News / 'Declining demand for transport services' hits DSV's bottom line

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Danish 3PL DSV today posted a 27.4% year-on-year decline in group EBIT for 2023, with revenues falling 36%.

Group revenues across its three divisions – Air & Sea Forwarding, Road and Solutions – came in at DKr150.7bn ($21.9bn), while full-year EBIT was DKr17.7bn, compared with the DKr25.2bn operating profit in 2022.

“DSV delivered solid financial results for 2023, in line with our expectations,” said departing CEO Jens Andersen, adding that one year ago, its EBIT guidance for 2023 was DKr16-18bn.

“In a market characterised by declining demand for transport services across most markets, we demonstrated our ability to adapt to changing market conditions, and our dedicated employees continued to deliver excellent customer service,” he added.

Its guidance for this year is an EBIT of DKr15 to Dkr17bn.

The Air & Sea division, which accounts for 76% of group EBIT, saw revenues plunge 44% last year, due to declining freight rates and lower volumes.

“For both air and sea freight, the volume declines were most significant at the start of the year, and the trend then improved for sea volumes in the second half of the year, while air volume growth remained negative,” says DSV’s annual report.

It booked 1.3m tonnes of air freight and 2.5m teu last year, compared with 1.6m tonnes and 2.7m teu, respectively, in 2022.

New chief executive Jens Lund told analysts during this morning’s earnings call that “gross profit had plateaued”, and the company was now looking to grow with the market – its forecast is for a 3% growth in volumes this year across both modes.

The Road division saw a 6.4% decline in revenues, to DKr38.1bn, while EBIT remained flat, at DKr2bn.

“While the road market was still characterised by tight capacity and lack of truck drivers at the beginning of 2023, there were signs of overcapacity in the second half of the year. This impacted the overall pricing levels and increased competition. Lower fuel prices also contributed to declining freight rates,” DSV said.

However, it also claimed that its European road freight market share grew during the year.

“Our effective procurement setup and strong network meant we were able to offer high service levels in combination with competitive prices. We believe this was an important factor behind our market share gains in 2023,” said the company.

Its contract logistics business, Solutions, saw revenues marginally shrink, to DKr32.1bn, and EBIT decline 10.7%, to Dkr2.35bn, in an industry marked by a large-scale destocking programme across multiple verticals.

“Throughout 2023, the contract logistics market was impacted by the decline in global trade and a global inventory correction.

“This led to lower inbound activity and lower inventory levels, especially in the retail and industry sectors. We estimate the market has decreased by low single digits in 2023, compared with the previous year,” explained DSV.