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Europe’s second largest EMS company with European headquarters, Danish-based GPV, generated record high revenue of DKK 2.7 billion in Q1 2023. The combination with Enics, capacity expansions and increased sales to customers are the main drivers extending the string of record quarterly performances.
GPV is off to a good start in 2023 with both the top and bottom line at record highs in the first quarter. Revenue grew to DKK 2.7 billion, the highest level ever and almost a threefold increase from Q1 2022. The single biggest reason for the growth is the combination with Swiss electronics group Enics, which took effect on 3 October 2022:
“We started the year by celebrating the combination, and all 8,000 employees received a welcome present. We have now been working as one for two quarters, and the integration process is moving forward as planned. We knew that Enics and GPV would be a good match, and so far, the expectations have been met, as reflected in the figures for both Q4 2022 (revenue of DKK 2.6 billion) and the first quarter of 2023. We are satisfied with the performance, but we also know that there is still much to be done in terms of the further integration work, harvesting synergies, etc.”, explains CEO Bo Lybæk.
He adds that there are additional reasons for the growth: “In the past months, we have been successful in retrieving some of the missing components from suppliers, and thereby, we have been able to deliver more to our customers that expected.”
Furthermore, since the combination, GPV has invested in capacity expansion at several of its factories, including in Estonia, Slovakia, Sweden, and Finland. The new mechanics factory in Bangkok was handed over in March and is now fully operational. In addition, the factory extension in Sri Lanka is progressing well and handover is now planned for Q3 2023.
GPV has 55 SMT production lines installed supporting the highly automated part of an electronics production, and according to Bo Lybæk, capacity evaluations are constantly on the agenda at GPV.
“GPV operates 19 factories in 13 countries and is the second largest EMS company headquartered in Europe. We have an ambition to generate revenue of DKK 10 billion by 2026. We aim to achieve this through both organic growth and acquisition, and we are well on our way,” he says and continues:
“We do not have doubts about our long-term potential. Demand is generally growing, and we provide a service that brings added value for our customers. We accomplish more for and together with our customers.”
EBITDA for Q1 2023 ended at DKK 179 million. Well up compared to the same period last year, and according to Bo Lybæk, ensuring sufficient profitability is clearly a focal point for the Group:
“Margins in the industry are under pressure due to continued high costs of materials, logistics, inflation, etc. We have strong cost control and high capacity utilisation, but we continue to work on improving our sales, supplier, and operations excellence. Furthermore, we introduced a new organisation at the end of February, which will take full effect during the second quarter,” he points out.
Another focus area, inventory levels, became significantly more important after the coronavirus pandemic due to the major material and logistics challenges that arose. Currently, DKK 2.8 billion is tied up in Net Working Capital, and with the materials situation easing up, the inventory levels are set to be reduced. According to Bo Lybæk, however, a number of electronic components are still in scarce supply, and therefore sourcing will remain a key factor in the industry.
Long-term Growth Outlook Remains Good
After the end of Q1 2023, GPV raises its guidance for total revenue in 2023. Revenue is now expected to be within the range of DKK 8.8-9.2 billion, replacing the previously announced range of DKK 8.4-8.8 billion. The increased revenue expectation is primarily driven by the continued challenges within the global supply chain market, where costs for specific materials are higher than expected. EBITDA is still expected in the range of DKK 590-640 million:
“We continue to experience good demand from a number of customers, however visibility for the second half of 2023 and into 2024 is relatively limited,” concludes Bo Lybæk.