DSV sees record numbers but Q4 points to lower growth


Thomas Cullen, TI Insight’s Chief Analyst, reports.

DSV saw record profits for the financial year 2022, however the fourth quarter numbers suggest that these results are more about the past than the present, let alone the future. For the financial year 2022 DSV saw revenue increase by 24.3% year-on-year and EBIT (Earnings Before Interest and Tax) by 48%.

Much of the growth in profits has, unsurprisingly, come from freight forwarding. For the full year the ‘Air & Sea’ Forwarding unit saw gross profit climb by 38.5% and Earnings Before Interest and Tax (EBIT) by 53% . Yet the picture changed noticeably in the fourth quarter with both gross profits and EBIT just growing in single figure percentages. The downturn was most noticeable in air forwarding, with gross-profit up just 3.8% year-on-year. For the whole forwarding business, profit margins hit a high of 13% in Q2 2022 but had fallen back to 10.6% by the fourth quarter.

The explanation is two-fold. DSV explained “global air cargo tonnages have been in decline since February 2022 – with export from Asia as the weakest market” which obviously has hit the volume of sales, but this has been compounded by “gradual yield decline as supply chain congestion eases and belly-space capacity returns.” The situation in sea freight was similar, with “extreme rate volatility” now seeing rates “close to pre-pandemic levels”. DSV said that in container shipping “Asia-Europe and Trans-Pacific were the weakest trade lanes during most of 2022.”

The good news for DSV was that both its road freight and its contract logistics businesses were stable and growing. The impression that DSV’s results give is that the core air and sea freight markets are falling to extent in terms of volumes but particularly in terms of rates, but the fall is not yet what might be described as a ‘bust’. Rather, as DSV state, at present the market is roughly where it is was before the pandemic, however this might not be sustained and any further weakness in demand may make forwarders and others suffer. But we are not there yet.

Author: Thomas Cullen

Source: Ti Insights

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