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Seafreight drives growth in historically strong DSV quarter

Air & Sea is still the top performing division at logistics group DSV, which achieved a result of USD 111.7 million before taxes in the 3rd quarter. Seafreight exceeds the market with 8 percent growth.

Photo: GORM OLESEN

The Danish logistics giant continued to deliver growth in the 3rd quarter, and this result was especially supported by the Air & Sea division, according to the interim report.

"We maintained our momentum in the third quarter of the year. Delivering 5 percent growth in operating profit, the best interim results yet in the company's history," says CEO Jens Bjørn Andersen in a statement.

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"Although affected by the usual impact of seasonality, activity levels remained high throughout the quarter and DSV gained market share in all business areas. The Air & Sea Division continues to deliver the highest growth rates and best results, whereas the Road Division is affected by price competition. With one quarter left of 2014, we expect to realise a full-year operating profit in the top half of the range we announced at the beginning of the year," he adds.

DSV achieved a 3rd quarter result of USD 111.7 million before taxes, compared to USD 97.5 million in the same period last year. Net revenue came to USD 2.10 billion, an improvement from USD 1.96 billion in the 3rd quarter 2013.

Exceeding the market

Looking at Air & Sea, the division achieved a net revenue of USD 974.9 million, compared to USD 889.4 million in the same quarter last year, and an operating profit before special items (EBIT) of USD 74.4 million, up from USD 65.5 million in the 3rd quarter 2013.

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According to the report, seaborne transport volumes grew eight percent, over a market growth of 3-5 percent. The company maintains its full-year forecast, though DSV specifies in the report that the result of primary operations before special items is expected to be USD 444.8 - 461.9 million, compared to previously announced USD 458.5 - 485.4 million.

Solid quarter as expected

Analysts had already anticipated a solid result from the logistics group in light of the fact that the company's competitors Kuehne+Nagel and Panalpina managed to win market shares in markets with less than impressive growth.

Panalpina's 3rd quarter interim report showed a significant decline in earnings per container, compared to Kuehne+Nagel, while the former did achieve a higher growth than the latter. Panalpina grew 9 percent while Kuehne+Nagel grew 7.4 percent.

However, both companies grew considerably more than the seafreight market in general, which grew an estimated 4 percent in the 3rd quarter compared to the same period last year.

Acquisition underway?

On Wednesday, DSV Chairman Kurt Larsen stresses in Berlingske Business (Danish) that it is time for the company to start performing acquisitions. The European growth remains sluggish, which means DSV should start looking for other markets:

"The time has now come for us. But it has to be something that works, something that fits with the company, and it has to be at a price that we feel makes sense to our shareholders. We're looking for acquisitions, regardless of whether times are going up or down. It's on the agenda at every single board meeting or management meeting, and yes, it's been a while since we've made a real splash," Kurt Larsen tells Berlingske Business.

Unlimited growth in seafreight

DSV CEO Jens Bjørn Andersen sees no limits for the logistics group's growth potential in seafreight.

"There are no limits, and it's a clear ambition for us to grow in seafreight. Right now we're many ranked around 10th among the greatest seafreight players in the world, and it's a fact that we're conquering market shares from some of the smaller players because we have certain opportunities to invest, with our customers, in new technology, IT and other new solutions - opportunities that some of the smaller players don't have," Jens Bjørn Andersen tells ShippingWatch.

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