limit the impact of COVID-19 on our business operations and we still managed to record a positive result in an extremely dynamic and challenging six months,” says CEO Eric Stodel. He continues to say that in the coming period, the company will remain focused on managing costs, investments and working capital to protectour profitability and cash position. “We are also working on plans to structurally reduce costs and improve capacity utilisation in line with today's reality. In addition, we are continuing to focus on the roll-out of our refined strategy,” the CEO says. Based on the recovery in turnover the company saw in June and the current state of its order book, Neways says it is seeing the first signs of recovery within Automotive. However, the company continue to prioritise costs and cash management in the coming period.