AVK annual report 2022/2023

Press Release by AVK Holding

Despite the economic slowdown in several markets, the AVK Group experienced growth in all business units, and turnover increased by 4.7% to DKK 7.9 billion. Operating profit increased by 5.4% to DKK 775 million, but among other things interest rate increases and exchange rate adjustments had a negative impact, so the net profit for the year decreased by 8.8% compared to the previous year to DKK 466 million.

"The result is satisfactory, as it should be seen against the background that the year was characterised by a slowdown in the economy in several of our markets. Despite this, we experienced growth in all our business units, with the Middle East and UK markets in particular contributing to the growth. Many Asian countries have continued to be impacted by low levels of activity following the Covid-19 pandemic, which in China’s case did not end until the lifting of restrictions in early 2023," says CFO Lars Kudsk, AVK, in a comment on the financial statements.

Shareholders' equity grew by 9%

The annual results did not keep up with the increasing turnover since the result of financial items developed negatively.

"This was partly due to the generally higher interest rate level and partly due to increased debt caused by the Group's stock build-up in response to the supply crisis the year before. However, exchange rate developments also had a negative impact on the result. On the other hand, the financial year was characterised by a positive operating cash flow of DKK 886 million, which was used to reduce interest-bearing debt by DKK 465 million. At the end of the financial year, equity had increased by 9% to DKK 3,560.6 million, resulting in a significant increase in the equity ratio to 54.8% compared to 48.0% the year before," adds Lars Kudsk.

Major investments in green transition

Niels Aage Kjær, Chairman of the Board, emphasises that AVK continues its intensified efforts in relation to the green transition in recent years.

"Reducing CO₂ emissions and establishing sustainable solutions are indispensable requirements, and at AVK we are fully aware of our responsibility and possible contribution to this," he states and continues:

"We have a product range that greatly contributes to improving the quality of water supply and irrigation, and our products already contribute significantly to a lower CO2 impact through reduced water loss and thus lower energy consumption. The efforts to ensure greater sustainability are reflected in many different initiatives across the entire Group, and the mantra is 'many little efforts counts'."

First EPD for an AVK product

Concrete initiatives include the development of innovative products, such as a new valve with a 100-year longevity and the development of products for smart irrigation. At the same time, AVK works determined to minimise energy consumption and has obtained the first three ISO 50001 certifications in energy management. Focus is also on product life cycle assessment (LCA), and this year AVK has received the company's first certified Environmental Product Declaration (EPD), which creates precise calculations of CO2 emissions throughout the entire value chain of a given product.

Significant level of investment is maintained

Lars Kudsk states that the Group has continued the significant investments of previous years. Thus, DKK 343 million has been invested in fixed assets, close to the record level from the previous year. He adds:

"We have invested in the Group's production facilities, including optimisation of factories and production facilities. In addition, we have invested heavily in product development, automation, and digitalisation, as well as a wide range of initiatives to reduce environmental and climate impact. We will maintain the significant level of investment in the coming year to optimise operations and ensure capacity for continued growth."

Acquisitions ensure 15% growth in 2023/24

For the current financial year, the AVK Group expects moderate organic growth. Despite this, turnover is expected to in-crease by approx. 15%, primarily due to the acquisition of French Bayard and Spanish Belgicast in October 2023, which together generate a turnover of around DKK 1 billion within the water sector. The two companies have a broad product portfolio and a strong market position in Southern Europe, including within water desalination plants. The acquisition significantly strengthens the AVK Group's core water business.

Key figures for the AVK Group, 2022/23 (thousand DKK):