DSV posted sharply higher earnings and revenue in the first quarter as its $1.35 billion acquisition of US freight forwarder UTi Worldwide begins to pay off.
The Danish trucker and freight forwarder’s earnings before interest and tax (EBIT) soared to 875 million krone ($128.2 million) from 319 million krone a year earlier and revenue climbed to 18.2 billion krone from 15.3 billion krone.
Operating profit before special items grew to 1.2 billion krone from 643 million krone and gross profit to 4.2 billion krone from 3.6 billion krone.
“A very strong set of first quarter numbers brings us even closer to our goal of reaching pre-UTi performance levels and margins,” said Jens Bjorn Andersen, CEO of the Copenhagen-based company.
“All three divisions have recorded a significant increase in earnings in the quarter, which is very satisfactory. In addition to following our integration plans, we have increased our sales effort in order to secure future market share gains.”
DSV said the 17 percent growth in container volume in the quarter to 332,787 TEU from 285,109 TEU last year and a 20 percent rise in air freight to 147,439 tonnes from 122,817 tonnes were impacted by almost one extra month of UTi activity compared with the first quarter of 2016.
The integration of California-based UTi, which was acquired in January 2016, also contributed to an increase in the sea/air freight division’s EBIT to 690 million krone from 414 million krone and the growth in revenue to 8.5 billion krone from 7 billion krone.
DSV Road, which operates more than 20,000 trucks a day out of more than 200 terminals in Europe, North America, and South Africa, grew market share with a 12 percent increase in shipments, which saw EBIT before special items rise to 378 million krone from 219 million krone, helped by a 125 million krone gain on property deals.
The increase in contract logistics gross profit to 671 million krone from 536 million krone was mainly attributable to UTi with the Americas, Asia-Pacific, and South Africa achieving the highest growth rates.
DSV said a large part of the integration of its US unit was achieved during 2016 and it is now focusing on consolidating the information technology infrastructure, back-office systems, and solutions sites.
The integration process is expected to be completed within two years of the acquisition and the financial synergies within three years.
The full-year operating profit forecast was raised to 4.3 to 4.6 billion krone from 4.2 to 4.5 billion krone.
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