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DSV gross profit up 61% in Q1
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The full-year outlook for 2022 has been upgraded to EBIT before special items in the range of DKK 21,000 (US$2,987.79) to DKK 23,000 ($3,272.34) million from the previous DKK 18,000 of 20,000 million
DSV reported strong first-quarter results with gross profit growing 61% supported by the integration of Agility’s Global Integrated Logistics (GIL).
Earnings before interest and taxes (EBIT) before special items more than doubled in the first quarter compared to the same period last year–to DKK 6,496 ($924.22) million from DKK 3,067 ($436.36) million, the company said in a statement.
DSV noted the challenging and volatile market conditions in the global supply chains will continue in 2022 and will be especially impacted by the conflict in Ukraine and new COVID-19 lockdowns in China.
The Group achieved a gross profit of DKK 12,877 (US$1,832.09) million for the first three months of 2022 compared to DKK 7,785 ($1,107.62) million for the same period last year. The increase was driven by the addition of the GIL business and growth in all divisions – especially the Air & Sea and Solutions divisions, DSV said.
The acquisition of GIL was closed in August 2021. In line with previous announcements, GIL is expected to contribute at least DKK 3,000 ($426.83) million to the combined EBIT before special items on an annual basis.
READ: DSV Panalpina acquires Agility unit for $4.2B, becomes world’s 3rd largest forwarder
While uncertainty related to the global economy has increased in recent months, the company said it expects the continued disruptions of global supply chains will support a high demand for its services.
Based on the first-quarter performance and expectations for the remainder of the year, DSV has upgraded its full-year outlook for 2022 to EBIT before special items in the range of DKK 21,000 ($2,987.79) to DKK 23,000 ($3,272.34) million from the previous DKK 18,000 of 20,000 million.
The Solutions division reported outstanding results in the first quarter. The division’s EBIT growth of close to 200% driven by strong gross profit growth and continued cost discipline confirms the long-term strategy of consolidation into large, multi-client campuses and continued investments in warehouse automation, DSV said. Additionally, the GIL integration contributed strongly to the division’s result.
The Air & Sea division reported an EBIT growth of 109%, while the Road division steered through the disruptive market conditions with 24% EBIT growth compared to the same period last year.
For the rolling 12-month period ended 31 March 2022, the Group achieved an 80% increase in diluted adjusted earnings per share.
“For Q1 2022, we report a strong set of results, with earnings growth across all divisions and a strong cash flow. We are tracking the plans for the GIL integration and are on track for completion in Q3 2022. The markets continue to be impacted by tight capacity and congestion, and in March we saw the return of COVID-19 lockdowns in China – a reminder to us all that the pandemic is still not over,” DSV Group CEO Jens Bjørn Andersen said.
The Ukraine conflict is also “on everyone’s mind. DSV shipments to and from Russia and Belarus have stopped, except certain humanitarian shipments, and we are in the process of divesting and exiting our activities in Russia. The direct financial impact is not material as the combined revenue in Ukraine, Russia and Belarus represents less than 1% of the Group’s revenue. Still, the situation has impacted the markets negatively in several ways, especially for air and road transports, and we continue to do our best to find capacity and alternative solutions for our customers,” he added.
DSV has subsidiaries in Ukraine, Russia and Belarus. The combined revenue in the three countries represents less than 1% of the Group’s revenue and has no material direct impact on the financial results or financial position of Group is expected.
Activities in Ukraine were temporarily suspended when the crisis started. A small part of the operation is up and running again to support humanitarian shipments and other activities, the company said.
The situation has led to a stop of DSV shipments to and from Russia, with the exception of medical and humanitarian supplies. DSV is in the process of divesting its activities in Russia.
The situation in Ukraine and the sanctions imposed in response by the EU, US, UK and others against Russia have impacted the transport markets in several areas. The closure of Russian airspace reduced available air freight capacity between Asia and Europe due to longer flight time and sanctions against Russian airlines.
In Europe, the decision by many Ukrainian truck drivers to return to their home country has contributed to further capacity tightness for road freight. In both cases, DSV said it has been able to find capacity and alternative solutions for the customers.
