The AVK Group's acquisition strategy is once again generating good results

Press Release by AVK Holding

In 2023/24, acquired companies contributed 13.0% of the AVK Group's total revenue, which increased by 13.7% to DKK 9.0 billion. Profit for the year increased by 9.5% to DKK 501 million, and the Group considers the result satisfactory. The AVK Water business unit drove growth with an increase of 28%, while AVK Industrial and AVK Advanced Manufacturing were affected by continued slowdown and reduced activity in their markets. 

The first half of the year was generally characterised by a continued slowdown in the economy in several of the Group's markets, while the second half of the year was characterised by improvements and a positive trend in order intake. 

"Behind the overall results, however, are significantly different market conditions for the Group's three business areas," says Lars Kudsk, CFO of AVK.

AVK Water did a great job and contributed significantly with a growth of 28%, which can primarily be attributed to the successful integration of French Bayard and Spanish Belgicast – two companies that were acquired in October 2023. However, it was also a contributing factor that the United States, the United Kingdom and the Middle East in particular developed positively.

"AVK Industrial's sales declined after the previous very positive year, but the order intake has developed positively towards the end of the year. AVK Advanced Manufacturing experienced a negative development in sales, caused by the squeezed European economy and, not least, a low level of activity in the wind turbine industry. On the positive side, however, was a significant growth in the production of pallets based on recycled plastic from household waste. In 2023/24, pallets were produced based on more than 30,000 tonnes of recycled plastic," adds Lars Kudsk.

Investment in production in the USA

Throughout the year, investments were at the same high level as in previous years. Thus, DKK 432.7 million was invested across the Group in optimisation and expansion of production facilities, automation, energy optimisation, product development and much more.

"These focus areas will be maintained in next year's investment program, which will be the largest ever in AVK's history," points out Bo Johansen, COO at AVK.

The programme includes an expansion of AVK's facilities in the United States.

"The U.S. is increasingly protectionist, and full local sourcing is required in federal projects. The U.S. is an important market for AVK, and to maintain our strong position, we are investing in production facilities that cover the entire supply chain, including a foundry and production of rubber components," says Bo Johansen.

Expects organic growth of 5-7% in 2024/25

The outlook for the financial year 2024/25 is characterised by considerable optimism. AVK expects revenue growth of 5-7% and a positive development in profit based on positive contributions from all business areas. This will primarily be organic growth, as AVK does not foresee significant acquisitions in the financial year.

"Overall, our markets are characterised by increasing activity, with a greater focus on the challenges within water supply and wastewater management. This is expressed in concrete terms through major investments in water projects in many emerging markets, such as India, South Africa, and the Middle East," says Lars Kudsk.

The Group's largest order to date

"In recent years, AVK has expanded our product range within large valves, which are used for transmission lines for water, among other things. A current example of this is the delivery of several valves with a diameter of more than two meters for a gigantic irrigation system in Egypt and for water supply to Egypt's new capital, both orders of record size for AVK," says Søren Kjær, Technical Director at AVK.

AVK is also growing successful with Smart Water solutions, where intelligent monitoring and control can ensure an optimisation of water supply and systems for irrigation. 

"Smart Water solutions are increasingly being integrated into more and more water projects, providing a better use of water resources with all the benefits that this entails. In Italy and India, among others, AVK's Smart technology helps to ensure efficient control of irrigation systems, which are being heavily invested in both countries to ensure food production also in dry areas," Søren Kjær continues.

Massive investments to become CO₂ neutral by 2030

The Group's focus on ensuring greater sustainability has intensified throughout the financial year. 

"We want the Group to be CO2 neutral by 2030," says Søren Kjær. “For example, we work systematically with the products' life cycle assessment (LCA), and in continuation of this, the ambition is to certify the products according to EPD (Environmental Product Declaration), which is a precise calculation of a product's CO2 emissions throughout the value chain. We received the first EPD certification last year, and in 2023/24, no less than 15 products are EPD certified," states Søren Kjær.

The Group's increased level of activity meant that the average number of employees grew by 462 to 5,342, of whom 797 are employed in Denmark.