News / Schenker makes an impact as DSV announces Q2 results

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In its first quarterly results since it completed the acquisition of DB Schenker, DSV chief executive Jens Lund said today the integration of the German business was off to “a great start”.

With DB Schenker contributing materially to two of the three months in the reporting period, DSV group revenues were recorded at just under Dkr70bn ($9.5bn), compared with Dkr41.1bn in the same period the year before.

Meanwhile, group EBIT was up 15%, at Dkr4.72bn, which it said was largely driven by a “stable organic performance, especially in Air & Sea, as well as a contribution of Dkr925m from Schenker”.

Forwarding arm Air & Sea reported 19.4% increase in EBIT, before special items, to Dkr3.4bn, following “positive organic earnings growth due to higher gross profit combined with a solid contribution from Schenker”.

However, Mr Lund told analysts it had experienced different headwinds across its verticals

“If we look a little bit at the verticals, I think it’s fair to say that a vertical like automotive is probably facing a bit of headwind these days.

“On the retail side it’s also so-so, whereas in tech we see significant progress – it was a very strong area of Schenker and it’s also a focus area for DSV,” he said.

On the air freight business, Mr Lund indicated the company was still determining the best product mix for its volumes.

“We’ve mentioned before that we’d lost some volume – certain retail volumes that didn’t really yield a lot, and also some perishable volumes as well.

“On the perishables side, I don’t think we ever made more than Dkr300-Dkr350 in gross profit per ton in the time I’ve looked at it.

“It’s not something that makes a big difference for us – it doesn’t produce a lot of income or GP for us, and it doesn’t really mix with our network business either,” he added.

He did however admit that, group-wide, forwarding yields had been dragged down by Schenker’s lower profit levels, and would continue to be so.

“Schenker takes our yield a little bit down, and it will also now have an impact in the next quarter, because it will probably take the yield a little bit further down.

“The whole idea is, of course, that we bring the Schenker volume up to the to the yield at the end of the day, and that we keep as much of the volume as we possibly can,” he added.

Meanwhile, its road freight division remained under considerable pressure, despite the addition of Schenker’s sizeable European road fight network, with second-quarter EBIT down 5.3% year on year, to Dkr520m.

While the general weakness in Europe’s economy has plagued the division for a number of quarters, Schenker’s US operations – centred around its 2022 acquisition of USA Truck – were singled out by Mr Lund as a key factor in a further deterioration of its profitability.

“Schenker has an operation in the US that is delivering significant losses. Actually, ever since it’s been acquired, it’s been delivering a financial outcome that was a deficit.

“On the Schenker side, I think it’s also fair to say that in particular, the German market has been a significant issue as well, while on the DSV side, the German automotive and German market is also a problem,” he explained.

The Contract Logistics division – renamed from Solutions since the acquisition of Schenker – reported 9.5% year-on-year growth in EBIT, to Dkr724m, largely due to the contribution of Schenker and a relatively “soft organic earnings performance” from its existing operations.

However, Mr Lund also revealed there had been some issues in contract logistics operations that had held back the division.

“It’s been a quarter where we cannot be 100% satisfied with the outcome – not least on the Schenker side.

“We’ve unfortunately had a few cases where it seems as if we’ve somehow underperformed on a couple of accounts significantly. One being in the US, and then there’s a couple of other places where we’ve continued to have certain issues.

“In the US, it is reported to be resolved, but it cost us a significant number in the last quarter, impacting the results.

“But here it’s been very positive getting acquainted with the Schenker business – it’s very strong in the Asia-Pacific and also in the Americas,” he said.

Synergies from the Schenker buy are expected to generate some Dkr500m this year, while DSV maintained its previous full-year EBIT guidance of DkR19.5bn to Dkr21.5bn.