Improvement but no complacency at Ceva

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Ceva has seen profits bounce back in the second quarter mainly as a result of its cost reduction programme. EBITDA before specific items was 69 million euros for the quarter, an increase of 130 per cent on the previous quarter.

Although sales and profits were down on the second quarter last year, chief executive John Pattullo said: “We believe these are improving results, and Ceva remains committed to emerging from this difficult trading period as one of the most admired companies in the supply chain industry.”

As a result of the second quarter improvement, first half sales, at 2,641m euros, were down 15 per cent on last year while EBITDA before specific items, at 99m euros, was down 39 per cent.

Pattullo reckons that Ceva has outperformed the market – while group sales were down some 16 per cent on last year, he says the market as a whole was down about 20 per cent. “There has been a bit more activity in the market in the second quarter but pricing has been lower.”

The group has been working hard at reducing its costs and expects to save some 100m euros for the full year. The group identified some 201 cost saving projects. Work has started on some 87 per cent of them and savings are being delivered, he said.

As well as saving money, Pattullo wants to increase market share and points out that Ceva now has eight consecutive quarters of outgrowing the market.

Second quarter business wins, at 550m euros were up 17 per cent compared to quarter two, 2008.

These wins were the result of various strategic initiatives underway across the group, such as cumulative cross selling of 423 million euros, up from 230 million euros at the Year End. 72 million euros in the second quarter. In addition, the Century programme, a key account management initiative generated 230 million euros in new business in the quarter and a growth initiative focused on inbound volumes into China and the China domestic network business has delivered 25 million euros of additional new business.

Pattullo has also been strengthening the senior management team. Rubin McDougal has come in as chief finance officer from Case New Holland while Matthew Ryan has joined to take up the newly created role of chief operating officer. He was previously executive vice president of World Wide Operations and Logistics at Flextronics International. And Leigh Pomlett, formerly chief executive for mainland Europe for DHL Supply Chain, is coming in as executive vice president for the UK & Ireland.

Looking ahead, Pattullo said there were some small signs of an improvement in the market but “ we are still at the pessimistic end”.

“This is no time for complacency as economic uncertainty remains. In the second half of 2009, we will continue to focus on cash and cost reduction, growing our capabilities and increasing the overall profitability of the business.”

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