Well positioned to thrive in 2021.
More than anything, 2020 will be remembered for the global COVID-19 pandemic and the uncertainty, the suffering, and the losses it caused. But at the turn of the new year, there is light at the end of the tunnel, as vaccines, developed at record speed, are distributed to those in need. May 2021 be the year in which we round the corner, gain the upper hand on the pandemic, and develop the antibodies, the technology, and the public policies to stop its spread.
Despite the vast and varied challenges that the global COVID-19 pandemic brought upon our business in 2020, we see ample ground for optimism going forward. If anything, the pandemic has bolstered the case for connected technology, driving up adoption rates the world over, as people have sought out contactless experiences that do not leave them isolated: remote work, online medical consultations, virtual events, online shopping, and the list goes on. It is a trend that is unlikely to be reversed, particularly now that the technology has proven itself.
While COVID-19 shook up global markets last year, it has only strengthened our unique offering.
One thing that is becoming clear across the megatrends that drive our corporate strategy and, ultimately, our business, is that wireless is unequaled as a connectivity technology. In healthcare, the growing role of data in diagnosing disease, delivering care, and cutting costs is making wireless technology indispensable. In mobility, it is enabling smart micro-mobility solutions, increasingly connected cars, and advanced driver assistance systems. In the industry, it is driving automation, boosting resilience, and increasing productivity. And in homes, buildings, and cities, it is increasing convenience, efficiency, and safety.
Our customers are optimistic. So are we.
Talking to our customers, these trends are palpable. Carmakers’ R&D activities are aligned with autonomous driving as their North Star, with cloud connectivity and edge intelligence two key prerequisites for achieving autonomous control. u‑blox is on track to deliver two others, high precision positioning and functional safety, thanks to continued investment and leadership. And wireless connectivity is shaping up to be an essential enabler for electric vehicle (EV) charging infrastructure, which is in high demand as EVs grow their market share year on year.
As we ended 2020, the global semi-conductor industry experienced a remarkable rebound in demand which was universal and all-encompassing. This surge was led by the automotive market where months of uncertainty and shutdowns resulted in a rush of demand for components as OEMs sought to meet this spike in demand and replenish inventory.
Demand from our industrial customers is booming as well. As industries connect, wireless technology will deliver accuracy and efficiency gains in operations and business. These benefits will stem from increased automation, process monitoring with wireless sensors, and airborne or terrestrial autonomous vehicle, as well as improved visibility across supply and distribution chains.
And beyond these markets, there is unprecedented demand for our technologies and services to enable solutions that promote social, economic, and environmental sustainability, for making our lives safer, more convenient, and, sometimes, simply more fun. Navigation, tracking, and wireless cloud connectivity are not only important ingredients for smartwatches, but also for a wealth of other IoT use cases that benefit municipalities, commercial businesses, and private customers. These are the mega trends driving our business, which have only intensified as the world begins to fully emerge from the pandemic.
Our underlying values remain the same
In the face of a turbulent year in 2020, our mission at u‑blox remains unchanged: to empower our customers to locate their devices and connect them from silicon to cloud. This involves continuing to translate leading innovation into leading solutions, characterized by tighter integration, smaller size, improved performance with lower energy consumption, and simpler use. It is a challenge we can only live up to by understanding our customers’ specific needs across the full breadth of their use cases.
Our recipe is to trust in our core values, beginning with the long-term attitude that characterizes how we develop our products and nourish our customer relationships. It continues with our mission to reuse core intellectual property between product generations and across our product portfolio to decrease the risk of obsolescence. It involves developing value-added services that leverage our core IP in the end device and creating energy-saving products in small form factors by exploiting advanced packaging and silicon technology. And finally, it involves earning the trust of our customers and partners, through meticulous verification and validation methods that help assure the robustness of all products and services bearing our label.
Four pillars of our strategy
In times of uncertainty and market turmoil, it is more important than ever to revisit these core values to help us remain focused and resolute in achieving our long-term strategy. We do this by assessing our four pillars of strategy:
The four pillars are: 1) maintain and cultivate our leadership positions in our markets, 2) continually strengthen, expand and assess our product portfolio, 3) achieve operational excellence for the benefit of customers and stakeholders, and 4) pursue external opportunities that complement and augment our own capabilities and intellectual property. Below is the evaluation of these pillars in 2020.
Maintain, cultivate and further develop our market leadership through expansion of sales channels and offering differentiated products and capabilities, including integrated and value-added services.
Our focus has always been to build a portfolio of products that highlights our strength of delivering technology that combines connectivity, location-awareness, and in some cases, timing, as required in the end use.
More recently, we have also focused on complementing our products with value-added data services which helps us provide even greater benefits to our customers who prioritize efficiency as much as functionality.
Technology and innovation:
Continually strengthen, expand and assess our product portfolios.
Being a technology company requires that we always look ahead not just to the following year, but anticipating the next 3, 5, 10 years and beyond in order to envision what the world will demand in terms of product needs and trends. Our IP portfolio reflects our long history of research and development know-how built over decades of experience and cannot easily be replicated.
In order to continue this path, we must spend a high proportion of our expenses on research and development annually. Today, we continue our work on building more products on our own silicon, developing additional combination modules that blend u‑blox technologies, and furthering miniaturization of products.
To both complement and support our products, we have focused on growing our services portfolio which will provide our customers even more benefit by combining our products with the data services that will improve the efficiency, usage and value. We seek to offer a unique, comprehensive solution offering that no other company can provide. Our goal is to not just be a commodity component supplier, but a true partner to our customers.
Achieve operational excellence for the benefit of customers and stakeholders.
Having leading technology and products is not enough to win and retain customers in today’s markets. In addition to the expectation of operational excellence, we have become increasingly aware of the importance of sustainability in all that we do – to ensure we’re operating in an ethical and socially and environmentally responsible way.
On this note, we published our first Sustainability Report in 2020, detailing u‑blox’s commitment to important issues in the areas of business ethics, employees, environmental responsibility, supply chain responsibility, and our communities.
For our customers, we remain focused on executing on exceptional levels of delivery reliability of our products, manufacturing efficiency and short throughput times.
Internally, in 2020, we announced the initiation of a cost savings and efficiency measures totaling CHF 15 million which we achieved on an annualized basis by year end. These savings will directly benefit our stakeholders as we continually look for ways to improve our internal processes and procedures.
From an external perspective, we also participate in rigorous quality assurance assessments that are periodically audited by customers. In turn, we regularly review our partners and suppliers to ensure all aspects of our business meet our high standards of operations.
Strategic partnerships and acquisitions:
Pursue external opportunities that complement and augment our own capabilities and intellectual property.
A key component of growing our business and achieving our strategic goals is dependent on external partnerships and acquisitions. In many instances, it is more efficient to acquire technology, products and talent through external means than developing in-house. We have a team dedicated to continually evaluate such opportunities.
In April 2020, we successfully acquired IoT Communication-as-a-Service Provider Thingstream, a provider of comprehensive, end-to-end solution for global IoT connectivity, offering its product “as-a-service”. The acquisition of Thingstream aligns with and accelerates u‑blox’s strategy to expand its services business into a new dimension, the IoT Sphere. The IoT Sphere will provide customers with a reliable, smart and secure solution to connect sensor data to their cloud enterprise. With this capability, u‑blox moves forward in achieving unique silicon-to-cloud differentiation.
Such strategic activity is critical for u‑blox’s long-term growth and competitive positioning.
2020 financial highlights
For the full-year 2020, u‑blox generated revenues of CHF 333.5 million, EBIT (adjusted) of CHF 18.0 million and EBITDA (adjusted) of CHF 42.2 million. The pandemic and its effect on the global economy negatively impacted our business for much of the year. AMEC and EMEA were especially affected by prolonged automotive and business shutdowns and companies adopting a delayed approach through much of 2020. APAC, where the initial outbreak occurred and, accordingly, where the economy reopened earlier, showed signs of a recovery earlier. Across all regions, demand in the automotive and certain industrial sectors were substantially impacted. The weakened USD/CHF exchange rate impacted the topline by ‑4.1%, resulting in a currency adjusted revenue decline of -9.3%.
In APAC, full-year 2020 revenues amounted to CHF 137.7 million compared to CHF 145.6 million in 2019 (-5.4%). While revenues in China benefitted from the steady development and deployment of 5G networks during the first half of 2020, this development became more subdued during the second half due to the U.S. government placing bans on certain manufacturing technologies. From an end-market perspective, revenues increased from a rebound in automotive, particularly Japan and Korea, but were offset by decreased demand in telematics and in some consumer product markets in the second half of 2020.
Revenues in EMEA decreased to CHF 95.9 million in 2020 from CHF 119.3 million in 2019
(-19.6%). Revenues were substantially impacted by automotive markets and mobility end markets as a direct result of COVID-19. Automotive OEMs enacted prolonged shutdowns due to the pandemic and the mobility markets, where applications used in shared services such as scooters and e-bikes were particularly impacted by reduced localized travel and transit. We began to see signs of a rebound in automotive beginning in the second half of 2020, accelerating toward the end of the year. Other areas of revenue growth in EMEA included industrial automation in general.
AMEC revenues decreased to CHF 99.5 million in 2020 from CHF 119.2 million in 2019 (‑16.5%). AMEC revenues declined due primarily to decreased demand in general consumer and fleet management applications. The pandemic caused many businesses in AMEC to push out decisions from the first half of the year to the second half of 2020 and into 2021. Partially offsetting this decline was increased year-on-year demand from industrial automation applications, such as metering, as well as fitness applications and health-care.
Our unique offering endures
We begin this new year with a healthy dose of optimism. u‑blox is in markets that are currently defining the future. These markets are growing, and their growth is accelerating. And while the global pandemic will be with us for some time still, so far it has only strengthened our offering. As the number of connected applications across our markets continues to grow, customers will be on the lookout for a connectivity partner they can rely on. By building out our unique one-stop-shop solution for positioning and wireless communication technology, we are confident that u‑blox will emerge even stronger once COVID-19 is behind us.
Finally, a word of thanks and gratitude
On behalf of the Board of Directors and Executive Committee, we would like to take this opportunity to thank all our employees. In a year filled with unprecedented challenges to our personal and professional lives, our employees responded with the highest levels of professionalism, a willingness of spirit and most importantly, a keen sense of humanity.
We would also like to extend our thanks to you, our shareholders, for your continuing support of u‑blox.
Lastly, we would like to thank all our customers, suppliers and manufacturing partners – with whom we have managed a most turbulent year that ended with a resurgence of optimism and activity.
More than ever, we are filled with both thanks and gratitude as we go forth into 2021.
|Thomas Seiler||Roland Jud||Andre Müller|