GPV: High Activity Level Continued in Q3

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Danish-based GPV, the second-largest European-headquartered EMS company, grew its sales to DKK 2.5 billion in the third quarter and reported EBITDA of DKK 197 million. In other words, the activity level remained high and the combination with former Enics continues to progress according to plan.

The financial results for Q3 2023 shows that the leading Danish EMS company GPV generated sales of DKK 2.5 billion in the third quarter compared to DKK 1.2 billion in the same period last year. The significant increase in revenue of 120% was primarily due to the combination with the Swiss EMS company Enics, but sales were also driven by stronger-than-expected customer demand together with higher component and material prices. The higher material prices and material PPVs have put pressure on margins throughout the year, however, the Q3 earnings were better than expected with EBITDA rising to DKK 197 million compared to DKK 96 million in the same quarter last year:

"The combination with Enics has been a top priority in 2023, and we are satisfied with our performance. Internally, we have received invaluable support and commitment to the integration under the heading "One. New. Leader.", and externally, our valued customers and suppliers have embraced the advantages we offer, being a stronger organisation. In summary, these constitute the reasons for the good performance presented for the third quarter and our full year expectations," explains Bo Lybæk, CEO of GPV.

GPV has increased its working capital to DKK 2.8 billion at the end of the third quarter from DKK 1.7 at the end of third quarter 2022 primarily due to the combination with Enics.

The positive development means that for the first three quarters of the year, revenue now stands at DKK 7.9 billion, an increase of 140% compared to last year. EBITDA for the first three quarters of the year totalled DKK 565 million, compared to DKK 284 million the year before – an increase of nearly 100%.

Good capacity utilization

In general, capacity utilisation has been high at the company's 19 factories, located across 13 countries and three continents.

In Q4 2022, GPV launched an investment programme to expand capacity at both new and old sites. As part of the programme, the company completed the construction of a new mechanics factory in Thailand and a new electronics factory in Sri Lanka, which has also significantly increased capacity:

"It is important that we have the necessary capacity matching customer demand. Some customers have become increasingly focussed on region-for-region production. The common denominator is the demand for high product quality and high delivery reliability, which is also the reason why we are in the process of doubling our total production area in Mexico to 8,500 sqm and why we are expanding in Slovakia with an additional 11,000 sqm electronics factory. Both are expected to be operational in the first half of 2024," continues Bo Lybæk.

Integration enters a new phase in the new year

The work to merge Enics and GPV in 2023 has built on the "Prompt merger in the market and step-by-step back-office integration" strategy from 2022. During the year, focus has been the implementation of a new organisation, which was successfully launched in June 2023. The strategy is currently being reviewed and a plan for 2024 being prepared:

"The integration process has gone according to plan thanks to the winning spirit and great commitment of all colleagues. We will shortly be closing our Integration Management Office and turning key initiatives into ordinary operational and strategic activities. This does not mean that the integration work is complete, but merely that it has progressed to a point where it should be integrated into daily operational tasks of every individual within our organisation. This is very positive and is, as mentioned, a major reason for the positive developments in 2023," Bo Lybæk continues.

Earnings expectations revised upwards Q4 2023 is expected to be affected by some customers postponing orders, initiating de-stocking, and reducing their expectations:

"It is still too early to say if there is a drop in demand, but we are seeing customers starting to destock. Therefore, we expect the activity level to be slightly lower in the fourth quarter," explains Bo Lybæk.

After the end of Q3 2023, GPV's outlook for the full year is still solid resulting in a lift in guidance for full-year 2023 sales in the range of DKK 10.0-10.4 billion, up from DKK 9.9-10.3 billion. Considering the positive Q3 earnings, GPV raises its full-year guidance to an EBITDA in the DKK 690-730 million range, up from DKK 650-700 million previously.