GPV Maintains Strong Growth in Q1 Despite Increasing Challenges

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The Danish-based international electronics manufacturer GPV continues to generate strong growth in 2022, reporting the best Q1 results ever. Q1 revenue reached one billion DKK for the first time, and earnings are keeping up well despite rising costs of materials and freight.

The electronics manufacturer GPV, owned by the Danish industrial conglomerate Schouw & Co. listed on Nasdaq Copenhagen, continues to generate strong top- and bottom-line growth in Q1 2022. GPV achieved revenue of DKK 1,009 million compared to DKK 741 million in Q1 2021. This is a significant increase of 36 per cent, partly due to increased demand and partly to rising prices due to increased costs of materials and freight:

“GPV has had its best Q1 ever, and a lot of things are going our way. At the same time, we continue to be in a particularly complex situation where, on the one hand, we see increased demand, while on the other, we continue to see a challenging material supply situation that has been further disrupted indirectly by the war in Ukraine and directly by the coronavirus lockdowns in China. So far, we are very pleased with the record-high turnover and our strong order book, and of course we are monitoring the situation closely,” explains GPV’s CEO Bo Lybæk.

He explains how the difficult situation has reduced earnings, which have not increased at the same rate as revenue. In terms of profit, however, Q1 2022 ended better than expected with an EBITDA of DKK 91 million compared to DKK 76 million in the same period last year. Earnings were positively affected by increased sales to a wide range of customers, good cost control and high-capacity utilisation at the company’s production units.

GPV has begun a new strategy period with new growth ambitions. Going forward, customers are divided into six segments consisting of the previous CleanTech, MedTech and Transportation as well as a tripartite segment of the Instruments and Industries segment into Industrials, Measurement and Control, and HighTech Consumer, respectively:

“We are seeing significant growth across all our segments and with the new strategy we are further professionalising our market approach. Our customers demand partners who are professional and dedicated in more specialised areas – this is what our new strategy is all about and you might actually say that we are aiming for excellent performance with a strong sustainability profile,” Bo Lybæk continues.

One of GPV’s largest production units is located in Sri Lanka, which is currently battling the worst economic crisis since the country gained independence in 1948. Drastically high inflation, combined with the coronavirus pandemic, and a poor last year’s harvest has led to a difficult situation for the country.

“We have launched a number of measures to help our employees in Sri Lanka. Among other things, we have established a system of monthly food packages to support the individual employees and their basic family well-being. The country and its people are in a very tragic situation, and we are trying to help as best we can,” he continued.

Following master plan to strengthen footprint

GPV cut the first sod for its new factory in Sri Lanka in October 2021 with an increase in production capacity of 40 per cent. This work is proceeding according to plan, and at the same time, GPV has started the construction of a new mechanics factory in Thailand with an expansion of the electronics facilities to follow. The new factories are expected to start operations in Q1 2023. GPV has also invested in new production capacity and optimised its production units in Thailand, Switzerland, and Slovakia.

Bo Lybæk and the rest of GPV’s top management are thus confident about the future, although the fear of recession is also part of the risk picture: 

“As a global company we have to some degree been in a state of alert since the beginning of the coronavirus crisis in early 2020. Throughout the period, we have had bi-weekly communications with our customers to ensure transparency, and since autumn 2020 our main focus has been on the supply chain situation. In 2021, we probably had a head start over many of our competitors with regards to the supply chain, but we are also deeply concerned about the developments. So far, the materials situation remains very challenging, and the logistics challenges, which would otherwise have diminished, have now worsened again due to the lockdowns in China and the situation in Russia and Ukraine. Visibility is thus still low,” Bo Lybæk notes.

Despite the volatility, GPV raises its full-year guidance. The revenue forecast is raised to the level of DKK 3.5-3.7 billion from previously DKK 3.2-3.4 billion, while earnings are expected in the range of DKK 310-350 million against previously DKK 300-340 million. A significant part of the increase in revenue is related to increased prices of materials.