SON, THE NETHERLANDS – Neways Electronics today reported 2020 net sales fell 10.3% to €478.6 million ($577.7 million) due to reduced demand in automotive and the automotive-related industrial electronics.

The net loss was €3.9 million, down from a profit of €8.5 million in 2019. EBITDA was €21.7 million down 28.4%. The operating loss was €2.5 million, versus a profit of €15.1 million last year.

Net cash flow increased to €37.6 million as the EMS company focused on preserving cash and working capital, and in particular inventories. Some €8.8 million of this was due to the deferral of taxes and social security payments.

Bookings declined 22.8% to €225 million as lower demand from automotive was partially offset by orders from the medical and semiconductor segements.

The company took one-time charges of €9.6 million due to layoffs in Germany and the Netherlands, and expects annual cost savings of around €8 million in total from the moves.

“2020 was a challenging year, as we saw a drop in demand in automotive due to the Covid-19 pandemic, translating into a decline in both turnover and result," said Eric Stodel, CEO, Neways. "The effective strategic spread across various sectors and, in particular, strong growth in semiconductor partly compensated for the decline in turnover in automotive. To offset the sharp and abrupt drop in demand in automotive in the spring, we responded quickly through strict control of costs and investments and a strong focus on cash and working capital. In addition, we were able to close better agreements with clients, which greatly improved our inventories position and enabled us to realize a strong positive cash flow. We also immediately scaled down production and reduced working hours.

"The reorganization announced in November is necessary to adapt the capacity utilization in Germany to the reduced demand from automotive on a structural basis. At the same time, we are implementing a number of organizational adjustments to bring the management of the operating companies involved, more in line with that of the group. For this purpose, we are taking a provision of €9.6 million in total, which will be charged to the result for 2020. The structural cost savings will amount to approximately €8 million on an annual basis and will be fully reflected in our results as from 2022.

"If we look ahead, the Covid-19 pandemic is still creating a lot of uncertainty and increased vigilance. We do see an increase in order intake in the first two months of this year. Our priority for this year is to restructure the organization and operations to align more effectively with our role as system innovator and product life cycle partner, for which we see an increasing demand from our clients. We see this as the most important condition if we are to take profitability to a higher level. We will also invest in those knowledge areas where we see opportunities as a System Innovator to offer more advanced solutions that simultaneously help us to meet the growing demand for more complex (box-build) systems. Strengthening long-term partnerships with clients, standardizing business processes and intensifying knowledge exchange will provide the basis for more profitable turnover and growth on a structural basis."

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