DSV has finally absorbed Schenker. A statement from the Copenhagen based logistics provider announcing the formal merger of the two companies on 30th April commented that it had “a long track-record of successfully integrating acquired companies as an integral part of the company’s growth strategy”, which is certainly true. The statement went on to say that “DSV and Schenker are an excellent strategic match due to similarities in business models, services and strategies”. This will be key to the strategic, as opposed to the operational, success of the merger. The market for freight forwarding based logistics is changing, and it will be interesting to see how the new DSV will use Schenker to adapt.
DSV’s “growth strategy” has become less successful over the past few years. Like many of its competitors, it has found growth harder in volatile market conditions. However, the most recent quarterly results were solid enough. For the first quarter of 2025, the company saw revenue increase by 8.7% to DKK 41,680m. EBIT (Earnings Before Interest and Tax) before “special items” was 4.8% higher year-on-year at DKK3860m.
Slightly surprisingly, the profit growth was delivered by the freight-forwarding business. Here, revenue and costs were both up markedly, resulting in gross profit 9.5% higher, with sea freight forwarding seeing its gross profit up 14.2% year-on-year. EBIT increased 10.6% year-on-year, with margins generally stable. DSV referred to the instability in the air freight market, with volumes being at the same level in Q1 2025 as what it called the “extraordinarily large air freight volumes” in 2024. The Sea freight volume increase was 3%, which was “in line with the estimated market growth”, implying that rates increased, although it is worth noting that gross profit is edging down over the past couple of quarters.
Business remained tough in the road freight sector. In what is still an important business for DSV, revenue was down 3% and EBIT was down 16.9% year-on-year at DKK 10,164m and DKK 408m respectively. DSV referred to a “challenged” market “due to low activity levels, especially within domestic groupage in some European markets”.
DSV is in the process of changing the name of its ‘Solutions’ business to ‘Contract Logistics’. However, business here is not as good as might be expected. In particular it looks as if DSV Contract Logistics has suffered from the problems in the continental European economies. Although revenue was up 4.9% at DKK6,325m, EBIT fell by 6.3% year-on-year. It is interesting to look at DSV’s market positioning here, with its contract logistics operations being heavily exposed to retail and automotive customers, something that the acquisition of Schenker will only strengthen.
DSV is now a leading logistics service provider with a truly global presence. It is a different company to that which grew so quickly over the past twenty years. The question is, how will it utilise its new resources to deliver growth.
Author: Thomas Cullen
Source: Ti Insight
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