Highlights
• Net turnover declines 8.1% to € 243.0 million driven by sharp decline in demand due to temporary
closures at automotive clients, in April and May in particular; net turnover in June at comparable
level to 2019;
• Order book declines by 26.4% compared to end-June 2019 and 13.4% compared to end-
December 2019, largely due to sharp decline in order intake from automotive sector; order intake
at semiconductor remains strong;
• Gross margin drops to 36.6%, primarily due to dip in demand for high-grade automotive
components and systems;
• No production interruptions at own facilities, thanks to timely action in response to COVID-19
outbreak.
Operational developments
Eric Stodel, CEO: “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.
In the coming period, we will remain focused on managing costs, investments and working capital to
protect our 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. We will continue to strengthen our position in the market as a System
Innovator and Product Life Cycle Partner, increase our added value and continue to improve our
organisational structure and operational processes through our ONE Neways transformation process.
This will enable us to operate more efficiently and effectively as a group in the coming years."
Financial data
Net turnover declined by 8.1% to € 243.0 million, largely due to the lower turnover in the automotive
sector. The order book declined by 26.4% to € 252.3 million, compared with end-June 2019, and by
13.4% compared with end-December 2019, largely due to weak demand from the automotive sector.
Moreover, the order intake in the first half of 2019 was relatively high as a result of strong demand for
e-mobility solutions from the automotive sector.
Net turnover per market sector shows that in addition to the decline in the automotive sector, there was
also a slight decline in the industrial sector, which was offset by an increase in turnover in the
semiconductor sector and other sectors.
The gross margin declined by 12.4% to € 89.0 million and came in at 36.6% as a percentage of net
turnover (H1 2019: 38.4%). This decline was largely the result of a negative mix effect due to the strong
decline in turnover in high-grade Automotive components and systems. Neways’ reduced its operational
cost base by € 6.1 million to € 87.0 million, partly due to a reduction in the number of temporary employees and the use of reduced working hours in Germany. The workforce declined by 101 FTEs in
the first six months of 2020 and by 280 FTEs compared with June 2019.
The financing expenses were down € 0.3 million as a result of one-off costs in 2019 for the expansion
and extension of the credit facility and as a result of the lower credit uptake in 2020. The net result came
in at € 0.8 million. The number of outstanding ordinary shares at end-June 2020 stood at 12,171,537,
which resulted in earnings per share of € 0.06.
Net cash flows increased strongly to € 26.0 million, primarily due to a deferral of tax payments and
social security payments facilitated by the Dutch and German authorities in response to the COVID-19
outbreak. This involved a total amount of € 21.9 million. Excluding this effect, the net cash flow was a
positive € 4.2 million due to the temporary cessation of investments and additional cost reductions. In
the second half of the year, Neways will repay the financial support previously obtained under the Dutch
NOW employment preservation scheme and also pay the deferred tax payments.
Solvency increased to 40.2% at the end of the first half of 2020
Risk factors and uncertainties with potential effect in the second half year 2020
The Neways reporting system and the key risks identified are explained in the risk and risk management
section of the 2019 annual report, on pages 47-50. The risks described also apply to the second half
of 2020. In addition, the company’s exposure to these risks has increased due to COVID-19 as is also
apparent from the operational developments. The risk monitoring of credit risk and inventory risk is
sharpened.
Outlook
The uncertain economic circumstances as a result of the COVID-19 pandemic are creating volatility in
our markets and make it difficult to predict the outlook for the second half of the year.
Based on the recovery in turnover we saw in June and the current state of our order book, we see the
first signs of recovery in Automotive. We will continue to prioritise costs and cash management in the
coming period. At the same time, we are working on plans to structure parts of the organisation more
efficiently and adapt cost levels and capacity utilisation to today’s reality.
In the longer term, underlying technology trends and the markets in which Neways is active remain
positive and offer ample opportunities for growth. In strategic terms, we are focusing on strengthening
our position as a System Innovator and Product Life Cycle Partner in selected growth markets and on
increasing the added value. Combined with the continued roll-out of the ONE Neways strategic
transformation process aimed at improving the organisational structure and working processes, this
should result in a structurally higher level of profitability in the coming years.
Directors’ statement regarding financial reporting
The Board of Directors of Neways Electronics International N.V. confirms that, to the best of its
knowledge:
• The 2020 half year financial statements give a true and fair view of the assets, liabilities and
financial position as at 30 June 2020 and of the results for the first half year of 2020 of Neways
Electronics International N.V. and the Group companies included in the consolidation;
• The 2020 half year report of the Board of Directors gives a true and fair view of the position as at
30 June 2020, the course of events in the first half of 2020 of Neways Electronics International
N.V. and its Group companies included in the consolidation and the half year report describes the
material risk facing the company.
Son (the Netherlands), 27 August 2020