News / DSV vows to continue on acquisition trail as it celebrates rise in profits

Profits may be on the up for DSV, but in its full-year results presentation today, the forwarder maintained a silence on its attempt to acquire Panalpina.

Despite rejection of its $4.1bn bid for the Swiss operator, DSV said it would continue to pursue M&A activity.

Chief executive Jens Bjorn Andersen told shareholders: “This process has seen us get bigger and today we are much stronger as a result of our prior purchases.”

DSV group revenue surpassed Dkr79bn ($12bn) in 2018, up 6.8%, leading to an 11% increase in profits, with ebitda of Dkr6.2bn.

However, last year wasn’t all rosy, the operator’s largest segment, road, seeing a 3.3% decline in ebit to Dkr1.2bn, even though revenue jumped 3.8% to Dkr30.6bn.

Even so, overall, Mr Andersen seemed pleased with the division and said: “The decline in ebit was due to the property transaction in Q1 2017. Adjusted for this, underlying growth was 8.2% in constant currencies, and North America and several European countries performed well and achieved growth in earnings in 2018.”

DSV’s smallest division, logistics, reported the greatest rate of profit growth, with ebit surging  more than 44.1% to Dkr709m. This outpaced the 18.3% upturn in revenue to Dkr13bn, as it added customers across the automotive, industrial and retail segments.

The operator said: “Growth in earnings was mainly driven by strong performance in the EMEA region. The margin improvement was driven by a higher gross profit and improved performance in several locations.”

Air and sea also saw double-digit increase in profitability, with ebit up 18.2% to Dkr3.6bn, on the back of a 10.1% increase in revenues to Dkr9.2bn.

And DSV’s growth in freight volumes across air and sea outpaced overall market growth, with sea up 4% in contrast with 3% market growth, and air up 8% against a market average of 4%.

Mr Andersen added: “2018 demonstrates our dedication to delivering quality services to our customers and growing organically. This is a competitive market… the top 20 forwarders collectively hold a 30% market share; in any other market the largest would single-handedly hold 30%.”

And while Mr Andersen claimed the company remained on track to meet its 2020 targets, it is worth noting that they have been revised downwards as a result of adding off-balance sheet costs back to the balance sheet.