The AVK Group is divided into three main business divisions: AVK Water, AVK Industrial and AVK Advanced Manufacturing. These divisions are built upon the more than 100 operational companies in the Group designing, producing and selling our own products into a range of business segments.
AVK Water is serving the markets of water and gas supply, wastewater and fire protection with an extensive product range of valves, hydrants and accessories. The AVK Industrial division is built upon companies such as Orbinox, InterApp and Wouter Witzel, which offer a comprehensive range of valve solutions marketed to customers within water treatment, power generation, oil & gas, the marine sector, pulp and paper, mining, the chemical industry, air separation and other segments. Flonidan, a leading producer of smart gas meters, is part of the industrial division as well.
Advanced Manufacturing comprises companies supplying rubber, plastic and metal components to both companies in the Group and external customers in various industries including food, pharmaceuticals, transport and wind energy.
Production and sales take place via the Group’s network of own companies in Europe, the Middle East, North and South America, Australia, Asia and Africa.
Development of key financial figures
Net sales of DKK 4.7 billion were well above last year with a growth rate of 26 %, which was supported by the acquisition of Fusion Group in the UK and the two Australian production companies Wang and Currumbin contributing with 10 % of the increase in sales. Organic growth was still an impressive 15 % achieved across the three business units, and with a positive development in most markets.
AVK Water realised strong growth of more than 25 %. Even if more positive market conditions supported growth, most was achieved by strengthening the position of AVK in both the mature markets of Europe, North America and Australia, as well as in emerging markets such as India, South Africa and South East Asia.
Sales of AVK Industrial re-bounced strongly after a weak year with a growth rate above 30 % broadly based among the industrial companies such as InterApp, Orbinox, Wouter Witzel and especially Flonidan, which has gained a strong position in the market for smart gas meters - especially in the Netherlands and the UK.
For the Advanced Manufacturing companies, sales of the past year grew by almost 10 % supported by a positive development in especially AVK Gummi and the Plastics Group.
Operating profit amounted to DKK 364.4 million, a 70 % increase from the profit of 2015/16. The operating margin improved to 7.6 % from 5.6 %, supported by the increase in sales and the continuous effort to optimise operations including the roll-out of LEAN tools. LEAN is presently being rolled out in 8 operational companies with the aim of improving delivery services, reducing stock levels, speeding up product development and lowering operational costs.
The investment level in the year was kept at a lower level than previous years as the aim was to achieve better capacity utilisation and improve cash flows, but plans are in place to further expand the Group’s production capacity to support the expected growth in the coming years.
Expected Group developments
We expect a positive development in sales also for the coming year. The positive market conditions are expected to continue, which along with the latest acquisitions and the expansion of the Group’s market position and product range will secure a growth rate close to or above the long-term objective of 10 % annually.
The Group’s presence in the growing markets in Asia, Latin America and Africa will be continuously expanded. There is a large need for infrastructure investments within the areas of water and wastewater, but also in the more mature markets, infrastructure investments are required to reduce non-revenue water. Digital tools and smart products that allow for better management and control of the water supply will play a growing role in the product and service offer of AVK.
We will continue investing in the improvement and expansion of our product range, production capacity, supply chain and digital tools to support both sales and operations. The acquisition of companies will also in the future contribute to further development of the Group.
Overall, a positive development of turnover, operating profit and net profit is expected in the coming year.