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Presentation of 2007 Annual Results

Presentation of 2007 Annual Results. Neways Electronics International N.V. 26 February 2008. Highlights 2007. 2007 exceptionally good year!. * Turnover and profit to record level Almost entirely organic growth of turnover of 18% to EUR 281,0 million

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Presentation of 2007 Annual Results

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  1. Presentation of 2007 Annual Results Neways Electronics International N.V. 26 February 2008

  2. Highlights 2007 2007 exceptionally good year! * Turnover and profit to record level • Almost entirely organic growth of turnover of 18% to EUR 281,0 million • Increased demand from all market segments • Net profit increased by 30% to EUR 14,5 million • Very well-filled order portfolio of EUR 74,8 million * Operational margin improved from 7,0% to 7,5%, well above the minimum margin target of 7% a year * Financial position further strengthened • Solvency ratio increased to 43,9% • Positive net cash flow • Decrease of Debt / Ebitda to 0,5

  3. Key figures 2007 * Net profit per share based on total number outstanding shares per ultimo period

  4. Positioning of Neways • Market: - Core market Benelux / Germany - Intentional focus on growth segments industrial, semicon, medical, automotive, defence and ‘high-end’ telecom • Customers: - Industrial / professional market - B2B (OEM’s: Original Equipment Manufacturers) • Specialisation: - Small complex / specialised series Development / production of electronic components to complete box build systems - Product life cycle management/ one-stop-provider • Core compentence: - Close to the customers (Netherlands / Germany) - High added value / expertise and service - Low production cost (Eastern europe, China)

  5. Products Neways

  6. Products Neways

  7. Products Neways

  8. Products Neways

  9. From capacity to knowledge supplier Systems Marketing R&D Sales S&R

  10. A B C D Business Model Neways C.P. T.R. ERP etc. Western Europe Eastern Europe China Customers Suppliers Service providers Less flexibility / added value

  11. Compentences

  12. Development turnover and backlog Orderportfolio (EUR m) per ultimo Net turnover(EUR m) +14% +18% +2% 281 239 208 74,8 73,1 190 65,9 51,9 • - More orders at existing customers; more new customers (a.o. ThyssenKrupp) • Contribution in turnover by one-stop-provider projects still relatively limited, but strong growing; higher part in turnover of knowledge-intensive activities (development, engineering and system assembly) • Increased order entry in most market segments

  13. Segmentation of turnover • Substantial growth in defence sector due to Hägglunds project and new orders

  14. Development of result Operating result(EUR m) Net result (EUR m) +30% +26% 21,0 14,5 11,2 16,7 9,8 9,0 5,1 4,7

  15. Development operating margin • Improved capacity utilisation • Improved purchase conditions • Increase of development and engineering activities / prototyping, a.o. start-up Hägglunds-project • One-stop-providership / internal cooperation, increased intercompany deliveries • More outsourcing to Slovakia / China • Higher efficiency • Changed productmix

  16. Potential improvementsOperating margin • Supplier reduction / preferred suppliership • Extension of component purchase in China • Expanding capacity Slovakia / China in people and resources (SMD-capacity / test equipment) • Growth of development and engineering activities and prototyping • Increase of intercompany deliveries by strengthening one-stop-providership / intensifying of internal cooperation • Growth in defence-orders → higher added value and more stability in turnover

  17. Balance sheet Solvency ratio* • Strong increase in equity • Increase in the balance sheet total (+13%) caused by higher activity level (increased working capital / higher investment level) • Solvency adjusted for deferred tax and goodwill 42,8% (ultimo 2006 : 39,6%) 43,9% 41,0% 40,0% 30,3% * guaranteed equity / total equity

  18. Working capital • Inventory • Increase of order related inventory by higher order entry • Decrease in days of turnover caused by development of a relatively high number of new products and increase of one-stop-provider projects

  19. Cash flow Net cash flow (EUR m) • Excellent result • Increase of working capital • Higher investment level 11,5 4,6 4,0 -7,5

  20. (Bank)debtsEUR mln 38,7 23,6 19,5 18,5 9,7 8,2 9,6 12,6 12,9 9,1 10,7 11,4 5,7 3,4

  21. Financial strength Interest coverage 12.1 9.9 • Interest coverage well over minimum target of 1,5 • Debt /EBITDA on a sound level far below maximum target of 3 • More than sufficient flexibility for further financing of growth 6.7 5.4 Debt/EBITDA 2.4 1.6 0.7 0.5

  22. Human resources • Knowledge component more and more import • Higher need for high-educated employees; increasing number of designers / engineers • Outsourcing important part of the business model • Approx 40% of total number of employees in Eastern Europe and Asia Average number of employees 2247 2097 1851 1836 Eastern Europe and China Western Europe * *of which hired 122 128 212 306

  23. Data per share EUR 2007 2006 2005 Operating result 2,26 1,81 1,06 Net result 1,56 1,21 0,59 Dividend 0,47 0,36 0,10 Shareholders’ equity 5,26 4,08 2,78 Number of outstanding shares (x 1.000ultimo) 9.299 9.202 8.526

  24. EMS – market trends • International development / increase in outsourcing by OEMs • Offering more added value; demand for life cycle management and earlier involvement in development (one-stop-providership) • Shorter product life cycle • Flexibility versus efficiency and cost reduction • More and more production in low-wage countries (Eastern Europe and China) • Increasing transparency due to modern communication media / globalisation • Growing demand for SMOI (Supplier Managed Owned Inventory) • Further intensifying of partnerships / customer relations – importance of being close to the customer (Western-Europe)

  25. Strategy • Realization of organic growth, supplemented by suitable acquisitions • Expansion of one-stop-provider concept / increase in added value • Strengthening of development side and systems assembly • Expansion of Electronic Mechanical Repair (EMR) activities • More balanced spread of activities over market segments • Medical sector • Defence market • Improvements in efficiency • Supplier reduction (preferred suppliers) / closer cooperation / better purchase conditions • More outsourcing of production to Eastern Europe and China (own facilities) • Ongoing new cost control initiatives

  26. Outlook 2008 • Sound starting position: Order portfolio +14% compared to ultimo 2006 and +2% compared to ultimo June 2007 • Due in part to the current uncertain economic climate, 2008 will be a challenging year

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