DSV reports profit, revenue, volume declines

DSV ’s Air and Sea forwarding division recorded a sharp decrease in profitability and revenue in the first quarter compared with the corresponding period last year in a market characterized by lower freight volumes and freight rates. However, the Danish group said the results for the quarter, which ended March 31, were in line with expectations and reflected the gradual normalization of global supply chains after the pandemic. “ We are very pleased about the [global] performance, [which includes DSV’s Road and Contract Logistics division, as well as Air and Sea] at the beginning of the year,” Chief Executive Jens Bjorn Andersen said today in a conference call with analysts. “ It goes without saying that when we entered 2023, there was a good deal of uncertainty, as well as a lack of visibility and transparency,” he said. “And the fact that we have come up with the result we’ve announced this morning pleases the management team very much. So we’ve had a good start to the year in a somewhat more competitive market than we are used to, caused by declining freight volumes and demand in certain sectors.” He added that DSV was standing by its full-year EBIT guidance for 2023. The Air and Sea division saw its operating profit (EBIT) fall by 31% year over year to just over DKK 3.6 billion ($532 million) while revenue dipped by 43% to $3.87 billion. Declining demand, volumes Air freight volumes were down 20% to 328,000 tonnes, affected by lower demand and a shift from sea. The decline was most significant at the beginning of the quarter, and momentum gradually improved toward the end. Asia Pacific export volumes continue to show the weakest development, DSV noted. "We estimate that DSV’s volume development was slightly below the general market — impacted by our focus on higher-yielding cargo,” according to the earnings report. “Air freight rates dropped further during the quarter and measured excluding fuel rates, are now close to pre-pandemic levels on most trade lanes." However, gross profit per tonne yields held up well, with a slight increase between Q4 2022 and Q1 2023, reflecting a policy of pricing discipline and efficient capacity management. Jensen said DSV had been expecting low market activity in Q1 and that had been mitigated by strong gross profit yields. “ We underperformed the market a little bit in Q1 but this was a kind of a deliberate action and the overall aim continues to be to take market share,” he said. “But there was more volatility than normal in Q1 and we decided to protect yields. We are very pleased about the gross profit and EBIT.” He emphasized that while DSV communicated a great deal about volume, its most important metric in Air and Sea was the number of shipments, i.e. the number of invoices sent to customers. The overall number of shipments in Air was down about 10% for the quarter compared to the 20% decline in volume, he said. DSV estimates Air and Sea freight volumes will decline by up to 5% for the full year, with Air likely to underperform Sea. Gross profit yields are expected to decrease less than anticipated, by about 20% or less, compared to 2022, according to the earnings report.

DSV reports profit, revenue, volume declines

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