As has become usual with DSV Panalpina, the company’s results for the first half of 2021 show sharp rises in profits and revenue. Even by the present standards of the logistics sector, the performance has been high. For the half-year, the whole group saw gross profit up 18% and underlying Earnings Before Interest and Tax (EBIT) were 64.7% higher year-on-year.
The now fully integrated Panalpina operation has led to a substantial expansion in the size of DSV’s air freight forwarding business influencing the 13.9% rise in gross profit on its airfreight business and the 32.6% increase in sea freight forwarding. The combined gross profit for the forwarding business was DKK*9,930m, a 21.3% rise year-on-year. EBIT for the whole freight forwarding business was up 69.0% at DKK5,236m. The management of DSV Panalpina described market conditions as “extraordinary” and that it saw “double-digit volume growth in Q2-21 and strong results in extraordinary market conditions” with global supply chains which “continue to be impacted by imbalances and capacity issues”. The clear implication is that that the company is in a strong position as regards its customers, enabling them to pass on price increases despite the overheated state of the market.
This even seems to be the case in DSV Panalpina’s road freight business, with revenue up 12% year-on-year in the first half but EBIT up 69.7%. Demand continues to be strong in all of the markets that the company is active in and such “high activity levels are starting to impact the capacity situation” driving up prices. As expected, ‘B2C’ demand is high but the company reported good demand across all sectors of the economy.
As seen elsewhere, conditions in contract logistics are less overwrought, however, DSV Panalpina did see a revenue increase of 16.2%, although this was influenced both by recovery from conditions last year but also as a result of acquisitions. Nonetheless, the company managed to increase profitability with a 37% rise in EBIT although the operating profit margin has fallen back somewhat from the peak in the second half of 2020.
DSV Panalpina will continue to grow through this year, not least as it has to absorb Agility Global Integrated Logistics, the purchase of which it will conclude in the third quarter. Bearing in mind the market conditions there seems no reason to think DSV Panalpina will not continue to grow its profits at a substantial rate.
Source: Transport Intelligence, August 3, 2021
Author: Thomas Cullen