The forwarding and logistics company DSV had earnings before interest and tax (EBIT) of 1.63 billion Danish kroner (DKK) in the second quarter of 2019. (About $243 million at today’s exchange rate of about $1 to 6.7 DKK.) That’s a 4.1 percent improvement from the same period in 2018.
Adjusted profit after tax was 1.196 billion DKK in the second quarter this year, down slightly from the 1.214 billion reported in the second quarter of 2018.
(The company noted its 2018 results were stated to exclude the effect of IFRS 16, a standard promulgated by the International Accounting Standards Board, which went into effect on January 1, 2019 and impacts how leases are treated.)
Jens Bjørn Andersen, chief executive officer, said the company was “very pleased with the strong results for the second quarter of 2019. Global transport markets are soft – especially within air freight, but DSV has managed to outgrow the market while still delivering market- leading profitability.”
Gross profit in the second quarter of 2019 was 5.29 billon DKK, a 5.5 percent increase over the same period of 2018. Second quarter 2019 revenue was 20.08 billion DKK compared to 19.49 billion DKK in the second quarter of 2018.
The company said it received approval of its merger with the Swiss forwarder Panalpina on July 29 from European regulators and expects to close on the deal in the third quarter.
“We look forward to combining two strong companies and leveraging our extensive networks and expertise to provide even stronger customer offerings,” said Andersen. DSV says it is currently the sixth-largest freight forwarder in the world with 2018 revenues of about $12.5 billion. Combined with Panalpina’s $6.2 billion in revenue, DSV would jump into fourth place, behind DHL Logistics, Kuehne + Nagel and DB Schenker. The company noted that the freight forwarding market remains highly fragmented, with the top 20 companies controlling only 30 to 40 percent of the market.
The company said its sea freight business moved 391,333 twenty-foot equivalent units (TEU) in the second quarter, 6 percent more than in the same period last year. Gross profit per TEU was 3,335 DKK in the second quarter, a 2.5 percent growth in yield.
In contrast, the company’s air freight volume was 170,301 tonnes in the second quarter, down 2 percent from the second quarter of 2018. Still, the company said that was better than its estimate of a 5 percent decline for the overall air freight market. The company said, however, that air cargo yields were 7,187 DKK per tonne in the second quarter of 2019, 5.2 percent higher than they were in the second quarter of 2018.
Road revenues were 7.83 billion DKK, down about 0.4 percent. They were reduced by the sale of the U.S. trucking company Market Transport Ltd. to Wilson Logistics on May 31, which it said had annual revenue of about 600 million DKK.
Adjusted for the divestment, road revenues were up 1.3 percent in the second quarter.
Gross profit in the company’s road segment was 1.5 billion DKK in the second quarter, a 4.8 percent increase compared to the same 2018 period, while EBIT in the road business was 338 million DKK, a 4.3 percent decline after adjustments for IFRS 16.
The company’s solutions business had gross profit of 1.19 billion DKK in the second quarter, an 8.5 percent increase over the second quarter of 2018, even as revenue grew a scant 0.6 percent over the same time period to 3.15 billion. The company said “following high growth in 2018, processes have been optimized leading to improved gross margin” of 37.7 percent in the second quarter of 2019 compared to 23.8 percent in the second quarter of 2018.
