FREE BRIEF: DSV continues to deliver strong results

The latest annual results from DSV are predictably good, with increases in revenue and better increases in profits. Gross profit was up 8% for the full year, whilst ‘adjusted’ Earnings Before Interest an Tax (EBIT) was up 15% at DKK5.45bn (US$680m). Growth was high across the two main divisions of the company with the forwarding and ‘Solutions’ contract logistics business delivering sustained high margin expansion.

At the ‘Air & Sea’ forwarding business, air freight was notable for its 13.2% jump in gross profit on a volume increase of 8%. The forwarding operation as a whole delivered an 18.2% increase in ‘adjusted’ EBIT to DKK3.6bn. Margins hardened to 10%. The company said that it had benefitted from export activity from Europe and the Americas. Discussing the results, DSV’s management implied that the market had slowed over 2018, however it expected reasonable market conditions in 2019.

The ‘Solutions’ contract logistics business did even better. Revenue was up by 18.3% over the year whilst ‘adjusted’ EBIT leapt by 44%. DSV explained that this performance was due to good penetration in the retail and automotive sectors, however few if any other contract logistics providers are showing such profit dynamism. DSV did comment that it would expect ‘’more modest growth’’ in the future.

Compared to the other two divisions, road freight did comparatively badly. Revenue grew by 3.8% but EBIT before exceptional items fell by 3.3% to DKK1.2bn. This was despite DSV looking to sustain profit margins.

The focus of attention has been on DSV’s bid for Panalpina. It is unclear where this is going as the response from the Swiss forwarder has been not been fulsome. It may be that the main Swiss shareholders are hanging on for the highest price. However the contrast between the performance of DSV and Panalpina is hard to miss, although this is more a commentary on the quality of DSV. Profit guidance for the next twelve months was 2-9% which seems a little modest in the light of this year’s results.

Source: Transport Intelligence, February 7, 2019

Author: Thomas Cullen


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