Muted airfreight growth for DSV as it digests UTi

Danish-headquartered forwarder and transport company DSV said its airfreight division increased volume by 10% in the first half of 2017, helped by its acquisition of UTi at the start of last year.
This put it slightly ahead of the market, which was up 8%, it said in its interim financial report, published on 2 August.
However, DSV’s airfreight volume growth in the second quarter of 2017 was only 3%, as against market growth of 10%.
This puts the Danish company’s airfreight growth somewhat behind some of its major competitors; Switzerland-based Kuehne + Nagel said that airfreight demand in the first-half of 2017 was up 18%, while in the second quarter it was up 20.9%.
Panalpina meanwhile estimated that its second quarter airfreight demand grew by 8% compared with last year.
DSV said that there had been heavy activity in the ocean and air market in the first half of 2017– especially in airfreight – and several trade lanes had been hit by a lack of capacity from time to time. This had led to increasing freight rates, it said.
DSV had meanwhile been focussing on the integration of US forwarder UTi, acquired on 22 January 2016, and also on improving profits on some low margin business.
It said: “We estimated that approximately 5% of UTi’s original business has been taken out during the integration process.”
DSV said that much of the planned integration of UTi had been completed, with most of the remaining work being consolidation of IT and back office systems. The entire integration process is expected to be completed in 2017, with the full financial effects expected within three years of the acquisition.
However, DSV said it had now renewed its sales focus and had already seen an acceleration in growth at the end of the second quarter of 2017, “especially in airfreight”.
DSV’s Air & Sea forwarding arm overall increased its EBIT earnings before special items from DKK843 million in the first half of 2016 to DKK 1,533m in the second half of 2017.
Overall, the company – which also encompasses the haulage arm, DSV Road and the DSV Solutions logistics and warehousing operations – saw net revenue for the half year rise from DKK32.9bn in 2016 to DKK37.1bn in 2017, while gross profit rose from DKK7.8bn in 2016 to DKK8.4bn in 2017.
Chief executive Jens Bjorn Andersen said: “With more than 50% growth in earnings and cash flow we are very satisfied with the group’s performance in the first half of 2017. Only 18 months after the acquisition of UTi Worldwide, our productivity and financial results are at an all-time high.”
He also announced a new DKK1bn share buyback programme.