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Jochen Thewes, CEO of DB Schenker, with Jens Lund (right)

DSV has revealed more about the Schenker integration as it announced disappointing 2024 results – after a poor fourth quarter. 

Revenues in Q4 fell 1.3% from Q3, to Dkr43.514bn ($6bn), and for the full year rose 10%, to Dkr167bn – but goss profit for the year fell from Dkr43.8bn to Dkr42.9bn.

Revenue in air and sea stayed flat in Q4, but rose for the year by 12% to Dkr104.4bn – but gross profit fell nearly 5%, to Dkr24.7bn. Gross profit on road fell slightly, while Solutions rose 5%. 

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Road

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Overall, ebitda for 2024 fell 5%, to Dkr21.8bn; ebit fell 10%, to Dkr16bn, while profit dropped 18%, to Dkr10bn. 

In this morning’s earnings call, CEO Jens Lund pointed to the new EU reporting requirements, which have added “a three-digit figure in extra costs for us to produce that reporting … [it’s] very, very costly”. 

And he noted lower volumes had a “serious impact” on December results. 

“There’s definitely been a de-stocking… December was a tough month because there were more shutdowns for a longer period in time than expected. And I think that was probably also a little bit visible in the November volumes as well. 

“We can see that on our utilisation rates of our multi-client facilities, currently we are running at 83%. So that means that most customers have actually reduced their stock levels a little bit. 

“Our occupancy ratio in the warehouses is down and the number of order lines and also the size of the order lines is very important. It’s also affecting this. So we need to ship perhaps more order lines but they might be a little bit smaller per shipment.” 

Mr Lund also suggested that the new shipping alliances could open a more competitive market. 

“They are competing a little bit right now to fill up the vessels, and it’s not now perhaps as volatile … but I believe it’s a very competitive situation … where everybody wants to make sure that in the new situation they get the allocations that they need. So that’s probably the main driver right now.” 

Integration

Meanwhile – aside from needing approval from three more jurisdictions, including the US and EU, to merge with Schenker – Mr Lund said that he expected to see revenues fall during the integration. 

“If we look at organic growth in an integration period, it’s typically a little bit lower than you would normally achieve. When we buy a company, we typically factor-in that we will lose a little bit of revenue as well.” 

However, he said: “We should be able to do a little bit better when it comes to growing our existing business, and then we should also hopefully manage the integration in such a way that we lose less volume than we have done before.” 

Reportedly, one of the reasons that other bidders pulled out of the running for Schenker was concern over its IT system. Mr Lund explained: “What we have in DSV that is exceptionally strong is our integration platform. We haven’t seen Schenker’s customer list, but we of course have a pretty good idea … We have already integrated many of them, so we can move those flows to DSV. And actually our system is so strong that we can quickly make an integration to the Schenker platform as well.” 

And he was relatively bullish on taking on Schenker’s business. 

“I think they have certain verticals where they do really well. They’re really strong on tech. It’s a strong vertical that has an impact on all the relevant business areas that produce volume in the tech area. [But[ I think they also have some exposure to Europe, so they will also be suffering for some of the industrial companies and automotive areas as well.” 

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DSV’s annual report explained: “The Schenker acquisition will have the most significant impact on the Road division. With 41% of Schenker’s revenue generated through road activities, the acquisition will contribute to a stronger service offering and lead to significant operational synergies. The Road division will become a leading player in Europe and will also benefit from increased road activities in APAC and Americas.”

Solutions

In Solutions, Schenker will nearly double DSV’s existing footprint with an additional 8.5 million sq metres of warehousing capacity, “including attractive exposure to APAC”. 

“The integration of Schenker will bring substantial synergies driven by consolidation of operations, administration and facilities and by leveraging our scalable platform and IT infrastructure. The aspiration is to lift the operating margin of the combined entity to at least DSV’s existing levels within the respective business areas in three years after closing of the transaction.” 

DSV said it expects air and sea to grow about 3% this year, while road would likely stay flat. 

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