GPV's Q2 2024 Performance Hit by Global Market Conditions

Estimated reading time: 3 minutes

GPV ends the first half of 2024 with an expected decrease in sales to DKK 4.6 billion and a drop in earnings (EBITDA) to DKK 300 million. However, as the second-largest EMS company with European headquarters, GPV is having a strong pipeline in several areas in a declining global market, and a turning point for market demand is now expected in 2025.

Today, Danish-based GPV announced its financial results for the first half of 2024, following the record year 2023, which was positively affected especially by a larger past due order situation.

GPV – owned by Nasdaq Copenhagen-listed Danish industrial conglomerate Schouw & Co. – generated sales of DKK 4.6 billion in H1 2024 compared to DKK 5.4 billion in H1 2023, a decrease of 14%. Normalised for the lower level of PPV and material sales in H1 2024, the drop in activity level is 10%. Earnings (EBITDA) fell from DKK 368 million in H1 2023 to DKK 300 million in H1 2024. The drop in sales and earnings is a consequence of lower activity level and GPV’s sales and earnings in 2023 being above normal levels due to, among other things, a large past due order situation going into 2023. At the same time, the global electronics market is negatively affected by post-supply chain crisis re-balancing supply chains and structural changes:

“As expected, rising global interest rates and a re-balancing of the market have resulted in a lower activity level in the electronics industry. At the same time, market conditions have become far more complex due to the geopolitical developments. Overall, the US out-of-China approach and the market effects following is having a significant impact on global trade. We already now handle the regionalised globalisation tendencies. Therefore, the industry is currently in an adjustment phase, which, together with a continued outsourcing, gives us some exciting new opportunities,” explains GPV CEO Bo Lybæk.

Bo Lybæk emphasises that GPV actively addresses the changing market conditions. Much of the demand in the American market is now moving towards Mexico. Consequently, GPV is doubling the production area there in 2024, with the final layout expected to be completed in the first half of 2025 and key production equipment is being relocated from regions with lower demand. A similar trend is taking place in Southeast Asia, where GPV has now closed its production in Malaysia in favour of capacity expansions in Thailand and Sri Lanka. China-to-China remains a significant market for GPV:

“One of our greatest strengths is our operational footprint, as confirmed by several customer surveys. We continue to develop our footprint, but also utilise our CAPEX wisely so that we do not increase total capacity in a declining market. Instead, we move capacity to where demand is greatest. We have been good at this, which is why we maintain solid sales and earnings,” continues Bo Lybæk.

Furthermore, GPV has expanded in Slovakia with a new 11,000 sqm electronics manufacturing factory and expecting start of production in October 2024.

Investing in future growth

Bo Lybæk emphasises that GPV is well-positioned in the global competition – both in the short term, where adapting to market conditions is key, and in the long term, where the market is expected to rise again. Previously, it was anticipated that the turning point would come as early as the second half of 2024, but now it is expected in 2025. This is also the reason why GPV is lowering its expectations for the year. The sales forecast is now in the range of DKK 8.9-9.3 billion compared to the previous forecast of DKK 9.1-9.7 billion. Similarly, the earnings expectation (EBITDA) is reduced to the range of DKK 610-660 million from the previously expected range of DKK 700-760 million:

“The turning point has been a long time coming, but we have many assets that provide us with a strong competitive advantage. Our business remains as solid as it was yesterday, and we make a living of selling the products that our customers need. For example, our extensive experience in box-build has helped us become among the largest European players in the Industrials segment,” continues Bo Lybæk.

He adds that 2024 is characterised by the fact that some industries are back into a positive trend, while others remain soft. GPV sees an increasingly positive trend in both the BuildingTech and Semicon industries where as MedTech is still in a soft patch.

In general, GPV is also using the period to prepare for future growth. As part of this process, the company has launched an important project to implement a common ERP system across the company, which according to Bo Lybæk will be the next big stepping stone, providing substantial efficiency gains over time.