Solid earnings in Q3 2024 driven by continued volume growth and higher gross profit
The DSV Group achieved solid results in Q3 2024 with continuing improvement in earnings driven by positive volume growth across all divisions.
Quarterly gross profit improved by 4.8% and EBIT before special items was 1.5% higher compared to the same period last year leading to sequential growth in diluted adjusted EPS of 2.1%.
Adjusted free cash flow generation in Q3 2024 improved to DKK 2,524 million.
Full-year 2024 guidance for EBIT before special items of DKK 16,000-17,000 million.
Jens H. Lund, Group CEO: “The third quarter of 2024 has been a landmark for our company with the agreement to acquire Schenker creating a world leader within transport and logistics and, following the announcement, we have successfully raised EUR 5 billion in equity from a broad range of long-term investors. We look forward to welcoming our colleagues from Schenker and together build a world-class transport and logistics company with a unique global network and service offerings to our customers. Our financial results in Q3 2024 show continued positive earnings growth. Our quarterly gross profit and EBIT before special items have increased on a year-over-year basis for the first time since Q3 2022, driven by positive volume growth across all divisions and higher gross profit.”
Selected key figures and ratios for the period 1 January – 30 September 2024
Q3 2024
Q3 2023
YTD 2024
YTD 2023
Key figures (DKKm)
Revenue
44,095
35,576
123,592
114,257
Gross profit
11,080
10,649
32,186
33,371
Operating profit (EBIT) before special items
4,420
4,396
12,160
13,773
Special items, costs
124
-
124
-
Profit for the period
2,845
2,808
7,950
9,470
Adjusted earnings for the period
3,001
2,864
8,254
9,652
Adjusted free cash flow
2,524
2,666
4,196
10,803
Ratios
Conversion ratio
39.9%
41.3%
37.8%
41.3%
Diluted adjusted earnings per share of DKK 1 for the last 12 months
53.8
63.1
Performance in Q3 2024 While the market in Q3 2024 was still impacted by uncertainty regarding the macroeconomic outlook and escalations around the situation in the Middle East and Red Sea, DSV reported positive earnings growth driven by strong volume development and improved free cash flow. On the back of the financial results for the first nine months and outlook for the remaining part of the year, we narrowed our full-year EBIT guidance for 2024 to DKK 16,000-17,000 (previously DKK 15,500-17,000 million) in a separate trading update on 3 October 2024.
Air & Sea continued the positive development with volume growth and continued market share gains in Q3 2024 leading to an increase in gross profit of 5.2% compared to the same period last year. For sea freight, gross profit increased 11.8% in the same period driven by higher volumes and improved average gross profit yield, while gross profit for air was down 1.5% due to lower average gross profit yield partly offset by higher volumes.
Road reported stable results in a market characterised by overall weakened demand and low rates, especially towards the end of the quarter. High revenue growth driven by increased volumes resulted in relatively stable gross profit and EBIT before special items for Q3 2024 compared to the same period last year, despite increasing cost pressure. The division continues to focus on cost and productivity improvement measures to offset the current market situation. In early October 2024, Road announced price increases towards customers to reduce the impact of the cost inflation from suppliers.
Solutions reported an increase in gross profit of 9.3% and a 9.8% increase in EBIT before special items in Q3 2024 compared to the same period last year. The positive development was driven by new customer wins and growth in order lines in combination with minor gains from sale of properties, partly offset by ramp-up of new sites leading to temporarily lower utilisation rates.
With the announced acquisition of Schenker, which is expected to close in Q2 2025, DSV is even stronger positioned to grow the business due to our enhanced global network and customer offerings, while at the same time maintaining our focus on having industry leading margins. M&A will remain a core pillar of our corporate strategy, as we believe that the combination of organic and inorganic growth will create a stronger DSV going forward.
We consistently assess our operations to remain competitive and flexible to meet changes in market demand, and we continuously invest in digital and physical infrastructure to optimise productivity. As part of the half-year 2024 interim report, we launched a company-wide operational efficiency programme with an expected full-year effect in EBIT before special items of approximately DKK 750 million excluding impact from cost inflation and higher activity. The cost initiatives had limited impact on the financials in this quarter but will materialise in Q4 2024 and into Q1 2025.
Outlook for 2024 Based on our performance in the first nine months of 2024 and our expectations for the rest of the year, we revised the full-year EBIT outlook for 2024 on 3 October 2024 to the following (reference is made to Announcement No. 1135):
EBIT before special items is expected to be in the range of DKK 16,000-17,000 million (previously DKK 15,500-17,000 million).
The effective tax rate is expected to be approximately 24%.
One-off costs (special items) are expected to be in the level of DKK 650 million in 2024.
