DSV’s air and sea revenue down 48.7% YoY

Danish freight forwarder DSV today reported 35.6 billion Danish kroner ($5 billion) in revenue for the third quarter, a 41.3% decrease year over year. Revenue from DSV’s air and sea operations was down 48.7% YoY in Q3 to $3.1 billion. [caption id="attachment_57065593" align="alignright" width="300"] (Photo/DSV)[/caption] THE BIG PICTURE: Freight fo rwarders have been struggling throughout 2023 and DSV is no different. In Q2, DSV saw revenue decline 37.8% YoY. Still, company executives said they are pleased with DSV’s earnings in such a difficult market. “In markets characterized by soft freight volumes and declining rates, we delivered solid results during the first nine months of 2023,” DSV Chief Executive Jens Bjorn Andersen said in the company’s earnings statement today. “The results reflect our flexible business model and, not least, our dedicated employees, who continue to deliver good customer service and efficiently manage our capacity.” BY THE NUMBERS: Q3 figures show DSV struggling against a difficult market: Gross profit was $1.5 billion, down 21.3% YoY; EBIT was $623.6 million, down 32.4% YoY; and Airfreight volume was down 14% YoY. In the first nine months of 2023, DSV reported $16.2 billion in earnings, down 38% YoY. Additionally: Revenue for sea and air operations was $10.1 billion, down 47.1% YoY; Gross profit was $4.7 billion, down 17.6% YoY; EBIT was $2 billion, down 32.7% YoY; and Airfreight volume was down 19% YoY. WHAT THEY’RE SAYING: The company attributes the decreases to low freight rates and volumes . “In the first nine months of 2023, the Air & Sea division saw a decrease in revenue due to significantly reduced freight rates and lower volumes compared to the same period last year,” the earnings report stated. “Freight volumes showed signs of improvement during Q3 2023; however, freight volume growth remained negative compared to [the] same period last year.” STATE OF PLAY: The low freight rates and volumes result from a “broader macroeconomic slowdown, shift in consumer behavior (from goods to services), and actions to reduce inventory levels,” according to the earnings report. DSV saw the weakest performance in export volumes from the Asia-Pacific region, mainly within the categories of retail, high-tech and industrials, according to the report. “As more passenger planes have returned to the market, more belly-space cargo capacity has become available,” the report stated. “In combination with weak demand, this has led to overcapacity and declining airfreight rates.” NOTEWORTHY: DSV and Saudi Arabian organization NEOM , which oversees the economic zone of the same name, today announced a $10 billion logistics venture to provide end-to-end supply chain management, development, and investments in transport and logistics assets and infrastructure. DSV will also provide transport and delivery of goods and materials within NEOM, according to a release from DSV. NEOM will hold 51% of the joint venture with DSV holding 49%. “NEOM is one of the largest and most complex projects in the world,” Andersen said in the release. “It provides a unique opportunity for DSV to support a development that is at the forefront of innovation, technology and digital transformation. DSV already has a strong presence in Saudi Arabia, and this is a significant growth opportunity for us in the region and we look forward to working with NEOM Co. and bringing our logistics capabilities to the table.” The proposed partnership is awaiting customary regulatory approvals, which are expected to be obtained in Q2 2024, according to the release. FUTURE LOOK: DSV has adjusted its full-year EBIT estimate to $2.5 billion to $2.6 billion. The previous range was $2.4 billion to $2.6 billion. The effective tax rate is expected to be about 25%. “A real recovery in global freight volumes does not seem to materialize in 2023, but, based on the performance so far, we raise the lower end of our 2023 EBIT guidance,” Andersen said in the earnings report. MARKET REACTION: Shares of DSV ( OTCMKTS: DSDVY ) were down 6.52% from market open to $74.23 as of market close today. DSV has a market capitalization of $34.7 billion. Editor’s note: All amounts have been converted to U.S. dollars.

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