DSV reported record financial results in the second quarter, prompting the global freight forwarding and logistics group to upgrade its full-year outlook.
The Danish group’s operating profit before special items increased to 1.45 billion Danish krone ($228 million) from 1.24 billion krone in the second quarter of 2017 on revenue of 19.5 billion krone against 18.9 billion krone a year ago.
“Our financial results for Q2 [second quarter] 2018 are at an all-time high and I am pleased to see that all business areas have performed well,” said CEO Jens Bjørn Andersen. “So far, the impact from trade tariffs has been limited, and going into the second half of 2018 we continue to see a stable development on the global transport markets.”
The company, which has fully integrated California-based UTi Worldwide — which it acquired for $1.35 billion in 2016 — also raised its full-year financial operating profit guidance to 5.3 to 5.6 billion krone from 5.1 to 5.4 billion krone previously.
DSV’s air and sea division was a major contributor to the record earnings with all-time high margins driving second-quarter operating earnings to 988 million krone from 843 million krone.
Further, air freight traffic increased 11 percent in the first half to 336,267 tonnes (370,671 tons) from 302,869 tonnes a year earlier and sea freight rose 4 percent to 715,999 TEU from 691,170 TEU in the first half of 2017.
UTi synergies cited
“The record high margins were driven by continued improvement in productivity across the organization. At the same time, the remaining synergies from the UTi integration have now been realized,” the Copenhagen-based firm said.
In addition, the DSV road division, which operates more than 20,000 trucks daily, the majority in Europe but also a growing number in North America and South Africa, continued to gain market share with shipments increasing 4 percent year over year.
The group has been able to increase prices during the first half of the year; still, the European trucking market remains highly competitive, and that has increased pressure on gross margins, which are expected to be around 17 percent moving forward.
The road division’s operating profit rose to 356 million krone in the second quarter from 319 million krone a year ago but slipped to 629 million krone in the first half against 734 million krone in the first six months of 2017.
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