DSV turns in strong Q3, warns of deteriorating air cargo market

DSV’s Air & Sea freight forwarding division continued to be the Danish group’s standout performer in the third quarter, recording a 44.2% year-over-year increase in operating profit (EBIT) before special items of DKK 5.455 billion (US $729.6 million). The division’s EBIT for the first nine months of 2022 clocked in at $2.26 billion, an 81% YoY increase, according to today’s earnings report. DSV noted that weaker airfreight demand was more than compensated by strong yields, which were impacted by its acquisition of Global Integrated Logistics (GIL) from Kuwait-based Agility in August 2021. Excluding GIL, DSV’s volumes declined approximately 10% in Q3 2022 to 376,000 tonnes, better than the estimated negative market growth in the quarter of -11% to -13%. [caption id="attachment_96998" align="alignright" width="365"] (Photo: DSV)[/caption] On the same basis, DSV’s airfreight volumes for the first nine months of the year were 5% lower compared with estimated market growth of -6% to -8%. Available air cargo capacity increased as bellyspace on passenger planes has gradually returned, DSV noted in its earnings report. Freight rates have declined but remain elevated, partly due to high fuel prices. Global market impact Based on the strong performance by its global business in the first nine months of 2022 and its projections for Q4, DSV said it expects global logistics markets to be negatively impacted by the slowdown in the economy as congestion eases and rates decline. “It is not unlikely that we will see volumes deteriorate for both air and sea freight somewhere between 10% and 15%,” Chief Executive Jens Bjorn Andersen said during today’s earnings call. “So not a super growth environment to be in but at the same time not something we consider to be serious for DSV. “It was a strong, strong performance from the Air & Sea division in a declining environment,” Andersen noted. “We’ve tended to talk about the positive trends throughout quarterly periods, but it’s actually been the opposite in this quarter, where we’ve seen a small deterioration in terms of volume. But still a super healthy and fantastic gross profit-to-EBIT conversion ratio [59.7%] and operating margin [12%] in the division.” While DSV’s airfreight volumes dipped around 10% in Q3 excluding mergers and acquisitions (M&A), this was still 1-3 percentage points higher than the rate of decline in the overall market, he explained. “We are pleased to have increased our share of what was a retracting market in Q3 and have maintained our very high yields,” Andersen said. 2023 guidance Around two-thirds of DSV’s airfreight procurement is on “spot,” 20% is chartered and the remainder is own network, Andersen said. Reflecting on the unpredictability of the market and the lack of visibility, DSV has not given guidance for 2023, he said, noting, “We will do that when we announce the annual results for 2022.” Join Air Cargo World for our next webinar, “Dangerous goods in focus: Shoring up air cargo logistics,” on Tuesday, Nov. 15, at 11 a.m. ET. Click here for more information and to register.

DSV turns in strong Q3, warns of deteriorating air cargo market

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