GPV: "We have been excellent at adapting to the market situation"
Danish EMS provider GPV reported sales of DKK 2.2 billion (EUR 294.92 million) and earnings (EBITDA) of DKK 186 million (EUR 24.93 million) for Q3 2024. This was a modest dip from the same quarter in the record year of 2023. Thus, GPV kept up in a worldwide market characterised by ongoing market rebalancing and declining end-customer demand.
“We are in a special situation where the market is rebalancing. The development should be seen in the context of the explosive demand for electronics products we experienced after the coronavirus pandemic. This led to major supply chain challenges and electronic component shortages, causing the EMS industry and its customers to build up inventories to better meet demand. In 2024, we are seeing a continued normalisation of the inventory situation and market rebalancing leading to declining demand, especially in Europe and Asia,” explains GPV CEO Bo Lybæk in the company's third-quarter reports.
To make matters worse, GPV's sales in 2023 were higher than usual due to a substantial backlog of outstanding orders. Therefore, Bo Lybæk emphasises that GPV’s figures for 2024 should be read in this context:
“We were proud to reach sales of DKK 10.4 billion in 2023, but it is important to say that this performance was positively impacted by several extraordinary circumstances that we are not favoured by in 2024 or in the years ahead. Nevertheless, our sales target for the strategy period until 2028 remains DKK 15 billion,” he continues.
As stated earlier, GPV generated sales of DKK 2.2 billion (EUR 294.92 million) in the third quarter, which corresponds to an expected decline of 13% compared to Q3 2023 sales of DKK 2.5 billion (EUR 335.12 million). Sales for the first three quarters of the year totalled DKK 6.8 billion (EUR 911.55 million), a year-on-year decline of 14%.
Earnings (EBITDA) for Q3 2024 were DKK 186 million (EUR 24.93 million), compared to DKK 197 million (EUR 26.40 million) in the same period last year. This corresponds to a decline of 6%. Earnings for the first three quarters of the year were DKK 486 million (EUR 65.15 million), a decline of 14%.
At the end of 2023, GPV, as well as other EMS companies and many customers, expected demand to start picking up in the second half of 2024. This recovery has yet to materialise, and it is uncertain when it will happen in 2025.
“The global economic growth is still driven by the US and Asia, while Europe and China have lower growth rates. However, we confidently anticipate increased optimism in the industry in 2025 as interest rate cuts affect investment appetite and our customers’ inventory reductions taper off,” he continues.
GPV narrows its full-year expectations for 2024 to sales in the range of DKK 8.9-9.2 billion and an EBITDA guidance range of DKK 610-640 million against the previous guidance of sales in the range of DKK 8.9-9.3 billion and EBITDA of DKK 610-660 million.
Bo Lybæk continues to explain that in order to reduce costs and increase efficiency, the company has implemented a significant reduction of the number of employees, which – according to the CEO – has happened as a natural adjustment of the organisation, partly because of the merger with Enics and partly because of lower activity levels.
GPV's investments are lower than in previous years. The group has a flexible setup enabling production capacity on main general production lines to be moved between operating business units to adapt efficiently to customer needs and demand.
“We have been excellent at adapting to the market situation, and we will continue to focus on this. It also reflects the fact that the world is becoming less global, which entails changes that we need to adapt to and take advantage of,” the CEO concludes.
