• Revenue Growth: Nearly 20% growth in revenue, driven by volume and freight rates.
• EBIT Growth: Increase in EBIT in fixed currencies in the second half of 2024 compared to the same period last year.
• Gross Profit (GP): Growth in GP for air and ocean freight divisions.
• Productivity: 16% more jobs handled per FTE.
• Net Working Capital: DKK4 billion increase, primarily due to air and sea division growth.
• Gearing Ratio: 0.0x, adjusted to 1.7x considering share capital increase.
• Proposed Dividend: DKK7 per share.
• 2025 EBIT Guidance: DKK15.5 billion to DKK17.5 billion, excluding Schenker.
• Tax Rate: Continues at approximately 24%.
• Schenker Acquisition Financing: EUR5 billion in shares, EUR5 billion in bonds, and EUR3 billion from core banks.

• Warning! GuruFocus has detected 6 Warning Sign with DSDVF.

Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• DSV AS (DSDVF) reported solid performance for 2024, with growth in gross profit (GP) and EBIT for the third consecutive quarter.
• The company has successfully outgrown its addressable market in both air and ocean freight, indicating strong market positioning.
• DSV AS (DSDVF) has improved productivity, handling 16% more jobs per full-time equivalent (FTE) compared to the previous year.
• The Schenker acquisition is progressing well, with 33 out of 36 regulatory approvals obtained, and financing in place for the transaction.
• The company has a strong pipeline with customers, suggesting continued volume growth in 2025, particularly in air and sea freight.

Negative Points

• Inflationary pressures have impacted the cost base, particularly in wages and IT licenses, which may continue to affect profitability.
• The road division experienced weak results due to structural challenges in the European market and a one-off adjustment in the US.
• The solutions division faced a flat development in the last quarter, with idle capacity affecting profitability and a need to address declining return on invested capital (ROIC).
• The NEOM joint venture has evolved slower than expected, with significant red tape causing delays.
• The company faces uncertainties in the macroeconomic and geopolitical environment, which could impact future performance.

Q & A Highlights

Q: Can you discuss the impact of the Schenker integration on your organic growth and how you plan to support it during this period? A: Jens Lund, Group CEO: Organic growth typically slows during integration, and we factor in some revenue loss. However, DSV's stronger market position and structured customer approach should help mitigate this. We aim to manage the integration to minimize volume loss, making the Schenker transaction more attractive.

Q: Regarding the road business, what does "right sizing" entail, and does it involve client pruning? A: Jens Lund, Group CEO: Right sizing involves focusing on profitable business areas and reducing exposure to less successful segments. This includes adjusting capacity to match demand, especially in areas like the automotive industry, to avoid unprofitable operations.

Q: How should we view EBIT for road and solutions in 2025 compared to 2024, and what reassured you about Schenker's profitability amid declining ocean rates? A: Jens Lund, Group CEO: We expect road and solutions to produce similar or slightly better figures in 2025. Regarding Schenker, our due diligence suggests their reported numbers are sound and not out of the ordinary, despite market challenges.

Q: Can you elaborate on the cost base increase in 2024 and expectations for 2025? A: Jens Lund, Group CEO: The cost base rose due to inflation, salary adjustments, IT licenses, and new EU reporting requirements. We expect inflationary pressures to ease, but IT costs may continue to rise. Reporting costs are now part of our baseline.

Q: What are your thoughts on the current volume environment and potential impacts from the Red Sea situation? A: Jens Lund, Group CEO: December saw longer shutdowns affecting volumes, but January should normalize. Destocking has occurred, reducing warehouse utilization. The Red Sea situation hasn't significantly impacted rates yet, but market competition is affecting them.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.