Danish-based GPV, the second-largest European-headquartered EMS company, grew its revenue to DKK 10.4 billion in 2023 and achieved an operating profit (EBITDA) of DKK 743 million. The positive performance was achieved in part due to a successful integration process following the combination with former Enics.
GPV, owned by Nasdaq Copenhagen-listed Danish industrial conglomerate Schouw & Co., has now increased its revenue eightfold in the last five years, reaching DKK 10.4 billion in 2023. The long-term strong growth stems both from acquisitions and organic expansion, demonstrating GPV’s skills in integrating new companies and onboarding customers to its portfolio.
Revenue for the Q4 period was DKK 2.5 billion, while earnings stood at DKK 178 million. Q4 revenue and earnings are a few per cent below the corresponding quarter of 2022, but the activity level at the end of 2023 was still higher than expected:
“2023 is the first full financial year of consolidating the Swiss-headquartered Enics, and this is the main reason why we increased our revenue from DKK 5.9 billion in 2022 to DKK 10.4 billion in 2023. Furthermore, higher material prices affected revenue positively and margins negatively. Despite the positive results, we saw a gradual decline in activity levels in the global electronics industry through second half of 2023. This trend was largely due to a normalisation, or market rebalancing, after some busy and challenging years in the supply chain and in logistics due to the impact of the coronavirus pandemic,” says GPV CEO Bo Lybæk, and he continues:
“Nevertheless, thanks to effective control and high-capacity utilisation at our factories, we managed to maximise deliveries to customers. Our growth in the period outpaced demand, partly due to the fact that we began 2023 with an overdue order backlog caused by the shortage of components and partly because of general high demand from customers. With the exception of one factory, we have reduced this backlog across all our factories.”
The reported EBITDA for 2023 was DKK 743 million, corresponding to an increase of 60% compared to 2022. The result was negatively impacted by integration costs including expected costs for the closure of GPV’s factory in Malaysia:
“Overall, we are pleased with our 2023 results, and I would like to take this opportunity to thank all our employees for their good work during the year. The combination with Enics took its toll on everyone, but I am proud to say that we have achieved all the expected benefits from the combination in 2023. In addition, this past year has brought us a number of new and highly interesting customer cases,” continues Bo Lybæk.
Rebalancing the market
According to Bo Lybæk, the global electronics market is rebalancing. Demand skyrocketed post the coronavirus pandemic, leading to an unprecedented situation of material shortages and logistics challenges. Overall, the situation has now generally improved, but prices of certain components remain elevated:
“The supply chain situation has been absolutely extraordinary. The surge in demand for consumer electronics during the coronavirus pandemic resulted in a shortage of electronics components. Consequently, we advised our customers to extend their forecasts from 12 to 24 months. As part of the current rebalancing, forecasts are now coming back at the 12-month standard, accompanied by destocking that further reinforces the reduced demand. Naturally, we have been aware of this all along and are adapting accordingly,” says Bo Lybæk and he continues:
“The market has also been characterised by some opposing megatrends. The congested supply lines led to high freight rates, and the reaction from the industry and customers was an even stronger region-by-region focus, with production being pulled back to the Americas and Europe from South-East Asia and China. Both regions have become more competitive, as they have not experienced the same inflation rates and energy prices as Europe and the US. This also provides some exciting perspectives.”
Focus on capacity utilisation
GPV’s focus on expanding capacity in recent years has shifted to aligning capacity to market demand. Having the right operational footprint is important and the ongoing expansions in Slovakia, Thailand, and Mexico are continuing, whereas new capacity expansions will be limited in near future. Moreover, in close dialogue with customers, GPV is intensifying its efforts to balance production capacity worldwide to avoid a situation of overcapacity at some factories and undercapacity at others. This includes transferring standard production lines between regions, an area where GPV has extensive experience.
Subdued expectations for 2024
Overall, GPV is looking into a 2024 that is significantly different from 2023. In general, customers have become more cautious due to a desire to adapt to the market situation, including reducing inventories across the value chain.
“We expect to see a lower activity level in 2024 year on year, particularly in the first half. Forecasting the latter half of 2024 is more difficult. Nevertheless, we expect the level of activity to recover at some point, but the magnitude of this recovery remains uncertain”, says Bo Lybæk.
On that basis, GPV expects to generate revenue in the range of DKK 9.1-9.7 billion and earnings (EBITDA) in the DKK 700-760 million range in 2024.
