DSV annual report: increased freight profit drive revenue growth

In its 2018 annual report, released today (February 7), DSV (OTC US: DSDVY) announced  that revenues grew 5.5 percent, from 74.901 billion Danish Krones (DKK), or $11.39 billion, in 2017 to DKK 79.053 billion ($12.022 billion) in 2018. Fourth quarter 2018 revenue increased 10.6 percent year-over-year (Y/Y) from DKK 19.019 billion ($2.893 billion) in 2017 to DKK 20.945 billion ($3.185 billion) in 2018, according to the company’s announcement.

“We delivered a strong set of results for 2018. Q4 2018 was in line with our expectations and we can report an EBIT [earnings before interest and taxes] of  DKK 5,450 million [$829,124,620] for 2018, a 15 percent growth on 2017. We are on track to meet our 2020 financial targets and 2018 demonstrates our dedication to delivering quality services to our customers and growing organically. In line with our strategy, we are actively pursuing M&A [merger and acquisition] opportunities and we believe that the right transactions can create value for all stakeholders,” said DSV chief executive officer Jens Bjørn Andersen.

DSV is a Denmark-based multinational transport and logistics company. It has 45,000 employees in more than 80 countries.

DSV’s operating margin increased from 6.3 percent in the fourth quarter 2017 Y/Y to 6.4 percent in the fourth quarter of 2018. The annual operating margin increased from 6.5 percent in 2017 to 6.9 percent in 2018.

Freight volume growth in 2018’s fourth quarter was 5 percent for air freight, 4 percent for sea freight and 2 percent for road freight.

Gross profit for DSV in the fourth quarter grew 9.9 percent Y/Y from DKK 4.054 billion ($616,751,978) to DKK 4.447 billion ($616,766,021). Profits from the air and sea division increased 10.4 percent, the road division increased by 4.6 percent and the solutions division grew by 15.6 percent.

Operating profit before special items for Q4 Y/Y increased 11.9 percent from DKK 1.196 billion ($181,968,125) to DKK 1.338 billion ($203,563,564). This growth was driven by profit growth in the air & sea and solutions divisions.

Adjusted free cash flow decreased 19 percent from DKK 4.835 billion ($735,496,352) in 2017 to DKK 3.916 billion ($595,740,799) in 2018, driven by a DKK 250 million contribution to pension plans in the fourth quarter.

Diluted adjusted earnings per share (EPS) increased 20 percent Y/Y.  However, year-end share price (DKK) declined, from DKK 488.60 ($74.35) in 2017 to DKK 429.2 ($65.31) in 2018.

Dividends increased 12.5 percent from 2017 (DKK 2 per share) to DKK 2.25 per share in 2018.

DSV’s outlook for 2019 expects an operating profit between DKK 5.9 billion ($897,737,335) and DKK 6.3 billion ($958,723,998). Adjusted free cash flow is expected to increase to DKK 4.3 billion ($654,327,759).