GPV shows stable developments despite ongoing pandemic

Relative to the first quarter of last year, the company saw a slight dip in its top line, but also a modest bottom-line improvement. GPV, Denmark’s largest electronics manufacturer, has so far performed well during the coronavirus crisis. The Q1 2020 revenue was DKK 679 million (EUR 91.04 million), down 6% from DKK 718 million (EUR 96.25 million) in Q1 2019. On the other hand, a slight improvement in EBITDA, to DKK 46 million (EUR 6.16 million), brought earnings to the highest Q1 mark ever. “We knew from the beginning of the new year that 2020 would be different from the last few years. The global economy had been expanding for quite a number of years, and there were several indications that the trend was about to break. It certainly did just that, but for reasons that we didn’t realise the scope of in early January,” says GPV’s CEO Bo Lybæk, in a press release. “After the end of the first quarter, we now know a great deal more about the extent and depth of the crisis, and so far, we’ve managed to get through the first stage of the crisis fairly well. We’ve lost a bit of revenue, but thanks to good cost management, we’ve managed to keep the bottom line stable and our cash flow high,” Lybæk continues. The coronavirus crisis has come at a time when GPV is still reaping the synergies from the acquisition of Swiss electronics and cable-harnessing company CCS, acquired at the end of 2018. As an example, GPV points to the to increase in its free cash flow by DKK 90 million (EUR 12.06 million) over the first quarter of 2019, in part by reducing its working capital from DKK 856 million (EUR 114.75 million) to DKK 720 million (EUR 96.51 million) over the past 12 months. Green lights across the group – all facilities are up and running GPV currently operates a total of thirteen factory sites in Denmark, Switzerland, China, Thailand, Sri Lanka, Slovakia, Austria, Germany and Mexico. All sites have implemented comprehensive safeguards that meet European standards, for example enabling people to observe the two-metre social distancing rule. The factory in China was closed due to coronavirus during much of February and in early March, while the Swiss factory, which is located close to the border to Italy, was also briefly affected by the crisis. The Sri Lanka site was closed briefly during March and April, but now all thirteen sites light up green. GPV has operated a crisis response since February 2020, monitoring the situation at all thirteen factory sites three times a week. One of the regular measuring points has been the number of employees infected by COVID-19, and that figure has been zero all through the crisis. “We’ve monitored the situation very closely, making sure to provide detailed information both in-house and externally. We’ve provided a weekly status to our customers on all thirteen sites, and during some periods, the factories in China, Switzerland and Sri Lanka did light up either yellow or red. However, during the last couple of weeks, it’s been green lights across the board,” Lybæk continues. He adds that GPV has good visibility for the second and third quarters, but that the situation could easily change. It is still too early to say anything specific about the fourth quarter or provide full-year guidance for 2020. Instead, the previous guidance, which was for revenue of DKK 2.8 billion (EUR 375.35 million) and EBITDA in the DKK 210–240 million (EUR 28.15 – 32.17 million) range, has been suspended for the time being: “We believe we have a reasonable understanding of how our company will be affected by the coronavirus crisis, but it’s still too early to quantify the demand crisis that will follow at some point. It goes without saying that we will monitor the situation closely, and we’re ready to respond promptly and effectively,” he concludes.