Freight Transport Association

Multimodal 2019

DSV invests after profit rise

DSV expects to complete the integration of UTi this year and continue to take market share in 2017, having already begun to achieve synergies since the completion of the acquisition in early 2016.

Margins remain below pre-acquisition levels in DSV’s fourth-quarter and full-year results published today, but profit levels at the forwarding and logistics group continued to improve as they have throughout the year, as synergies from the integration of UTi were achieved.

CEO Jens Bjørn Andersen said that while maintaining momentum in its integration efforts in 2016, the company “kept focus on running the business, leading to very satisfactory results in all divisions”. He continued: “We expect to complete the integration of UTi and continue to take market share in 2017, creating earnings growth of 21-29%.”

The company added: “In 2016, we have made significant progress with the integration of UTi and delivered very satisfactory results. In the first half year, we managed to neutralise UTi’s operating deficit; and by the end of 2016, we could record an operating profit before special items of DKK 3,475 million.”

It continued: “When we announced the deal in October 2015, we said that the goal was to lift the operating margins of the combined group towards former DSV levels by 2018; and the results of 2016 show that we are well on our way to achieving this.”

In terms of the integration status, it commented: “At the end of 2016, a large part of the integration of UTi was completed. The milestones have been the gradual transfer of UTi’s freight forwarding activities to DSV’s transport management system; close down of the former UTi head office; and the physical merger of close to 200 offices and the merger of several back-office functions and systems.

“The UTi activities have been rebranded to DSV, and it is our overall impression that the transaction has been positively received by our customers.”

In terms of synergies, it said: “ In line with our original estimate from February 2016, we expect annual cost synergies of around DKK 1.5 billion from the integration of UTi. We estimate that 40% of the synergies had profit and loss impact in 2016, and we expect to achieve an additional 40% of the synergies in 2017 and the final 20% in 2018.

“UTi was running at a significant loss at the time of the acquisition, and the merger has initially diluted DSV’s conversion ratio and operating margin. Based on the integration plan, we expect that operating margins of the combined entity can be lifted back to pre-acquisition level by 2018.

“The combined operations are expected to be further optimised during 2019 and 2020 with a view to achieving the long-term financial targets.”

Net revenue in the fourth quarter increased 39.8%, year on year (y/y), to DKK 17.6 billion (US$2.52 billion), mainly due to the acquisition of UTi Worldwide. The group’s Air & Sea freight forwarding division reported a 61.1% increase, the Road division 14.4%, and the Solutions division 77.6%.

Freight volume growth for the quarter was 86% for air freight, 56% for sea freight, and 5% for the company’s European road transport business.

Gross profit was also significantly increased by the addition of UTi, increasing 41.3% y/y in the fourth quarter to DKK 3.99 billion. Air & Sea landed growth of 50.8%; Road achieved growth of 11.5%; whereas Solutions reported gross profit growth of 94.9%.   

Operating profit before special items for the quarter was up by 24% at DKK 929 million, with all three divisions achieving earnings growth in fourth quarter.

“Growth in earnings gradually increased throughout the year as synergies from the integration of UTi were achieved,” the company said.  

Margins remained below pre-acquisition levels, diluted by the addition of UTi’s business. The fourth-quarter operating margin of 5.3% compares with 5.9% in Q4 2015. Similarly, a conversion ratio (EBIT as a percentage of gross profit) of 23.2% for the quarter was down from 26.5% in the same period in 2015, but an improvement compared with the average conversion ratio for the full-year 2016 of 21.9%.

Elsewhere for the full year, consolidated net revenue was up 33.2% to DKK67.7 billion for 2016. The Air & Sea division reported 48.% growth in net revenue; Solutions 62.5%; and Road 14.6%.

Meanwhile, consolidated gross profit was up 41.4% to DKK15.8 billion for 2016. The Air & Sea division reported 57.6% growth in gross profit. The growth was driven by 85% growth in air freight volume and 53% growth in sea freight volume.

The Road division reported growth of 13.3%, driven by new UTi activities in the USA and South Africa, but also a solid 5% growth in shipments in the European network. The Solutions division reported growth of 84.2%, mainly due to new UTi activities in Americas, South Africa and Asia. Exchange rate fluctuations impacted negatively on gross profit by DKK 239 million.

The gross margin was 23.4% for 2016, up from 22.0% for 2015. The Air & Sea and Solutions divisions reported higher margins, whereas Road reported a decline in gross margin.

Consolidated operating profit before special items rose to DKK 3.47 billion for 2016 against DKK 3.05 billion for 2015.

The Air & Sea division reported EBIT before special items of DKK 2.143 billion, up from DKK 1.92 billion in 2015, with the growth in EBIT before special items partly due to the new UTi activities. “The impact of the synergies gradually increased during the year, in pace with the integration process,” the company said.

The conversion ratio was 21.9% for 2016 against 27.2% for 2015, with the decrease “mainly attributable to the low profitability of the UTi activities. The margin improved during the year as the integration progressed.”

The operating margin was 5.1% for 2016 against 6.0% for 2015 and was also impacted by UTi.

In terms of the outlook for 2017, the company expects to achieve an operating profit before special items in the range of DKK 4.2 billion- DKK 4.5 billion - up from DKK 3.47 billion for 2016. It noted: “We expect that the growth rates in the transport markets will be in line with the underlying economic growth and that DSV will be able to take market share in all the markets we operate in. Furthermore, we expect a continued successful integration of UTi and realisation of expected synergies.

“In line with previous estimates, total restructuring costs of approximately DKK 1.5 billion are expected. DKK 1.002 billion thereof were expensed in 2016, and the remaining costs are expected in 2017.”

Separately, DSV has renewed its framework contract with the commercial vehicle manufacturer Schmitz Cargobull and ordered another 3,000 rail-transportable curtainsider trailers. The first batch of these curtainsiders were delivered to DSV on 6 February 2017.

Cargobull will gradually deliver the rest of the new order for universal and mega trailers to DSV over the next two years.

DSV Road placed its first order for 3,000 vehicles at the beginning of 2015. In the meantime, all those units have been handed over to the logistics provider that currently owns a fleet of around 10,000 vehicles spread across Europe.

Finally, DSV Road Ltd is investing further in its Yorkshire operations and has opened a new facility in Bradford to provide its Yorkshire based clients with a team of global logistics specialists with extensive local knowledge.

The new team is being headed up by Richard Wheatcroft, an experienced professional who has worked for organisations in the Bradford area for over 30 years. Richard joined DSV in October 2016 to take on the day-to-day responsibilities of the Yorkshire client portfolio. The teams’ immediate focus will be on delivering an enhanced service to existing clients, and from the beginning of February they will look after all DSV’s Yorkshire-based customers. 

Chris Malyon, Director Sales, Marketing and Customer Services for DSV commented on the investment:

“Bradford and the Yorkshire region have always been very important for DSV Road and we already work with great clients in many market sectors such as textiles, automotive, chemicals and heavy manufacturing.  We also see significant potential for growth in this area and are keen to build on our existing relationships across the county by delivering even better customer service.”

The opening of this new facility will benefit Yorkshire clients with daily groupage services to multiple destinations including Belgium, Czech Republic, Denmark, Finland, France, Germany, Holland, Hungary, Ireland, Italy, Norway, Poland, Spain, Sweden and Ukraine. Those European countries not mentioned will be serviced via existing twice-weekly departures.

The new office is also ideally located for easy access to the M62 and M1, and is in a shared user facility with one of DSV’s key partners in the region, Expect Distribution. 

Rebekah Kemp, Director Strategic Sales, comments on this new partnership:

"We believe there is a strong synergy between the two businesses that can extensively support the growth and development of both companies.

"We are confident that the new facility will be great news for our customers in Yorkshire, linking into our comprehensive wider domestic and international networks, and within easy reach of our Immingham Distribution Centre, which itself has recently been linked in to our UK Domestic Network. We are sure, that our focus on operational excellence will help us achieve our aim of becoming Yorkshire’s leading European road freight provider.”

Globally, DSV Road is a leading logistics provider with more than 20,000 trailers on the road everyday. The division can deliver full, part load and groupage shipments, as well as offer short delivery times and flexible transportation services for all types of cargo. With local offices in 32 countries, DSV Road handles more than 30 million shipments a year across a comprehensive range of products and services.

Opening Times

Tues 18th June 2019 10:00 - 17:00

Awards/VIP Dinner 19:00 - 24:00

Wed 19th June 2019 10:00 - 19:00

Multimodal Mixer 17:00 - 19:00
(Late night opening & happy hour)

Thurs 20th June 2019 10:00 - 15:00


Supply chain management for logistics and cargo owners.

Browse the Multimodal exhibitor list.

Check out our Programme of features.  

Contact Us

To speak to a member of the show team call +44 (0) 207 384 7759. For more information go to our Team contacts page

Quick Links

Go to the Exhibitor list

Follow us on Twitter

Sign up for the Newsletter

Join the debate on LinkedIn

View the 2018 Meet the Experts Interviews