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Robert.Jervis_43227 Feb 07

DSV Panalpina upbeat after ‘best-ever’ acquisition

DSV Panalpina upbeat after ‘best-ever’ acquisition image
Newly merged group, now the fourth-largest global freight forwarder, has continued to grow faster than the market in the Americas and Asia Pacific and is positive about 2020, its CEO describing Panalpina as ‘the best company we have ever acquired’
DSV Panalpina’s place among the world’s largest transport companies was underlined today when the Denmark-headquartered juggernaut unveiled its 2019 annual report, its first since DSV completed the $5 billion purchase of Swiss forwarder Panalpina last August.

Operating profit before special items in the fourth quarter of 2019 totalled DKK 1,784m (US$262m), up from DKK 4,447m a year earlier.

Revenues of DKK 94,701m ($13,931m) in 2019 increased from 79,053 a year earlier, while yearly operating profits saw impressive growth driven by a strong performance from the company’s Americas division.

“Q4 2019 was in line with our expectations and we can report EBIT of DKK 6,654 million for 2019, an 8.4% organic growth on 2018,” said Jens Bjørn Andersen, CEO, DSV Panalpina.

Andersen is upbeat for 2020 with EBIT in the DKK 8,200-8,700 million range forecast although he admits headwinds could affect the forecast.

“Currently the coronavirus situation is impacting global supply chains and creating uncertainty,” he added. “However, at this stage it is not possible to predict the financial impact.”

DSV Panalpina is now the fourth-largest global freight forwarder after DHL, Kuehne & Nagel, and DB Schenker, with market share of around 3%, according to its annual report which draws on 2018 revenues.

“2019 was a strong year for our company – not least thanks to the acquisition of Panalpina in August 2019,” added Andersen. “A large part of our organisation is now working hard on the integration and things are progressing well.”

With the addition of Panalpina, DSV Panalpina’s global network covers more than 80 countries and consists of approximately 600 warehouses and cross-dock terminals and 800 office locations.

However, while its revenue generation continues to focus strongly on Europe, the combined company’s profits are now being spread more evenly. APAC (Asia, Australia and the Pacific) EBIT before special items increased 3.7% year-on-year in 2019 to DKK1,285m while EMEA (Europe, Middle East and Africa) EBIT before special items rose 1.7% to DKK3,334m.

The Americas was the outstanding growth area in 2019 with profits before special items up 18.4% to 2,035m.

“We’ve grown faster than the market in the Americas and Asia Pacific and this has been the position for many years,” Jens Lund, chief financial officer.

He emphasised the enhanced geographical footprint the company now has following the integration of Panalpina.
“Panalpina has large operations in the Americas and also in the Asia Pacific and has grown in these regions,” added Lund. “So, when you mix all this up, that creates a very diverse operation, or at least a more diverse operation, and of course we also have high exposure in Europe.”

By mode last year, DSV Air & Sea achieved 5.9% organic growth in gross profit, DSV Road’s organic growth gross profit was up 1.8% and DSV Solutions posted 7.1% organic growth in gross profit.

Andersen was bullish about how the company would benefit as Panalpina’s operations were further integrated.

“We aim to create one strong organisation by merging the two global networks: the offices, IT infrastructure, back-office and HQ functions,” he said. “With the addition of Panalpina, we are much stronger and ready to start building on the leading global market position we now have.

“In many ways, Panalpina is the best company we have ever acquired. With our expanded global footprint, increased freight volumes, network and capacity as well as new vertical expertise and products, we are well positioned to grow our business further.”

Source: Lloyd’s Loading List