DSV reports double-digit increases in profits in 2018, above market averages

The DSV Group released its annual results for 2018 today, in which the Danish logistics giant reported an impressive growth rate in operating profit, or earnings before interest and taxes (EBIT), of about 12 percent during both the fourth quarter and the full year. EBIT for Q4 was about US$204 million and $829 million for the full year.

Growth in Q4 EBIT, specific to its Air & Sea segment, came in at about 14 percent, year-over-year, to $136 million, and a whopping 18 percent to $561 million, looking at the full year.

Splitting the two modes, gross profit from Air grew by 10 percent to $704 million while Sea grew  at just 4 percent to $695 million – comparing 2018 to 2017.

Looking at volume, air tonnage growth between Q4 2017 and Q4 2018 saw an approximate 5 percent increase from 167,735 to 175,623 tonnes.

Its Road segment didn’t do quite as well; its EBIT decreased by a little more than 3 percent on the annual level, but increased about 3 percent for Q4, y-o-y. Its Solutions segment, however, increased almost 20 percent, y-o-y, at the quarterly level and 44 percent over the full year, which the company said was driven by retail and e-commerce demand, as well as the automotive industry.

Looking forward, the company said that in 2019 it expects to increase operating profit by about 6 to 8 percent, to between $897 and $958 million, and that it is “on track” to meet its 2020 financial targets.

A core aspect of its strategy will be continuing its mergers and acquisitions (M&A) endeavors, to which CEO Jens Bjørn Andersen said the company is, “actively pursuing,” adding, “we believe that the right transactions can create value for all stakeholders.”

When asked during a DSV year-end results conference call why he would risk more M&A activity at a time when the market appears to be slowing down, Andersen responded by saying, “We like challenges – it’s part of running a big company. We are of the very clear understanding that in this extremely fragmented industry, where the biggest players have only a fraction of the market, consolidation makes a lot of sense.”

To that end, DSV has made offers to Panalpina for $4.1 billion, and to CEVA Logistics AG for about $1.5 billion in the past few months, neither of which have so far resulted in mergers.