Although Neways achieved healthy turnover growth in 2019, strong fluctuations in demand were also apparent. This combination of factors places high demands on our internal organisation and operating processes. In spite of all the company’s efforts, Neways was unable to convert this healthy growth in turnover into a healthy growth in profit in 2019. We must improve this aspect in the coming years to safeguard our ability to carry on investing in our business activities and resources.
Net turnover increased fully organically by 5.2 % to € 533 million. The turnover growth was mainly due to higher turnover in the automotive market (especially e-mobility). The decrease in the order book to € 291.4 million at year-end 2019 is due to less forward planning of orders by clients because of the reduced scarcity of components. The order book is at a healthy level at year-end.
Value chain collaboration
Developments in technology, such as artificial intelligence, self-driving cars, robotics and the Internet of Things are progressing at lightning speed. These are all technologies that require more electronic connections and complex integrated solutions. As a result, large OEMs and suppliers – our customers – are increasingly receptive to setting up strategic partnerships in order to keep pace with these developments. Our customers are constantly looking for efficiency benefits to make their operations more effective and competitive. The demand for customised solutions and flexibility is increasing and effective collaboration within the value chain is also becoming ever more important as a result. These are solutions and partnerships that Neways can offer.
I feel that Neways should profile itself more by emerging from the shadow cast by our customers. Neways is a proud company and justifiably so, but at the same time we are also overly modest about the extremely high-quality and reliable solutions that we develop and produce for our customers. After suitable consultation, we will more proactively and proudly communicate with the market about OEM products that all use Neways Inside. For example, we make extremely complex electronics and cabinets for EUV chip machines and electron microscopes, monitor the safety of millions of train passengers and our sensors make millions of cars safer.
In addition, our components are present in a wide range of aviation and defence systems and in navigation satellites, and we make components for CERN’s particle accelerators in Switzerland. Furthermore, millions of motorists use our components every time they pay for fuel using a payment terminal or recharge their vehicle at an electric charging station. Every year, tens of thousands of people are medically examined and operated on thanks to the availability of MRI scanners and surgical robots that are full of Neways electronics.
Product life cycle partner and system innovator
We will mobilise our powers of innovation even more effectively to make Neways the preferred system innovator and product life cycle partner for our international customers, from the initial idea and development stage to production, repair and services. We will focus more acutely on positioning technological solutions that have higher added value for our customers. By moving further up the value chain for customers, in addition to supplying PCBAs, wiring and microelectronics solutions, we will be able to focus more on advanced electronic assemblies and fully integrated box-build and other systems.
As we now employ more than 250 highly trained engineers at strategic locations close to the universities of Eindhoven, Delft, Twente and Erfurt, we are also capable of offering more and more services to our customers. Further development and deepening of our sector and account plans, technology roadmaps and ‘centres of expertise’ are essential requirements for this. Our attention will also be firmly focused on further expansion of our EMS competencies, particularly in Eastern Europe, Asia and the United States.
The strong fluctuations in demand put pressure on the design of our business processes. In order to anticipate effectively in this area, we will continue to focus on making the internal procedures for outsourcing production orders more efficient and on improving and standardising our order intake process. Achieving this will require ongoing attention to ensure optimum allocation of continuously changing demand, spread over the available engineering and production capacity in our operating companies, further standardisation of our business processes, procedures and systems and harmonisation of our corporate culture with an unambiguous presentation to our customers (One Neways). By intensifying the level of contact with our customers, we will be able to form a clearer picture of their needs and more accurately understand exactly where their challenges lie.
As we do so, we will look more critically at our risk appetite and the agreements we make with both customers and suppliers in the value chain. This calls for continuous strengthening of management expertise in the operating companies and further development of our employees’ extensive talents. These improvements will make our operational and financial performance more robust and permanently raise them to a higher level. All these initiatives are a reflection of three key strategic principles within Neways: Customer Intimacy, Technology Leadership and Operational Excellence.
The priority for 2020 is to increase our productivity and flexibility, positioning technological solutions with higher added value and making better agreements with customers in order to make Neways’ operational and financial performance more robust and to take it structurally to a higher level.
Neways has grown successfully through customer focus, by constantly reinventing itself and by discovering and adopting New Ways. The challenge in future years will be to strike an optimum balance between further professionalisation of the global organisation and increased profitability on the one hand, and retaining our effective entrepreneurial corporate culture on the other hand.
At the start of 2020, our order book is well-filled and shows a balanced spread across important sectors such as the automotive market (including e-mobility), healthcare, semiconductor industry, industrial automation, power & energy and agri-business. This spread gives us better resilience against possible fluctuations in economic growth. In 2020, Neways will focus less on growth and more acutely on profitability.
I would like to thank all my colleagues at Neways who in the last year worked with great commitment and dedication on behalf of Neways, our customers and all our other business partners during the past year. I eagerly look forward to working together with you in the future and jointly making Neways an even more successful company!