Investor press releases
14 Mar 2018
Thalwil, Switzerland - March 14, 2018 – u-blox (SIX:UBXN), a global leader in wireless and positioning technologies, today announced its financial results for 2017.
u‑blox achieved solid top‑line and bottom‑line growth:
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Having delivered strong growth and high levels of profitability, u-blox can look back on 2017, another good year.
Helped by the return to growth of our Americas business, u-blox achieved global revenues of more than CHF 400 million for the first time. This represents another big step towards its intermediate goal of half-billion-dollar annual revenues, a milestone the company plans to come close to in 2018.
u-blox has continued to expand its product and service offering. As well as releasing a variety of new chips and modules, u-blox launched the Sapcorda high-precision GNSS positioning service, a joint venture with Bosch, Geo++, and Mitsubishi Electric.
As always, u-blox has maintained significant investment in research and development, guided by tangible technology trends and market demands. Key areas currently include Bluetooth Low Energy in the Industrial Internet of Things (IIoT), low-power wide-area networks for smart cities, and high-precision positioning. This on-going work has enabled us to create a valuable and coherent range of products that meet our customers’ current and future needs.
Based on our strong performance and profitability, the Board of Directors wishes to continue returning money to shareholders. u-blox proposes a dividend of CHF 2.25 per share, and will put the motion to shareholders at the Annual General Meeting on 24 April 2018.
u-blox’s strategy remains to provide a coherent range of products and services that are secure, easy-to-use, and of high quality. It is also an ongoing aim to continually increase the number of products that are built on its own silicon.
In 2017, u-blox launched a variety of exciting new chips and modules across positioning, cellular, and short-range, alongside integrated solutions and complementary services. Highlights include the ZOE-M8 series, the industry’s smallest complete GNSS module; the next-generation NINA-B1 and NINA-B3 Bluetooth 5.0 modules, and the TOBY-L4 LTE Cat 6 cellular module for the automotive sector, which includes the most powerful CPU found on this type of module anywhere in the industry.
After a challenging year in 2016, optimism in the Americas rose once more in 2017, particularly in the second half. Demand in the area of medical equipment and consumer goods was particularly strong, while traditional automotive and fleet markets also performed well. Moreover, new tracking applications started to pick up momentum. As a result, u-blox achieved 8% revenue growth in this region.
Markets in Europe, the Middle East, and Africa (EMEA) reported strong revenue growth of 16%. This expansion covers all areas and product ranges, and was particularly prominent in navigation and industrial automation. Europe, in particular, benefited from a notable upturn in demand for connected devices destined for the IoT, as well as good demand from the automotive sector, driven by the need for in-vehicle connectivity.
The Asian and Pacific (APAC) markets also reported strong growth, with the positive economic drive in China influencing the whole region. This allowed u-blox to achieve revenue growth of 13%. While Asia remains our biggest market for wearables, unmanned aerial vehicles (UAVs), and other consumer applications, the region’s industrial sector is evolving, leading to growing demand for network equipment and tracking solutions.
This global growth saw us achieve overall revenue of CHF 403.7 million, a 12.1% increase over 2016. Operating profit (EBIT) exceeded our forecasts, growing by 10.3% to CHF 65.1 million.
These revenue and profitability figures were achieved, in part, by investing some of our cash reserves into the supply chain to mitigate the risks associated with having limited supplies of components during a time of component shortage. Making this investment enabled us to maintain high service levels and achieve our financial goals.
u-blox operates in two segments:
In 2017, by reporting region, Asia-Pacific generated 39.7%, EMEA 26.8%, and Americas 33.5% of total revenue. u-blox was able to grow revenues in Asia Pacific by 12.8% to CHF 160.3 million and in EMEA by 16.3% to CHF 108.3 million. Also, revenue in the Americas grew by 8.1% to CHF 135.1 million.
In 2017, the company made about 80% of its total revenue from 84 customers. u-blox's largest customer accounted for less than 6% of revenue. u-blox served over 6’100 customers and achieved global expansion into new regions and markets.
Gross profit increased by 10.1% to CHF 184.0 million in 2017 from CHF 167.1 million in 2016. Gross profit margin was 45.6% for 2017 compared to 46.4% in 2016 due to changes in product mix.
Distribution and marketing expenses increased in 2017 due to the expansion of the business. In 2017, distribution and marketing activities were CHF 36.2 million as compared to CHF 32.0 million in the previous year. As a percentage of revenue, distribution and marketing expenses remained stable with 9.0% in 2017 compared to 8.9% in 2016.
R&D expenses in 2017 were CHF 65.6 million as compared to CHF 63.5 million in 2016. As a percentage of revenue, R&D expenses in 2017 were 16.2% as compared to 17.6% in 2016. The percentage of revenue decreased because of higher capitalized R&D expenses and lower amortizations in 2017. Including capitalized efforts, we have again invested considerable amounts into R&D.
Share based payment expenses recognized in 2017 were CHF 8.1 million as compared to CHF 7.0 million in 2016.
Operating profit (EBIT) was CHF 65.1 million in 2017 as compared to CHF 59.0 million in the previous year. The growth rate from 2016 to 2017 was 10.3%. Operating profit (EBIT) margin was 16.1% and EBITDA margin was 21.6% in 2017.
Finance income was CHF 5.7 million containing also income from establishing the joint venture Sapcorda GmbH. Finance costs were CHF 6.1 million, mainly due to foreign exchange effects and interest for the two bonds.
In 2017, u-blox generated cash from operating activities in the amount of CHF 60.5 million as compared to CHF 93.6 million in 2016, a decline of 35.3% compared to previous year, due to supply constraint driven increase of inventory level, increased trade receivables related to the expansion of the business with higher revenues and high tax payments.
Investments in property, plant, and equipment and intangible assets increased to CHF 65.1 million in 2017 (2016: CHF 49.5 million). As a percentage of sales, the investment ratio increased slightly to 16.1% in 2017 (2016: 13.7%).
With the continued expansion of the R&D pipeline and the increased number of development projects for all product categories, the investments into capitalized development costs increased to CHF 53.8 million (2016: CHF 37.2 million). Additionally CHF 0.2 million (2016: CHF 1.2 million) was invested into intellectual property rights and CHF 0.5 million (2016: CHF 1.4 million) into software. In 2017, CHF 10.6 million of investments were used for property, plant, and equipment (2016: CHF 9.7 million).
In the context of the employee share option program, u-blox invested CHF 24.4 million for the purchase of 125‘000 treasury shares.
u-blox invested 82.9% of total investments (2016: 77.5%) into the development of new products and 2.0% of total investments were invested into capacity expansion (2016: 2.9%).
In 2017, u-blox paid dividends of CHF 14.5 million and received proceeds from the issuance of ordinary shares connected with the employee share option plan of CHF 6.8 million. To further profit from the good market conditions and to secure future operating flexibility, u-blox issued, on April 18, 2017, a CHF 60.0 million bond with duration of 6 years at an interest rate of 1.375% p.a.
u-blox has a very strong balance sheet with an equity ratio of 60.7%. Cash and cash equivalents and marketable securities amounted to CHF 172.4 million on December 31, 2017, compared to CHF 157.1 million on December 31, 2016.
Goodwill increased due to changes in EUR/CHF exchange rate from CHF 54.1 million in 2016 to CHF 57.6 million, or 11.0% of total assets in 2017.
On the basis of this strong financial position and the positive outlook, the Board of Directors is proposing at the Annual General Meeting to pay out dividends. For this year, an increased dividend of CHF 2.25 per share is proposed, which represents a payout ratio of 30.5% of consolidated net profit, attributable to owners of the parent.
As with any large business operating in such rapidly changing markets, u-blox faces significant and sometimes complex challenges. To protect our own business, and those of our customers, u-blox takes these issues very seriously and has comprehensive measures in place to identify and deal with them.
A key challenge over the coming 12 months will be to make sure our products remain relevant and valuable to our customers. Thanks to the close links the company has with its customers and the wider markets, as well as its agile approach to product research and development,
u-blox is confident that it has the structures in place to maintain a relevant product portfolio.
With markets that are growing strongly, u-blox needs to ensure that it can turn this potential into revenue, without compromising high service levels. The challenge here is around limited supply-chain capacity at certain times. It is why the company is building strong, long-term relationships with its suppliers, using its financial capabilities to mitigate any risks, and expanding the use of its own silicon, thereby giving u-blox greater control over production.
Increasing global mobility and the availability of low-cost cloud data storage mean our markets are continuing to grow. Consequently, there is growing demand for precisely the sort of wireless and positioning technologies u-blox specializes in.
Our plan is to continue on the path that has delivered us significant success in recent years.
u-blox will maintain its agile attitude towards its product and service portfolio, with frequent reviews to ensure the company is keeping ahead of market and technology trends.
Key focuses will be to expand our high-precision positioning capabilities into a broader range of markets for general automation purposes; to further develop our own silicon to give us even more control over the core technology in our products; to create more solutions that blend u‑blox products from different lines; and to improve resilience by further enhancing our supply chain.
With this in mind, u-blox has set revenue targets for 2018 of between CHF 460 million and CHF 475 million, aiming to deliver an operating profit of between CHF 65 million and CHF 70 million and an EBITDA of between CHF 95 million and 105 million. These forecasts exclude unforeseen economic adversity and are based on exchange rates at the level of 2017 of USD/CHF: 0.98 and EUR/CHF: 1.11. Accelerated revenue growth rates are expected for second half of the year 2018.
|(CHF in million)||2017||2016||2015|
|Growth rate over previous year||12.1%||6.5%||25.3%|
|Growth rate over previous year||10.1%||7.8%||26.3%|
|Gross Profit in % of revenue||45.6%||46.4%||45.8%|
|Growth rate over previous year||8.7%||6.5%||37.7%|
|EBITDA adjusted in % of revenue||24.2%||25.0%||25.0%|
|Growth rate over previous year||6.9%||3.9%||34.3%|
|EBITDA in % of revenue||21.6%||22.7%||23.3%|
|Operating profit (EBIT) adjusted2)||78.0||69.8||59.9|
|Growth rate over previous year||11.8%||16.5%||34.4%|
|Operating profit (EBIT) adjusted2) in % of revenue||19.3%||19.4%||17.7%|
|Operating profit (EBIT)||65.1||59.0||51.3|
|Growth rate over previous year||10.3%||15.0%||31.3%|
|Operating profit (EBIT) in % of revenue||16.1%||16.4%||15.2%|
|Net Profit adjusted2)||57.6||54.8||44.0|
|Growth rate over previous year||5.1%||24.6%||13.5%|
|Net Profit adjusted2) in % of revenue||14.3%||15.2%||13.0%|
|Growth rate over previous year||11.0%||24.5%||7.9%|
|Net Profit in % of revenue||12.7%||12.8%||11.0%|
|Cash generated from operating activities||60.5||93.6||74.7|
|Growth rate over previous year||-35.3%||25.3%||39.1%|
|in % of revenue||15.0%||26.0%||22.1%|
|in % of total assets||60.7%||67.0%||64.2%|
|Dividend per share in CHF3)||2.25||2.10||1.90|
|1) EBITDA (earnings before interest, taxes, depreciation and amortization) calculated by adding depreciation and amortization to profit from operations (EBIT), in each case determined in accordance with IFRS.|
|2)excl. share based payments, impacts based on IAS-19, amortization of intangible assets acquired and non-recurring expenses|
|3) proposal of the Board of Directors to the AGM|
|(in CHF 000s)||2017||% revenue||2016||% revenue|
|Cost of sales||-219'695||-54.4%||-193'123||-53.6%|
|Distribution and marketing expenses||-36'173||-9.0%||-32'032||-8.9%|
|Research and development expenses||-65'554||-16.2%||-63'490||-17.6%|
|General and administrative expenses||-19'125||-4.7%||-14'614||-4.1%|
|Operating profit (EBIT)||65'086||16.1%||59'004||16.4%|
|Profit before income tax (EBT)||64'702||16.0%||61'688||17.1%|
|Income tax expense||-13'442||-3.3%||-15'488||-4.3%|
|Net profit, attributable to owners of the parent||51'260||12.7%||46'200||12.8%|
|Operating profit (EBIT)||65'086||16.1%||59'004||16.4%|
|Depreciation and amortization||22'290||5.5%||22'762||6.3%|
|1) Management calculates EBITDA (earnings before interest, taxes, depreciation and amortization) by adding back depreciation and amortization to operating profit (EBIT), in each case determined in accordance with IFRS.|
|(in CHF 000s)||At December 31, 2017||At December 31, 2016|
|Cash and cash equivalents||169'624||149'545|
|Trade accounts receivables||50'401||39'792|
|Total current assets||283'314||239'580|
|Property, plant and equipment||17'494||15'774|
|Financial assets (incl. equity accounted investees)||8'351||1'074|
|Deferred tax assets||3'739||2'435|
|Total non-current assets||241'198||185'292|
|LIABILITIES AND EQUITY|