© Neways Electronics Production | April 19, 2021
Neways sees healthy recovery in turnover
While the company is off to a good start in 2021, seeing a healthy recovery in turnover the company is expecting that the shortage of components will create issues and put a break on order execution and turnover growth within Automotive.
The EMS provider is reporting a net turnover of EUR 119.3 million during the first quarter of 2021, an increase of 4.2% compared with Q4 2020 and a decline of 6.2% compared with the same period last year, when the impact of COVID-19 was still limited. The company's order book increased during the quarter to EUR 273.7 million, up 21.6% compared with the EUR 225.0 million at year-end 2020. The company says that all its market sectors recorded continued growth or recovery in the first quarter. However, turnover development was hampered by the worldwide shortage of components for Automotive that arose in early 2021. Neways says it expects the shortage of components to continue to put downward pressure on turnover development in the coming quarters, primarily in the Automotive sector. As stated earlier, at the end of the first quarter, the order book stood at EUR 273.7 million, an increase of 21.6% compared with year-end 202 and a slight decline of 3.2% compared with end-March 2020 (EUR 282.7 million). Order intake for the quarter was EUR 168.4 million, up 42.0% compared with Q1 2020. All market sectors saw an increase in order intake. The company says that the order intake was given an additional boost due to the fact that clients had been anticipating the recent shortage of components in the automotive sector. As a result of this, clients placed orders earlier than anticipated, which extended the length of the company's order book. The reorganisation which the company initiated in 2020, including the downscaling of production capacity utilisation in Germany and the integration of two Dutch business units is on schedule and is nearing completion. This reorganisation will realise cost savings of around EUR 8 million on an annual basis. In Germany, Neways launched an improvement programme in the first quarter, which is running parallel with the reorganisation. The company says that the aim of this programme to optimise alignment of the local organisation with changing market demand and bring it more in line with Neways positioning as a System Innovator. This programme will continue in the coming quarters. “We got off to a good start in 2021, with higher turnover than in the fourth quarter of 2020. At the same time, we are seeing a healthy recovery in turnover, especially if we compare this with the turnover level in the first quarter of 2020, when the impact of COVID-19 was still limited. Our order book was up across the board and showed a clear recovery in demand in the Automotive sector. We do expect the worldwide shortage of components to put a clear brake on order execution and turnover growth within Automotive. The fact that the e-mobility segment still needs to settle also has an impact in this sector. On the one hand, e-mobility clients are opting for more outsourcing to EMS partners, while on the other hand certain production activities are insourced,” says CEO Eric Stode. “Given the uncertainty regarding COVID-19 and the transition to System Innovator underway, we will continue to keep a very close eye on our cost levels and cash flow in the coming period. We expect to see full recovery from Covid-19 impact, including the related component shortage,” in 2022, the CEO continues.