GPV Delivers Growth Despite Global Material and Logistics Shortages

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GPV presented its interim financial report for Q3 2021. The Danish-based European top-10 electronics manufacturer has set new records driven by high-capacity utilisation and is also raising its full-year guidance. Thus, GPV again demonstrates its ability to navigate in times of global turbulent supply chains.

The electronics manufacturer GPV, which is owned by Danish industrial conglomerate Schouw & Co. listed on Nasdaq Copenhagen, presented its interim financial report for the third quarter of 2021 earlier today and according to GPV CEO Bo Lybæk, the report comes at a time when global material shortages, rising prices and logistics challenges have reached new heights:

“Global demand for a wide range of electronics products remains much higher than the current supply, and in Q3, these shortages and international logistics challenges have only increased. This has left the market situation upside down in many ways,” he explains and continues:

“This means that we have spent a significant amount of our time in dialogue with customers and suppliers, while optimising our production and inventories so that we can finalise production in the best possible way as soon as the components reach our factories. We have managed this capacity puzzle quite well so far, and that is one of the reasons why we achieved record top and bottom lines for the first three quarters of 2021 and in addition are able to raise guidance for the full year.”

For Q3 2021 specifically, GPV delivered revenue of DKK 799 million, which is a 4 per cent drop year on year. In third quarter 2020, GPV delivered the main part of a large MedTech order for ventilators, and it is positive to see that in Q3 2021, GPV experienced stronger demand from a broader range of customers. Earnings (EBITDA) ended at DKK 102 million due to high-capacity utilisation across sites and the growing demand from a broader range of customers.

In the first nine months of 2021, GPV delivered revenue of DKK 2.3 billion compared to DKK 2.2 billion in the same period last year. Earnings (EBITDA) have also been lifted, from DKK 191 million in the first three quarters of 2020 to DKK 254 million this year. This is the highest level ever, which now leads to an upward revision for the full year. GPV expects to realise revenue for 2021 in the range of DKK 3.0-3.1 billion compared to the previously announced DKK 2.9-3.0 billion. Similarly, the expected profit increases from the range of DKK 260-300 million to DKK 300-320 million, driven by a record high order backlog:

“Our backlog of orders has almost doubled in the last 12 months, and this symbolises the very special situation that both the market and we find ourselves in. The high level is partly the result of us asking our customers to extend their demand horizon and partly due to a general increase in business activity,” Bo Lybæk continues.

He also says that GPV has, in close co-operation with its customers, chosen to increase its inventory levels by approx. DKK 400 million to ensure a high level of flexibility. However, this does not mean that GPV can always live up to its own objectives of delivering on time, which is currently simply not possible:

“It hurts to call a customer and explain a delivery delay. Unfortunately, we have tried this many times recently, and although we always want to deliver on time, we are up against something bigger here. Fortunately, there is a great deal of understanding for this, as long as we do everything we possibly can,” says Bo Lybæk.

GPV has launched a wide range of measures to overcome the challenges. One of the initiatives is to emphasise our offerings within redesigning products and replacing components which are difficult to obtain by available components. Furthermore, GPV is now launching a large strategic Sales and Operations Planning project to ensure that knowledge and data are gathered to act even smarter in our demand planning and control in the future.

Executing on ambitious growth plans

Today, GPV has production sites in Denmark, Switzerland, Germany, Austria, Slovakia, Thailand, Sri Lanka, and Mexico, and the group has already significantly expanded its production capacity in the current year.

In addition, the first sod was cut in October for a new factory in Sri Lanka that will replace the existing electronics factory. Construction is due to be completed in the beginning of 2023 and will expand the factory's area by 40 per cent.

In a few months, GPV will also start construction of a new factory for mechanics in Thailand, which is scheduled for completion in early 2023. At the same time, this factory will increase GPV's electronics capacity in Thailand, as the new factory frees up existing square metres for increased electronics production:

“Although most of our time is spent dealing with acute supply chain challenges, we are very aware not to neglect our opportunities to think and plan long term. We do not know when the situation will normalise, but we know that this will happen eventually, and we have both the strength and the will to prepare for growth in the long run as well. Here, we believe we have a competitive edge,” Bo Lybæk concludes.