DSV Q3 revenue up 25% on higher air, sea volumes

DSV reported a 25 percent increase in revenue for the third quarter of 2024 at DKK 44.1 billion compared to the same period last year, driven by a combination of higher volumes for both air and sea and higher sea freight rates.

"As opposed to last year, we did not experience the usual summer seasonality drop in volumes during the holiday period," says an official release.

Profit for Q32024 was up marginally at DKK 2.85 billion compared to DKK 2.8 billion in Q32023.

“The third quarter of 2024 has been a landmark for our company with the agreement to acquire Schenker creating a world leader within transport and logistics, and, following the announcement, we have successfully raised €5 billion in equity from a broad range of long-term investors," says Jens H. Lund, Group CEO, DSV. "We look forward to welcoming our colleagues from Schenker and together build a world-class transport and logistics company with a unique global network and service offerings to our customers. Our financial results in Q3 2024 show continued positive earnings growth. Our quarterly gross profit and EBIT before special items have increased on a year-over-year basis for the first time since Q3 2022, driven by positive volume growth across all divisions and higher gross profit.”

For the first nine months of 2024, revenue amounted to DKK 123.6 billion compared to DKK 114.3 billion during the same period last year, an increase of nine percent. Adjusted earnings declined 13 percent to DKK 8.3 billion from DKK 9.6 billion last year.

"While the market in Q32024 was still impacted by uncertainty regarding the macroeconomic outlook and escalations around the situation in the Middle East and Red Sea, DSV reported positive earnings growth driven by strong volume development and improved free cash flow. On the back of the financial results for the first nine months and outlook for the remaining part of the year, we narrowed our full-year EBIT guidance for 2024 to DKK 16-17 billion (previously DKK 15.5-17 billion) in a separate trading update on October 3, 2024.

"Air & Sea continued the positive development with volume growth and continued market share gains in Q32024 leading to an increase in gross profit of 5.2 percent compared to the same period last year. For sea freight, gross profit increased 11.8 percent in the same period, driven by higher volumes and improved average gross profit yield while gross profit for air was down 1.5 percent due to lower average gross profit yield partly offset by higher volumes."

Air & Sea revenue was up 30 percent for Q32024 at DKK 28.4 billion while EBIT before special items came in at DKK 3.3 billion.

"DSV’s air freight volumes grew by eight percent in Q32024 compared to Q32023 and by seven percent in the first nine months of 2024 compared to the same period last year. The increase was mainly driven by improved export from APAC, which was positively impacted by growth in demand among our technology customers. Furthermore, the air demand was positively impacted by the narrowing price gap between sea and air, driving an increase in conversions from sea to air shipments."

DSV’s sea freight volumes grew by eight percent during Q32024 and by seven percent in the first nine months of 2024 compared to the same period last year, slightly above the sea freight market. Strong growth rates continued to be recorded on export volumes out of APAC, the release added.

While air freight gross profit per unit declined to DKK 8,559, sea freight gross profit per unit increased to DKK 4,893.

Road division revenue increased to DKK 10 billion while EBIT before special items declined marginally to DKK 514 million. "Despite challenging market conditions with pressure on the freight rates due to low demand, the Road division achieved solid results, and we estimate that the division gained market share, especially on European groupage shipments."

The Solutions division reported revenue of DKK 6.6 billion and EBIT before special items of 636 million, driven by strong development of order lines year-over-year. "The positive results were partly offset by lower warehouse utilisation and higher costs related to the continued expansion of the division’s warehousing capacity."

Schenker deal
"With the announced acquisition of Schenker, which is expected to close in Q2 2025, DSV is positioned to grow the business due to our enhanced global network and customer offerings, while at the same time maintaining our focus on having industry leading margins. M&A will remain a core pillar of our corporate strategy, as we believe that the combination of organic and inorganic growth will create a stronger DSV going forward. DSV and Schenker are an excellent match based on similarities in business models and corporate culture with focus on customer service, sustainability and employees."

With around 86,600 employees, including temporary workers, at more than 1,850 locations in over 70 countries, Schenker generated revenue of €19.1 billion (approximately DKK 142 billion) in 2023.

The acquisition of Schenker will significantly expand DSV's services and coverage for customers in key markets, such as France and Germany, and contribute strongly to operational efficiencies, the release added.

NEOM update
The joint venture to provide transport and logistics services for the projects in NEOM has obtained final regulatory approvals, and the incorporation process has begun. "A modest ramp-up of the joint venture is expected in Q4 2024 and in 2025.

"The timing of investments in the joint venture will follow the progress of the individual projects in NEOM. We expect limited capital allocation in 2024, and we expect a return on the invested capital in line with our financial target."

2024 outlook
DSV has estimated full-year 2024 guidance for EBIT before special items of DKK 16-17 billion. One-off costs (special items) are expected to be around DKK 650 million in 2024.

First published on stattimes