u-blox, a global leader in wireless and positioning modules and chips, today announces its financial results for 2014.
Financial highlights
u-blox achieved solid top- and bottom-line growth:
- Consolidated revenue of u-blox was CHF 270.0 million in 2014, a growth of 22.9% as compared to 2013.
- Gross profit improved from CHF 101.2 million to CHF 122.7 million, with a continued strong gross profit margin of 45.4% in 2014.
- Operating profit (EBIT) increased from CHF 30.1 million to CHF 39.1 million, a growth of 30.0% as compared to 2013.
- EBITDA margin of 21.7%, EBIT margin of 14.5%.
- Net profit increased by 39.6% from CHF 24.6 million to CHF 34.4 million, representing a 12.7% net profit margin for 2014.
- Strong net cash generated from operating activities was CHF 53.7 million, representing 19.9% of revenue.
- Healthy balance sheet with a high equity ratio of 70.5%.
- The payout of a dividend of CHF 1.60 per share from capital reserves is to be proposed at the Annual General Meeting.
Sales and profit continue to rise
In 2014, worldwide sales growth showed a 23% rise over 2013, and progress was achieved in all regions.
In the Americas, growth continued as in the year before and achieved a 19% business expansion. The improved macro-economic climate created greater demand for our customers’ products and hence for our own. u-blox recorded an encouraging rise in market share and increased volumes with new customers. Interest in the company’s new products and technologies was keen and provides a solid foundation for future operations.
In Europe, the Middle East and Africa (EMEA), results were strong despite economic progress remaining hesitant in some countries and impacting our own operations. Nevertheless, u-blox expanded its business in countries with healthy export markets and reported strong growth in automotive and industrial applications, leading to revenue growth of 20%. There was also a surge in new business opportunities.
Growth in the Asia-Pacific (APAC) region reflected its vibrant economic climate and laid the foundations for further consolidation of our market share. u-blox increased sales with existing customers and acquired several important new accounts, both factors that led to significant manufacturing ramp-ups for specific products. u-blox’ ongoing innovation and the delivery of new products continued to attract customers. Revenues grew strongly in all application areas, and the overall increase stood at 27%.
The company’s product and service business segments both generated positive EBIT in 2014. Consolidated revenues increased by CHF 50 million to CHF 270 million while EBIT rose from CHF 30 million to CHF 39 million, a 30% increase over 2013. Net profit grew by 40% to CHF 34 million, the equivalent of a 13% net profit margin.
Strategic course confirmed
In 2014, as in previous years, u-blox’ expansion, acquisition, manufacturing and product strategies were geared to achieving the target of achieving half-billion-dollar annual revenues in the foreseeable future. The company took a major step towards that goal by establishing the third pillar in its product offering: short range radio connectivity.
Two acquisitions made during the year have given u-blox the technologies, expertise and products to maintain its market lead and further widen our technology base. These were:
- connectBlue, an established provider of industrial-grade short range radio modules that support Bluetooth and Wi-Fi platforms and enable connectivity over the last few hundred meters between equipment and the Internet.
- Antcor, a developer of advanced Wi-Fi core technology that will enable rugged short range connectivity and communications tailored to demanding environments.
u-blox has successfully integrated all employees in the companies acquired, significantly increasing its workforce and giving it two new R&D centers. Thanks to the acquisitions, u-blox is now able to supply a product range that covers the entire connectivity spectrum for customers worldwide.
During the year under review, u-blox also introduced a new product-grade concept – Automotive, Professional and Standard. The concept facilitates the matching of modules or chips with customers’ designs and gears our product range even more closely to customer needs.
Product highlights
u-blox launched a raft of new products in 2014, all designed to incorporate state-of-the-art advances in technology, to meet its customers wide-ranging and ever-changing needs and to keep the company at the forefront of the industry. In the positioning sector they included the eighth generation of MAX, NEO and LEA GNSS modules, a 3D Automotive Dead Reckoning, a GNSS antenna module that supports all satellite types and GNSS precision-timing modules as well as the world’s smallest standalone positioning module. On the cellular front, u-blox rolled out the fastest 4G module (TOBY-L2) available and a new line of ultra-compact LTE cards (MPCI-L2). Finally, in the short range sector, which completes the connectivity line-up, the company introduced a rugged Wi-Fi and Bluetooth module for demanding industrial, automotive, medical and security applications. This strengthens the company’s position in the next big market to come: the Internet of Things (IoT).
Platform for future growth
The Internet of Things will provide interconnectivity across the board and is poised to become the biggest growth area of the near future. The years ahead will see the connection of dozens of billions of devices to the worldwide web. From satellite-based positioning, through cellular communications and on to short range Wi-Fi and Bluetooth radio technologies, u-blox supplies the building blocks that make the Internet of Things possible and are ideally positioned to profit from the steep growth inevitable in this sector.
Revenue breakdown
u-blox operates in two segments:
- Positioning and Wireless products: u-blox develops and sells chips and modules for positioning and wireless connectivity that are used in automotive, industrial and consumer applications. Revenue was CHF 269.8 million for 2014 as compared to CHF 218.9 million in 2013.
- Wireless services: u-blox also offers Wireless communication technology services in terms of reference designs and software. In 2014, revenue for Wireless services was CHF 24.1 million compared to CHF 18.9 million in 2013 (including intra-group revenue).
In 2014, Asia-Pacific generated 47.9%, EMEA 24.8% and Americas 27.3% of total revenue. u-blox was able to grow revenues in all areas. Revenue for Asia Pacific grew by 26.7% to CHF 129.5 million, EMEA grew by 19.9% to CHF 67.1 million and America increased its revenue by 19.1% to CHF 73.5 million.
In 2014, the company made about 80% of its total revenue from 69 customers. u-blox’ largest customer accounted for less than 7% of revenue. u-blox served over 5’000 customers and achieved global expansion into new regions and markets.
Increased gross profit
Gross profit increased by 21.3% to CHF 122.7 million in 2014 from CHF 101.2 million in 2013. Gross profit margin was 45.4% for 2014, slightly declining from 46.0% in 2013 because of the changes in product mix.
Distribution and marketing activities
Distribution and marketing expenses increased in 2014 due to the expansion of the business. In 2014, distribution and marketing activities were CHF 24.5 million as compared to CHF 21.2 million in the previous year. As a percentage of revenue, distribution and marketing expenses were 9.1% in 2014 compared to 9.7% in 2013.
Research and product development
R&D expenses in 2014 were CHF 49.9 million as compared to CHF 38.9 million in 2013. As a percentage of revenue, R&D expenses in 2014 were 18.5% as compared to 17.7% in 2013. The percentage increase is due to the investments into short range radio technology and the ongoing strategic investments into 4G/ LTE technology.
With the acquisition of Malmö-based connectBlue AB and Athens-based Antcor S.A., u-blox opened the door to the market for short range, Bluetooth/Wi-Fi based radio communications. Adding short range products enables u-blox to meet the whole range of customer requirements.
Share based payment
The share based payment expenses recognized in 2014 were CHF 3.3 million as compared to CHF 2.2 million in 2013.
Growth of operating profit (EBIT)
EBIT was CHF 39.1 million in 2014 as compared to CHF 30.1 million in the previous year. The growth rate from 2013 to 2014 was 30.0%. EBIT margin was 14.5% and EBITDA margin was 21.7% in 2014.
