u-blox reports resilient results in 2023
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u-blox AG / Key word(s): Annual Results
Thalwil, Switzerland – 6 March 2024 – u-blox (SIX: UBXN), a global provider of leading positioning and wireless communication technologies and services, announced today its financial results for the full year 2023.
u-blox achieved resilient results in 2023 performing better than the overall semiconductor market. After a record year in 2022, we reported strong results in the first half of the year, while in the second half revenue declined. All in all, in 2023, revenue reached CHF 576.9 million, adjusted EBIT stood at CHF 69.7 million, and free cash flow reached CHF 10.9 million.
During the year, we refined our strategy. At the Capital Markets Day held in November 2023, we announced changes, such as the increased focus on our positioning business and the discontinuation of the development of our own cellular chips. We also announced a new Target Financial Model.
As we enter 2024, we remain focused on what we do best: innovate. Our teams use the post-semiconductor supply crisis momentum with customers to win next generation business with our leading edge innovations in positioning and connectivity, following our mission to lead the world to reliably locate and connect every thing.
Stephan Zizala, u-blox’s Chief Executive Officer, commented, “2023 was marked by very different realities. While we had good growth in the first half, revenue declined in the second half despite a significant inventory build-up by our customers.
In 2024, we see a continuation of the weak business situation. We expect the first quarter to be the lowest point, with the following periods showing a gradual sequential improvement. During this low point in the cycle, we are making important changes in the organization, as announced at our last CMD. Our motivated teams have all hands on deck to create the basis for the u-blox of tomorrow.
Our team is familiar with the semiconductor industry cycles, and we will manage the situation as we have done many times. We have it in our hands to shape u-blox’s long-term success thanks to our strong structural growth drivers in automotive and industrial target applications. We are winning critical new projects with leading customers. The large design wins for automated driving and an innovative approach for satellite IoT connectivity are testimony to these future development prospects.”
2023 operational highlights Automotive
Industrial
Financial Overview In 2023, u-blox generated revenues of CHF 576.9 million, EBIT (adjusted) of CHF 69.7 million and net profit (adjusted) of CHF 51.1 million. Revenue declined in most regions and markets, reflecting overstocking from our customers. Foreign currency exchange rates negatively affected -4.8% on revenue, mainly from the strengthening of the Swiss Franc versus the Euro and the US Dollar.
Revenues by region
Revenues by market
Gross Profit Gross profit (adjusted) reached CHF 254.3 million in 2023 from CHF 307.2 million in 2022. The respective gross profit margin (adjusted) reached 44.1% in 2023 from 49.2% one year earlier. The good performance of Cellular, with revenue growth and gross margin expansion, generated a negative mix effect, which explains most of the decline of the gross margin at the Group level.
Research and Development expenses R&D expenses (adjusted) grew by 10.5% in 2023 to CHF 117.4 million, compared to CHF 106.3 million in 2022. As a percentage of revenue, it increased to 20.4% in 2023 from 17.0% in 2022.
Cash R&D expenses (excluding amortization and adding back capitalization) grew less, +4.3% to
Sales, General, and Administration expenses adjusted (SG&A) SG&A expenses (adjusted) declined by 3.5% to CHF 67.2 million in 2023 (CHF 69.6 million in 2022) due to lower sales bonus payments and cost discipline in the period. As a percentage of revenues, SG&A (adjusted) reached 11.6% in 2023, from 11.2% in the prior year.
Operating Profit (EBIT) EBIT (adjusted) reached CHF 69.7 million in 2023, lower than in 2022 (CHF 131.3 million). Accordingly, the adjusted EBIT margin decreased to 12.1% in 2023 compared to 21.0% in 2022.
Adjusted operating profit before depreciation and amortization (EBITDA adjusted) amounted to CHF 112.4 million (2022: 169.9 million), a decline of 33.8% in 2023. The respective EBITDA margin (adjusted) reached 19.5% in 2023, from 27.2% in 2022.
Financial Results Net finance results (adjusted) in 2023 amounted to CHF -8.7 million from CHF -1.5 million in 2022. Excluding FX effects, net finance costs (adjusted) in 2023 were practically nil.
FX results of CHF -9.0 million in 2023 (realized: CHF +3.2 million; unrealized: CHF -12.2 million) compared to nil in the same period last year (realized: CHF +4.2 million; unrealized: CHF -4.2 million).
Net Profit Net profit (adjusted) decreased to CHF 51.1 million compared to CHF 109.0 million in the prior year period. Diluted EPS (adjusted) in 2023 amounted to CHF 7.01 per share compared to CHF 15.36 in 2022.
Cash Flow Changes in net working capital was CHF -45.9 million in 2023 vs. CHF -58.2 million in 2022. In the second half of the year measures for improving net working capital started to show results, with a cash release of CHF 21.1 million, driven by lower receivables and inventory levels.
Income tax paid was CHF -6.0 million in 2023, from CHF +4.9 million received in 2022. Capex, in absolute terms, was CHF 48.3 million in 2023 compared to CHF 51.2 million in 2022. As a percentage of revenue, Capex was slightly higher in 2023 (8.4%) versus 8.2% in 2022.
As a result, free cash flow reached CHF 10.9 million in 2023 compared to CHF 66.2 million in the prior year.
Balance Sheet and Financing In 2023, u-blox recognized CHF 65.4 million impairment losses on intangible assets. The impairment was due to the decision to discontinue the future cellular chipset development. The impairment charge in 2023 was recognized in ‘Research and development expenses’ and relates to intangible assets in ‘Intellectual property rights / acquired technology’ and ‘Capitalized development costs’.
After a dividend payment of CHF 14.2 million, u-blox’s net cash position on 31 December 2023 stood at CHF 86.2 million versus CHF 77.8 million on 31 December 2022.
Early in 2024, u-blox strengthened its financing and secured liquidity for the near future by signing a new CHF 140 million credit facility with a three to five-year duration from a syndicate of banks led by Zürcher Kantonalbank.
Based on u-blox’s solid net cash position, the Board of Directors will propose at the Annual General Meeting the payment of a dividend in the form of a par value reduction in the amount of CHF 1.00 per share in 2024.
Changes in the Board of Directors Thomas Seiler, a member of the Board of Directors since u-blox’s IPO in 2007, has decided not to stand for re-election at the upcoming General Meeting. We are deeply grateful for Thomas’ long-standing, unwavering dedication and strategic leadership and wish him all the best in his future endeavors.
As previously announced, u-blox intends to propose Fabian Rauch, co-founder and managing partner of Spectrum Entrepreneurial Ownership (SEO), for election to the Board of Directors at the next General Meeting.
Outlook for 2024 After a strong performance in 2022 and 2023, 2024 is expected to be a transition year for u-blox. Due to agreements made with customers during the semiconductor supply crisis, we could deliver products above the demand from our customers, generating an overstocking situation. As we start into 2024, orders remain at a low level. We expect order levels to grow in the second quarter of 2024 and accelerate in the year’s second half.
Given our strong operational leverage, lower revenue results in lower profit margins. We stay on track with strategy execution, but to mitigate these effects, we have a cost reduction program in place targeting double-digit million CHF savings in 2024 which includes a broad hiring freeze as well as further OPEX optimization.
u-blox remains positive on its long-term development prospects. Demand and requirements for semiconductor solutions for automated and autonomous driving, asset tracking, healthcare offerings, and industrial automation will grow significantly. As confirmed by our design wins, u-blox is well on track to profitably grow with its positioning and wireless connectivity semiconductor solutions and services business.
Guidance for Q1 2024 u-blox expects very low revenue of CHF 50-60 million in Q1 2024, mainly due to high inventory levels at customers, which was accentuated by contractual deliveries in the fourth quarter of 2023.
Due to lower operational leverage, EBIT margin (adjusted) is expected to reach -40% to -30%.
Key figures
For the complete consolidated financial statements and definitions of alternative performance indicators, please refer to our Annual Report 2023.
Conference call and webcast details For details on the 2023 results webcast, please click here.
For further information, please contact:
About u-blox u‑blox (SIX:UBXN) provides semiconductor chips, modules, and IoT services that reliably locate and connect every thing. Our cutting-edge solutions drive innovation for the car of the future and the Internet of Things. Headquartered in Thalwil (Zurich), Switzerland, we have a presence of 1,400 experts who enable our customers to build solutions for a precise, smart, and sustainable future.
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End of Inside Information |
| Language: | English |
| Company: | u-blox AG |
| Zürcherstrasse 68 | |
| 8800 Thalwil | |
| Switzerland | |
| Phone: | +41 44 722 74 44 |
| Fax: | +41 44 722 74 47 |
| E-mail: | ir@u-blox.com |
| Internet: | www.u-blox.com |
| ISIN: | CH0033361673 |
| Listed: | SIX Swiss Exchange |
| EQS News ID: | 1851941 |
| End of Announcement | EQS News Service |
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1851941 06-March-2024 CET/CEST
