Dsv A/s · OMXCOP:DSV
Dsv A/s — H1 2024 Earnings Presentation
52 slides from Dsv A/s's earnings presentation, July 2024
Slide 1: Half-Year 2024 Results
HALF-YEAR 2024 RESULTS DSV A/S Investor presentation
Slide 2: Content
Content • Highlights • Business segments • Update on NEOM joint venture • Financial review • Appendix Forward-looking statements This presentation contains forward-looking statements. Such statements are subject to risks and uncertainties, as various factors, many of which are beyond DSV A/S’ contro
Slide 3: Highlights H1 2024
Highlights H1 2024 • Strong Q2 2024 with sequential growth in gross profit and EBIT – driven by positive volume growth across all divisions and stable yields. • Full-year 2024 EBIT guidance narrowed to DKK 15.5 - 17.0 billion (previously DKK 15-17 billion). • Cash flow impacted by increased activity
Slide 4: Air & Sea
Air & Sea Management commentary (DKKm) Q2 2024 Q2 2023 Growth* H1 2024 H1 2023 Growth* • Gross profit and EBIT in line with Gross profit Air 2,953 3,574 (16.7%) 5,848 7,301 (18.8%) expectations reflecting seasonality and continued market normalisation. Gross profit Sea 3,119 3,180 (1.0%) 5,987 6,480
Slide 5: Air freight Q2 2024
Air freight Q2 2024 • Sequential growth in gross profit and stabilising gross profit yields compared to previous quarter. • Strong volume growth and market share gains in our addressable market (i.e. excluding e-commerce and perishables). • Increase in Asia export volumes, especially from growth wit
Slide 6: Sea freight Q2 2024
Sea freight Q2 2024 • Strong sequential growth in gross profit and volumes from Q1 2024 to Q2 2024. • Volume growth in line with market with high growth in freight rates on the Trans-Pacific and Asia-Europe trade lanes in May and June. • Limited impact from the Red Sea situation in Q2 2024 – we expe
Slide 7: Road
Road Management commentary (DKKm) Q2 2024 Q2 2023 Growth* H1 2024 H1 2023 Growth* • Gross profit and EBIT growth despite a challenging market. Revenue 10,561 9,650 9.1% 20,986 19,744 6.2% • The strong results are driven by Gross profit 2,061 2,023 1.5% 4,025 3,999 0.4% market share gains in control
Slide 8: Solutions
Solutions Management commentary (DKKm) Q2 2024 Q2 2023 Growth* H1 2024 H1 2023 Growth* • Gross profit and EBIT growth driven by our campus strategy and Revenue 6,916 5,898 17.0% 12,905 11,523 12.3% the continued expansion of our global footprint. Gross profit 2,576 2,373 8.1% 4,977 4,658 7.0% • Acti
Slide 9: Update on the joint venture with NEOM
Update on the joint venture with NEOM Sourcing to NEOM from across the world • The logistics joint venture in the NEOM region is mobilised and ready to go live but awaiting final approvals from authorities. • No cash outflow until final approvals have been obtained. • Based on current plans, we expe
Slide 10: P&L H1 2024
P&L H1 2024 Management commentary (DKKm) Q2 2024 Q2 2023 Growth* H1 2024 H1 2023 Growth* Headlines • Strong financial results for Q2 2024 impacted by higher average freight Revenue 41,157 37,727 9.6% 79,497 78,681 2.0% rates and increased activity. Gross profit 10,841 11,331 (4.0%) 21,106 22,722 (6.
Slide 11: Cash flow and financial ratios H1 2024
Cash flow and financial ratios H1 2024 (DKKm) H1 2024 H1 2023 Variance Management commentary EBITDA before special items 10,541 11,963 (1,422) Cash flow Change in working capital (3,773) 2,540 (6,313) • Solid cash flow despite higher net Tax, interest, change in provisions, etc. (2,550) (3,491) 941
Slide 12: Allocations to shareholders
Allocations to shareholders Management commentary • Launch of new share buyback Announced share buyback programme of DKK 1.5 billion Share buyback (running 24 July 2024 to 22 Dividend October 2024). • 2.2 million shares bought back in H1 2024 at an average price of 20,313 DKK 1,131. 17,841 13,997 •
Slide 13: Narrowed outlook for 2024
Narrowed outlook for 2024 (DKKm) Updated outlook Previous outlook Actual 2023 EBIT before special items 15,500-17,000 15,000-17,000 17,723 Effective tax rate 24.0% 24.0% 24.8% Special items 650 - - Main assumptions • We expect air and sea markets will grow 3-4% in 2024. We continue to target profita
Slide 14: Key takeaways
Key takeaways Strong Q2 results with Continued focus on cost Narrowing the full- sequential growth and management and the year 2024 EBIT market share gains launch of operational guidance to DKK across all divisions. efficiency initiatives. 15.5 - 17.0 billion. 14
Slide 15: Appendix
Appendix DIV cosartrnsport andtosisies oF
Slide 16: DSV at a glance
DSV at a glance Global One company – DSV operations three divisions Nasdaq Copenhagen No majority shareholder – 100% free float ~75,000 Air & Sea Credit ratings Employees A global network A3 (Stable) by Moody’s A- (Stable) by Standard & Poors +1,600 Road Offices and logistics Overland transport in E
Slide 17: Our purpose and strategy
Our purpose and strategy We want to be a leading freight forwarder targeting sustainable growth Keeping supply chains flowing Purpose Vision Mission We are part of the critical infrastructure driving world trade. We help our Keeping supply Sustainable Operational customers grow by keeping their supp
Slide 18: From local haulier to global player
13% 11% From local haulier to global player 76% A global network created through organic growth and M&A 2023 Breakdown of EBIT by division 2021 Air & Sea Road Solutions EBIT Breakdown of EBIT by geography 3% EMEA Americas 38% APAC 59% 2019 100% 2016 2008 2006 2000 1976 1997 Revenue 2,694 DKKm 19,478
Slide 19: Our market position
Our market position Third-party logistics providers by 2022 revenue in USD billion 1 Kuehne + Nagel (CH) 46.9 2 DHL Logistics (DE) 45.6 3 DSV (DK) 34.9 4 DB Schenker (DE) 30.4 5 SF KEX (CN) 25.7 6 C.H. Robinson (US) 23.9 7 Nippon Express (JP) 19.9 8 4% CEVA Logistics (CH) 18.7 The estimated market 9
Slide 20: Our market position
Our market position Top 3 Top 3 Top 3 Top 10 Air freight Sea freight Road freight (Europe) Logistics solutions Source: Transport Intelligence (by 2022 revenue) 20
Slide 21: Working together to support your entire supply chain
Working together to support your entire supply ~75,000 people in more than 80 countries at your service Third-party logistics services (3PL) 4 PL services Air and Sea Road Solutions Lead Logistics • Access to all markets through • Road freight services in EMEA • Contract logistics worldwide • Enabli
Slide 22: Creating value in the supply chain
Creating value in the supply chain From A to B and much more Freight forwarding services Shipment booking — Pick-up — Warehouse — Documentation & customs clearance — Cargo consolidation — Purchase order management Cross-dock terminal — Insurance A From shipper End-to-end logistics Through our global
Slide 23: Leveraging our global network
Leveraging our global network Value creation Global network strategy Air freight network – LCL network – Groupage network – Vertical specific solutions – Multi-client warehouses • Higher quality • International consistency • Stronger end-to-end offering Control of Control towers to Increased digital
Slide 24: Focused commercial efforts to grow gross profit
Focused commercial efforts to grow gross profit DSV Gross Profit distribution Illustrative graph Management Commentary SMALLER CUSTOMERS Largest global customers (Top ~200) LARGE TO MID-SIZED (less than 5% of gross profit) CUSTOMERS • A significant growth potential both in terms of share of wallet a
Slide 25: Vertical specialists closely connected to our customers
Vertical specialists closely connected to our customers Our industry-specific expertise and solutions offered globally (% share of gross profit) Consumer Automotive Industrial Healthcare Technology ~25% ~15% ~35% ~10% ~10% Other: ~5%
Slide 26: DSV x NEOM joint venture
DSV x NEOM joint venture
Slide 27: Logistics joint venture with NEOM
Logistics joint venture with NEOM • NEOM aims to create one consolidated supply chain to support the projects under NEOM. • In the joint venture, DSV will set up a Control Tower to organise and monitor NEOM’s entire supply chain. • This includes sourcing from suppliers across the world and on-site l
Slide 28: Planned activities in the joint venture
Planned activities in the joint venture NEOM JV Construction End-state Property Management / logistics logistics development back-office Air, sea, road and contract Manage, execute and support Development of Strategy and planning. logistics services for the urban logistics for the population, logist
Slide 29: ESG in NEOM joint venture
ESG in NEOM joint venture • The joint venture will be based on DSV’s values and policies (Human Rights Policy, Code of Conduct, Supplier Code of Conduct). • DSV appoints the Managing Director and will be responsible for daily operations. • Internal and external audits will be conducted. • DSV has op
Slide 30: Sustainability
Sustainability
Slide 31: Sustainability strategy
Sustainability strategy Addressing our material impacts in environment, social and governance ENVIRONMENT SOCIAL GOVERNANCE Reducing our impact Caring for our employees and Doing business with integrity and engaging with communities running a responsible supply • Climate change chain • Diversity and
Slide 32: Our carbon footprint
Our carbon footprint Committed to net zero in 2050 Total carbon footprint 2023 Science-based targets Our emissions by scope Scope 3 by transport mode (Tonne CO2) 2030 3% 37.1% Scope 1 & 2 0.41 million 50% Reduction of scope 93% SCOPE 3 SCOPE 1+2 4% Other categories, SCOPE 3 LAND (Buildings, company
Slide 33: Our roadmap towards net-zero emissions
Our roadmap towards net-zero emissions Energy efficiency and Four key levers to deliver on our decarbonisation targets optimisation Phasing out fossil fuels in transportation 20,526 (CO2e - ‘000 tonnes) Renewable energy Scopes 1+2: ~15% production and charging Scope 3: ~20% Scopes 1+2: ~30% infrastr
Slide 34: DSV Green Logistics
DSV Green Logistics A set of solutions that reduce the carbon footprint of our customers’ supply chains CO2 Supply chain Sustainable Sustainable Carbon reporting optimisation warehousing fuels offsetting Reporting of customer Customer analysis to Sustainable warehousing Sustainable fuel Offsetting o
Slide 35: Our approach to IT
Our approach to IT
Slide 36: Our IT landscape
Our IT landscape Designed to support good customer service, high data quality and growth Customer myDSV ∙ API / EDI Air & Sea Road Solutions • Global transport management system • One primary transport management system • Global warehouse management system • Off-the-shelf system • New TMS planned as
Slide 37: Digital capabilities and logistical capabilities
Broad and deep service offerings based on a solid IT platform DSV is uniquely positioned to combine logistical and digital capabilities Utilising our global platform to provide Winning formula to compete in the future complex supply chain solutions Digital capabilities Governance & change capacity D
Slide 38: Our technology trend radar
Our technology trend radar Tracking Quantum Metaverse computing Assessing Holographic Displays Telepresence AI Avatars Augmented reality Nanotechnology Pick and pack AIGV’s Testing AI Guided Fully autonomous Vehicles trucks Micro mobility Hyperloop and Space access Circular supply High-Speed Rail Po
Slide 39: Financial details
Financial details SF» eS
Slide 40: 2026 financial targets
2026 financial targets H1 2024 actual 2026 targets Assumptions • We maintain the targets, but the negative DSV Group (%) volume trends for Air & Sea in 2022-23 have made the targets more challenging. Conversion ratio 36.7 >45.0 • We assume that annual GDP growth will be around 3% and transport marke
Slide 41: Earnings per share
Earnings per share • Flexible and scalable business model • Performance driven organisation • Strong M&A track record • 17% CAGR* in EPS from 2014 – H1 2024 • Graph illustrates diluted adjusted earnings per share of DKK 1 17% CAGR* 2014 – H1 2024 81.4 58.7 50.9 52.7 26.5 22.1 22.1 18.4 10.5 12.9 13.
Slide 42: Financial performance over the years
Financial performance over the years Revenue (DKKm) Gross profit (DKKm) 240,000 56,000 210,000 49,000 180,000 42,000 150,000 35,000 120,000 28,000 90,000 21,000 60,000 14,000 30,000 7,000 0 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 CAGR* 13
Slide 43: Financial performance per division
Financial performance per division DSV Group DSV Air & Sea EBIT DKKm Conversion ratio Operating margin EBIT DKKm Conversion ratio Operating margin 28,000 49% 21,000 70% 24,000 42% 18,000 60% 20,000 35% 15,000 50% 16,000 28% 12,000 40% 12,000 21% 9,000 30% 8,000 14% 6,000 20% 4,000 7% 3,000 10% 0 0%
Slide 44: Cash flow and ROIC
Cash flow and ROIC Operating cash flow (DKKm) Cash conversion ratio* (%) 28,000 175% 24,000 150% 20,000 125% 97% 98% 16,000 100% 12,000 75% 8,000 50% 4,000 25% 0 0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Average: 99% * Cash conversion rati
Slide 45: Divisional and geographical exposure H1 2024
Divisional and geographical exposure H1 2024 Gross profit by division Gross profit by region Air & Sea EMEA 57% 60% Road Americas 19% 24% Solutions APAC 24% 16% EBIT before special items by division EBIT before special items by region Air & Sea EMEA 72% 52% Road Americas 13% 25% Solutions APAC 15% 2
Slide 46: DSV trade lane exposure vs. market (volume)
DSV trade lane exposure vs. market (volume) Air freight Sea freight Asia-Europe 34% Asia-Europe 37% (both ways) 30% (both ways) 24% Trans-Pacific 16% Trans-Pacific 19% (both ways) 20% (both ways) 20% Trans-Atlantic 24% Trans-Atlantic 15% (both ways) 17% (both ways) 10% 4% 12% Intra APAC Intra APAC 1
Slide 47: Capital structure and capital allocation
Capital structure and capital allocation Management commentary Financial gearing Net interest-bearing debt below 2.0x EBITDA before target special items. Free cash flow 1. Repayment of debt (if above target gearing priorities ratio). 2. Value-adding investments in the form of acquisitions or develop
Slide 48: P&L details - Group
P&L details - Group Group (DKKm) FY 2019 FY 2020 FY 2021 FY 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Q2 2024 YTD 2024 Revenue 94,701 115,932 182,306 235,665 40,954 37,727 35,576 36,528 150,785 38,340 41,157 79,497 Direct costs 70,947 87,398 144,691 183,516 29,563 26,396 24,927 26,081 106
Slide 49: P&L details – Air & Sea
P&L details – Air & Sea Air & Sea (DKKm) FY 2019 FY 2020 FY 2021 FY 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Q2 2024 YTD 2024 Divisional revenue 51,151 73,689 131,901 174,431 26,213 22,993 21,912 21,854 92,972 22,716 24,616 47,332 Direct costs 38,634 56,780 108,132 139,807 19,186 16,239
Slide 50: P&L details – Road and Solutions
P&L details – Road and Solutions Road (DKKm) FY 2019 FY 2020 FY 2021 FY 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Q1 2024 Q2 2024 YTD 2024 Divisional revenue 31,621 30,395 35,416 41,507 10,094 9,650 9,036 9,375 38,155 10,425 10,561 20,986 Direct costs 25,465 24,257 28,321 33,596 8,118 7,627 7,112
Slide 51: Balance sheet
Balance sheet (DKKm) Assets 30.06.2024 30.06.2023 Variance 31.12.2023 Equity and liabilities 30.06.2024 30.06.2023 Variance 31.12.2023 Intangibles assets 77,391 77,298 93 77,106 DSV shareholders’ share of equity 70,899 70,080 819 68,703 Right-of-use assets 17,106 15,216 1,890 15,655 Non-controlling
Slide 52: Investor Relations
Investor Relations Share information Financial calendar 2024 Investor Relations contacts DSV A/S is listed on the Copenhagen stock 01 Feb. 2024 Annual Report 2023 DSV A/S exchange under the symbol ‘DSV’. Hovedgaden 630, 2640 Hedehusene, Denmark investor@dsv.com 14 Mar. 2024 Annual General Meeting 20