Danish company GPV, a European top-10 electronics manufacturer, reported revenue of DKK 2.86 billion for 2019. The acquisition of Swiss peer CCS more than doubled the size of the company, propelling GPV into a completely different European league.
GPV, Denmark’s largest electronics manufacturer and owned by industrial conglomerate Schouw & Co., more than doubled its revenue in 2019 to DKK 2.86 billion from DKK 1.22 billion in 2018. Representing a 134 per cent increase, the reported revenue is more than DKK 100 million higher than forecast.
The increase in revenue was predominantly driven by Swiss electronics manufacturer CCS, acquired in late December 2018 and included in the 2019 financial statements for the first time:
“In late 2017, we adopted a new growth strategy that would see us doubling our revenue within five years from DKK 1.15 billion at the time. The acquisition of CCS and the performance we’re reporting for 2019 today show that we’ve reached that goal ahead of time. This is not least due to the successful integration of GPV and CCS, which began on 7 January 2019 when all units were renamed GPV globally. Obviously, this was a high priority project for us throughout 2019,” says CEO Bo Lybæk from GPV’s new head office in Vejle, Denmark.
GPV reported EBITDA of DKK 196 million for 2019, up from DKK 114 million in 2018. The result is within the guided range of DKK 190-200 million and Lybæk considers it satisfactory, not least when you bear in mind the external challenges the company faced during the year:
“Our 2019 financial results include certain non-recurring items, including a not insignificant million-kroner foreign exchange loss due to changes in Thai baht exchange rates, challenges at our Mexico site and, of course, integration costs. So, at the end of the day, I’m very pleased that we still managed to meet our earnings target of just under DKK 200 million,” he explains.
Bo Lybæk adds that the US-China trade war also had a negative impact, as some major customers became reluctant to place orders, but that sentiment was replaced by more optimistic views during the fourth quarter.
Largest of the small and smallest of the large players
Given its size, the ‘New GPV’ has certain advantages from being the largest of the small and the smallest of the large players in the industry. GPV is, still, in the European top-10 of EMS (Electronic Manufacturing Services) companies, giving its customers distinct benefits.
“With the integration competed, GPV has a very special position in what we call HMLM (high-mix/low-medium) volume production. It means that we are as flexible as some of the smaller manufacturers, but also as capable in terms of high-volume orders and cost efficiency as some of our largest peers. We’ve consolidated this position and made the ‘New GPV’ even stronger, in part thanks to the highly successful integration in 2019,” says Lybæk, and he continues:
“I would also like to point out an extra benefit that I’m personally delighted with: the combination of German diligence so characteristic of the DACH region and the highly flexible and dynamic approach that we’re often associated with in Scandinavia. This combination generates a unique culture and platform from which to run our business.”
Apart from integration, a key focus for GPV was to set the market standard for service excellence, quality products, reliability of supply and fast response. Intending to retain this position, GPV has launched an ambitious investment programme to implement further automation and efficiency improvements at its factory sites in Denmark, Switzerland, Thailand, Mexico, Germany, Austria, Slovakia, Sri Lanka and China. GPV has recently invested in a 2,300m2 high-ceiling warehouse at the electronics factory in Thailand, and a comprehensive project planned for 2020 will extend and modernise the electronics site in Sri Lanka to cover 10,000m2. The extension is scheduled for completion in 2021.
Also in 2020, GPV intends to step up cross-selling efforts, encouraging customers to buy more services from GPV. The acquisition means GPV can offer new services, such as product and software optimisation as well as cable harnessing which complement the company’s existing mechanics solutions. According to Bo Lybæk, it is crucial that all customers are aware of the entire range of services provided by GPV.
Updated strategic ambition
Having already reached its 2022 targets in 2019, GPV is currently implementing a new, updated business strategy – ‘Winning our Future’. The new strategy envisions very strong growth as the company works towards its next target, which is to generate annual revenue of DKK 4 billion.
“We believe that staying focused on delivering solid earnings is crucial to continuing our growth journey,” Lybæk points out.
The strategy also involves a number of ESG (Environmental, Social, Governance) initiatives, including specific targets for further reducing energy consumption, ensuring ongoing reduction of lost-time incident (LTI) rates (reportable industrial injuries per one million working hours) and on keeping LTI below the current level of 2.7. In addition, GPV is currently mapping its overall carbon footprint.
In conclusion, GPV has a positive outlook for the current year, not least in light of the performance and the market recovery seen in the fourth quarter. However, that might change considering the current situation involving Covid-19 coronavirus and the disruption it has created in the global supply chain.
Overall, GPV anticipates a flat top line at a revenue forecast of DKK 2.8 billion and an EBITDA improvement to the DKK 210-240 million range.
“We took certain costs in 2019 which we don’t expect will recur in similar amounts in 2020. We also have a strong pipeline with an ongoing inflow of new contracts from both existing and new customers, so we certainly expect to lift our bottom line in 2020,” Bo Lybæk concludes.