DSV booked record earnings in the second quarter, prompting a fresh upgrade of its full-year financial forecast as it continues to reap the benefits of its $1.35 billion acquisition of US freight forwarder UTi Worldwide.
The Danish trucker and freight forwarder’s pre-tax profit surged to DKK970 million ($154 million) from DKK455 million a year earlier as revenue climbed to DKK18.9 billion from DKK17.6 billion.
Operating profit before special items was up DKK340 million at DKK1.24 billion and surged 53 percent in the first half to DKK2.37 billion.
“Only 18 months after the acquisition of UTi Worldwide, our productivity and financial results are at an all-time high,” said Jens Bjorn Andersen, CEO of the Copenhagen-based company.
The growth in earnings and significant margin improvements, particularly in the ocean container and air freight division, are mainly attributable to UTi synergies and operational performance, the company said.
DSV has upgraded its forecast for 2017 operating profit before special items for the second time this year to DKK4.5–4.7 billion from DKK4.3–4.6 billion previously and is starting a new share buyback program of DKK1 billion.
The company said it has completed most of the planned integration of California-based UTi, which it bought in January 2016, and is finalizing the consolidation of IT infrastructure, back-office systems, and solutions sites.
“The entire integration process is expected to be completed in 2017, and the financial synergies are expected to fully materialise within three years of the acquisition.”
The air and sea division earned DKK843 million before interest, tax, and special items in the second quarter against DKK534 million a year earlier “driven by high productivity and integration synergies.”
Sea freight rose 4 percent in the quarter, in line with estimated market growth, to 358,383 TEU, while first-half volume surged 10 percent to 691,170 TEU.
Air cargo traffic grew 3 percent to 155,430 tonnes and was 10 percent higher in the first six months at 302,869 tonnes.
DSV said around 5 percent of UTi’s original business has been “taken out” during the integration process as it focused on improving profit on low margin freight and is now intensifying its focus on sales and boosting market share, which is expected to increase traffic, especially air cargo, in the second half of the year.
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