GPV’s Q1 2024 Interim Financial Report Shows Strong Navigation in Uncertain Times

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Danish-based GPV recorded an expected drop in sales to DKK 2.3 billion for the first quarter of 2024. The decline also affected the operating profit, which was DKK 155 million compared to DKK 179 million in the same quarter last year, although the EBITDA margin was maintained. In general, demand has been softer in 2024, but GPV continues to invest for the long-term and expects the trend to turn in the second half of 2024.

Earlier today, Danish electronics manufacturer and Europe’s second-largest EMS company GPV Group A/S published its financial results for Q1 2024, showing a balanced start to the year and a sustained high activity level. The company, owned by Nasdaq Copenhagen-listed Danish industrial conglomerate Schouw & Co., generated sales of DKK 2.3 billion compared to DKK 2.7 billion in the same quarter of 2023, corresponding to a 13 per cent decline. The change in sales was expected due to customers destocking after the supply chain challenges in recent years, a large past due order situation in 2023 and, higher one-off material costs than what we see now:

“The activity level was lower in Q1 of this year than in the same quarter last year, but in line with our expectations. We are currently experiencing a good balance between supply and demand, leading to improved service excellence and we continue to follow our strategy and plan for the full year,” explains GPV CEO Bo Lybæk.

Earnings in Q1 2024 were also affected by the lower activity level, and EBITDA ended at DKK 155 million compared with DKK 179 million in the same period of 2023, also a 13 per cent decrease. Nonetheless, the EBITDA margin remained steady at 6.7 per cent. In other words, GPV is not significantly affected by the reduced sales, and Bo Lybæk believes that profitability is currently at a balanced level:

“We have seen a rebalancing of the global electronics market as a result of multiple, opposing trends. We continue to see the positive effects of our region-by-region approach, in which our customers and their customers give priority to products produced within a region. Also, we see an imbalance on the cost side, because large parts of the world are facing inflation and rising prices, while China and Southeast Asia have not experienced similar increases. Furthermore, some customers – especially from the US continue to move their production out of China. With our strategically located global footprint, we are well-positioned to adapt our production capacity across the various regions in which we operate,” Bo Lybæk continues.

He adds that there are other opposing trends, and that GPV’s strength lies in the fact that the company is a supplier to many different sectors and geographies. Some sectors, such as the Smart Building sector, have been hit by the downturn, while other sectors are growing. Geographically, demand is high among US customers, while European customers in general are more cautious.

Overall, however, GPV expects demand to strengthen later in 2024, and thanks to its solid financial situation, the company takes a long-term approach. Therefore, GPV will continue to finalise the initiated capacity expansions including the final phase of expanding the electronics production in Thailand, which is planned for completion in Q3 2024. The project to expand the electronics production in Mexico began in 2023, and the first phase, to double the production area, is expected to be completed in the first half of 2024. The expansion of the production facilities in Slovakia is also nearing completion and will be commissioned within the current quarter:

“We continue our investments and will be ready when the markets recover and begin to grow again. At the same time, we are focused on moving our current capacity to where it is most beneficial to our customers, which is one of the reasons why we are working to move our customers with orders placed at the factory in Malaysia to other sites, so that we can close the factory by this summer. Once that is in place, we will have production in 12 countries, which places us as the European number two among European-headquartered EMS companies and in the top 25 globally,” continues Bo Lybæk.

After the end of Q1 2024, GPV maintains its forecast of full-year sales in the DKK 9.1-9.7 billion range and EBITDA in the DKK 700-760 million range.