The third quarter 2024 has been eventful for DSV, having agreed to acquire Schenker from Deutsche Bahn. It has also had a moderately successful quarter in terms of its financial results.
For the quarter, gross profit was up 4.8% and EBIT (Earnings Before Interest & Tax) edged-up 1.5% year-on-year, although it is worth noting that revenue grew even more rapidly at over 25%. Revenue in the quarter was DKK44,095m (US$6.38bn) and profit was DKK2,845m (US$411.95m).
At the freight forwarding business, which is about to become one of the global logistics markets largest forwarding operations, things have improved from earlier in the year. Gross profit for the business was up 5.2% whilst EBIT was 0.6% higher year-on-year. These numbers disguise a mixed picture, with air forwarding seeing a fall of 1.5% in gross profit but sea forwarding saw gross profit 8% higher. DSV did not explain the divergence however it did say that it has seen “strong volume growth and market share gains for both Air and Sea” due to “commercial initiatives towards large customers”. It also commented that the higher gross profit in sea forwarding was “partly due to the Red Sea situation”.
Again, the growth in revenue in forwarding has been very strong at 32.1% year-on-year, apparently due to the strength of container freight-rates. DSV commented that there had been “some impact on yields from the Red Sea situation in Q3 2024”, something that presumably explained the 5% increase in terms of gross profit/TEU. The air freight market has been strong in DSV’s experience, with growth in exports from “APAC” complemented by the fact that the “narrowed price gap between sea and air freight rates drove an increase in sea-to-air conversions”.
In the road freight business, revenue was up 9.8% but EBIT was down 1.6% year-on-year. The market was described as “volatile” by DSV, “especially in Europe”. Growth in revenue was driven by “increased volumes with our large customers and in our European groupage network, despite lower freight rates”. Activity was lower in retail and automotive, but higher in ‘Technology’. Contract logistics activities within the ‘Solutions’ business was strong, with revenue up 20.3% and EBIT up 9.8%. This growth seems to be organic.
What stands out in these quarterly numbers is the results from the freight forwarding business. The underlying market is growing but is unpredictable. The Red Sea crisis is clearly continuing to have an effect on both sea and air freight markets. However, it does appear that it is the ship and aircraft operators who are continuing to benefit from higher rates.
Source: Ti Insight
Author: Thomas Cullen
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