Admittedly the conditions in most logistics markets are excellent if you are an asset owner or service provider, yet DSV performance over the past year has been predictably impressive.
For the fourth quarter and full year results, the top-line numbers are a 59% growth in revenue and 71% growth in operating profits for the whole company.
In the air and sea business, revenue for the year was up 81.6% to Danish Kroner 131.9bn (US$20.26bn) with the fourth quarter seeing a leap of 126% to Danish Kroner 46.168bn ($US7bn). Profits followed a similar trajectory, with EBIT (Earnings Before Interest & Tax) up 83.5%. Looking at the gross-profit numbers it was the sea freight forwarding business that really performed, however it should be remembered that the numbers are boosted by acquisition, both of the now fully digested Panalpina but also of GIL, with the latter expected to increase profits by Kroner 3bn from the back-end of this year. Also, the picture is not one of constantly increasing performance with peak profitability being in the first and second quarters of 2021, followed by a marked fall towards the end of the year. Still, DSV admits that it is the exceptional market conditions that have driven these results and that they feel that “assuming that demand holds up, the current market conditions are likely to last well into 2022”.
Unsurprisingly the ‘Solutions’ contract logistics business did not see such violent profit growth, nevertheless, for the full year revenue was up 28.4% and EBIT was up 51.3%. Demand seems strong, with high utilisation rates and operating margins hitting low double digits towards the end of the year. Similarly, the road freight business did more than respectably, with revenue up 16.2% and EBIT up 32.6%. DSV commented that the “market is characterised by high activity level, tight capacity and increasing rates” and that the “EU mobility package will lead to further rate increases in 2022.”
It is hard to know what is more responsible for these impressive results, DSV’s successful acquisition management or market conditions. Either way, DSV is clearly the most successful of the major logistics service providers. The company is suggesting that “congestion, tight capacity and high rate levels will continue in the first half of 2022. A gradual improvement could start during the second half of the year”. It will be interesting to see the impact on DSV’s results in a more normal market but bearing in mind it sees global growth continuing at 4%, any fall may not be particularly significant.
Source: Transport Intelligence, February 10, 2021
Author: Thomas Cullen