Slide 1: Full Year 2017 Results Investor presentation
FULL YEAR 2017 RESULTS Investor presentation
Slide 2: Forward-looking statements
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’ control, may cause actual developments and results to differ materially from the expectations contained in th
Slide 3: Agenda
Agenda 1 Highlights 2 Outlook for 2018 3 Business segments 4 Financial review 5 2020 financial targets 6 Appendix 3 | 2017 Annual Report
Slide 4: Highlights 2017
Highlights 2017 • Strong financial results driven by successful UTi integration and operational performance • Accelerating volume growth in the second half of 2017 • Adjusted free cash flow of DKK 4,835 million (2016: DKK 1.838 million) • Financial targets for 2020 revised upwards Q4-17 Gross profit
Slide 5: Outlook for 2018
Outlook for 2018 (DKKm) 2017 outlook 2017 actual 2018 outlook Operating profit before special items 4,700-4,900 4,878 5,000-5,400 Effective tax rate 23% 21% 23% Adjusted free cash flow 4,400 4,835 4,000 • In constant currencies we expect growth in operating profit before special items of 6-14% • The
Slide 6: Business segments – Air & Sea
Business segments – Air & Sea • EBIT growth of 53.2% and gross profit growth of 5.1% GP per TEU/tonne GP/tonne, DKK GP/TEU DKK • Market share gains in second half of 2017 – most 8.000 significant in air freight 6.000 6.471 7.004 6.897 6.501 6.199 • Yields were impacted by currency translation and 4.
Slide 7: Business segments – Road
Business segments – Road • EBIT growth of 15.9% and gross profit growth of 4.5% Key financial ratios Gross margin Conversion ratio • Gross profit and EBIT were positively affected by a gain 30% *adjusted for one-offs 24,3% from property transactions of ~ DKK 125 million (Q1-17) 21,4% 19,3% • Tempora
Slide 8: Business segments – Solutions
Business segments – Solutions • EBIT growth of 28.2% and gross profit growth of 3.8% Key financial ratios Gross margin Conversion ratio • Strong operational performance in 2017 lead to higher 30% 25,6% profit margins 26,5% 25,1% 24,0% 20% 23,7% 23,4% 19,5% 18,6% 17,8% • Growth across several industr
Slide 9: Financial review Q4 and FY 2017
Financial review Q4 and FY 2017 (DKKm) Q4 Q4 Constant FY FY Constant • FY17 was impacted by one extra 2017 2016 Variance currencies 2017 2016 Variance currencies month of UTi activities Net revenue 19,019 17,617 8.0% 11.6% 74,901 67,747 10.6% 11.8% Gross profit 4,054 3,998 1.4% 4.8% 16,605 15,838 4.
Slide 10: Diluted adjusted earnings per share (DKK)
Diluted adjusted earnings per share (DKK) 18,4 13,4 12,9 10,5 10,1 9,5 7,8 5,8 6,1 6,2 4,5 3,9 3,4 1,9 2,3 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CAGR 17.6% 10 | 2017 Annual Report
Slide 11: Financial review FY 2017 – cash flow and debt
Financial review FY 2017 – cash flow and debt (DKKm) FY FY 2017 2016 • Adjusted free cash flow was above latest EBITDA 5,664 4,250 outlook, primarily due to NWC performance Change in net working capital 944 -1,158 Provisions -279 -168 • NWC reduced to 1.9% of net revenue at year Special items -488 -
Slide 12: Allocation to shareholders
Allocation to shareholders • The ongoing DKK 1.25 billion share buyback will run until 23 March 2018 • Proposed dividend for 2017 is DKK 2.00 per share • In 2017 3.3 million shares were bought back at an average price of DKK 466.3 per share • The purpose of the share buyback programmes is to adjust
Slide 13: Financial targets 2020 - update
Financial targets 2020 - update FY 2017 Revised targets Previous targets • Targets for Air & Sea and DSV Group raised DSV Group % % % • 2020 timeline maintained Operating margin 6.5% 7.5% 7.0% Conversion ratio 29.4% 32.5% 30.0% • New IFRS leasing standard will be implemented in ROIC (pre tax) 23.4%
Slide 14: Appendix
Appendix 14 | 2017 Annual Report
Slide 15: DSV – Global Transport and Logistics
DSV – Global Transport and Logistics We support our customers’ entire supply chain • Operations in more than 80 countries • More than 1,000 branch offices, terminals and warehouse facilities • Top 5 global freight forwarder One company – three divisions • Air & Sea – global network • Road – overland
Slide 16: Vision and strategy
Vision and strategy We want to be a leading freight forwarder targeting above market level profit and growth Growth • Active M&A strategy • Pursuit of market share gains Customers • myDSV – new digital platform • Roll out of global warehouse management system x • DSV Purchase Order Human Resources M
Slide 17: DSV Corporate Social Responsibility
DSV Corporate Social Responsibility Ensuring our work and partnerships are based on an ethical business model Global Compact is based on ten universally accepted principles relating to: • Environment and climate • Business ethics and anti-corruption • Employees and working environment • Community en
Slide 18: A strong global transport and logistics network
A strong global transport and logistics network EMEA 460 offices 385 logistics & cross-dock facilities (4,220,000 sqm) 31,900 employees 290,000 tonnes of air freight (export) 520,000 TEU (export) Americas 30 million shipments 108 offices 40 logistics & cross-dock facilities (760,000 sqm) 7,700 emplo
Slide 19: Competitive landscape
Competitive landscape Global top 20 freight forwarders based on 2016 revenue (billion USD) DHL Logistics (DE) 1 29,2 Kuehne + Nagel (CH) 2 20,3 DB Schenker (DE) 3 15,7 C. H. Robinson (US) 4 11,7 (DK) 5 10,1 • The market is fragmented and DSV’s XPO Logistics (US) 6 9,4 market share is ~ 2% UPS (US) 7
Slide 20: Historical transport market growth
Historical transport market growth CAGR in % 1980-20082000-2008 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017(e) Global real GDP 2.30% 3.60% 2.80% -0.60% 5.00% 3.90% 3.10% 2.90% 3.20% 3.20% 3.10% 3.70% Global Trade 4.40% 4.60% 2.30% -11.40% 14.10% 6.50% 3.00% 2.90% 3.10% 2.50% 2.20% 4.70% multip
Slide 21: A global network created through M&A
10% A global network created through M&A 24% More than 50 companies united over time 66% Breakdown of EBIT by division 74,901 DKKm Revenue Air & Sea 3% 4,878 DKKm Road 38% EBIT 67,747 DKKm Solutions Revenue 59% 2017 3,475 DKKm Breakdown of EBIT by geography EBIT EMEA 2016 37,435 DKKm Americas Revenu
Slide 22: We support our customers’ entire supply chain
We support our customers’ entire supply chain 22 | 2017 Annual Report
Slide 23: Three divisions working together to support the entire supply chain
Three divisions working together to support the entire supply chain Air & Sea Road Solutions • Access to all markets through our • Road freight services in Europe, • Contract logistics services global network North America and South Africa worldwide • Annual ocean freight volume of 1.4 • More than 2
Slide 24: Divisional share of Gross profit and EBIT FY 2017
Divisional share of Gross profit and EBIT FY 2017 Gross profit EBIT before special items 16% 10% Air & Sea Air & Sea 24% Road Road 52% Solutions Solutions 32% 66% 24 | 2017 Annual Report
Slide 25: Geographic Exposure by Revenue FY 2017
Geographic Exposure by Revenue FY 2017 DSV A/S DSV Air & Sea 13% 25% EMEA EMEA 18% Americas 50% Americas APAC APAC 69% 25% DSV Road DSV Solutions 9% 8% 15% EMEA EMEA Americas Americas APAC 77% 91% 25 | 2017 Annual Report
Slide 26: Regional development Q4 2017 (DKKm)
Regional development Q4 2017 (DKKm) Gross profit* EBIT before special items* 3,998 +1% 4,054 +29% 1,196 929 699 58% EMEA 2,643 +6% 2,796 66% 69% +32% 528 57% 215 18% 580 +16% APAC 536 185 15% 20% -7% 13% 282 AMERICAS 775 722 216 +31% 24% 19% 18% 23% -7% Q4 2016 Q4 2017 Q4 2016 Q4 2017 *) Growth % in
Slide 27: Regional development FY 2017 (DKKm)
Regional development FY 2017 (DKKm) Gross profit* EBIT before special items* +5% 16,605 +40% 4,878 15,838 3,475 2,697 55% +5% 11,260 EMEA 10,674 68% 67% +31% 2,051 59% 906 19% 2,127 2,212 +40% APAC 14% +4% 13% 648 19% 1,275 3,037 3,133 776 +64% 26% AMERICAS 19% 19% +3% 22% FY 2016 FY 2017 FY 2016 FY
Slide 28: Air freight volumes
Air freight volumes 650,000 tonnes annually Europe EMEA – APAC - APAC 170,000 136,000 t TEU APAC–-Europe Intra Europe APAC EMEA Intra90,000 EMEA TEU 480,000 TEU 103,000 t Americas - EMEA 70,000 t Intra IntraAmericas Americas 73,000 t Intra APAC 25,000 TEU 14,000 t Intra 38,000APAC t . EMEA - America
Slide 29: Sea freight volumes
Sea freight volumes 1,400,000 TEU annually EMEA – APAC Europe – APAC 160,000 TEUTEU 170,000 APAC – Europe Intra Europe APAC – EMEA Intra90,000 Europe 480,000 TEU TEU 460,000 TEU 90,000 TEU Intra Americas Americas – EMEA Intra Americas 60,000 TEU 25,000 Intra APAC 40,000 TEUTEU Intra APAC 60,000 TEU
Slide 30: Capital structure and allocation
Capital structure and allocation Target for financial gearing (net interest-bearing debt/EBITDA) • Target: 1.0-1.5 x EBITDA before special items • Gearing ratio may exceed this level in periods with M&A activity Capital allocation – priority for use of free cash flow 1. Repayment of debt if financia
Slide 31: Estimated impact from IFRS 16
Estimated impact from IFRS 16 From 2019 operational leases must be recognised in the balance sheet Increase (+), Estimated • IFRS 16 will take effect on 1 January 2019 (DKK) decrease (-) change and will be applied following the retrospective approach with full restatement for the Balance sheet - 1 J
Slide 32: Cash flow and ROIC
Cash flow and ROIC Operating cash flow (DKKm) Cash conversion ratio* (%) 5.000 180% 4.500 160% 4.000 140% 3.500 120% 3.000 2.500 100% 2.000 80% 1.500 60% 1.000 40% 500 20% 0 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Average: 110%
Slide 33: Financial performance
Financial performance CAGR incl. M&A Revenue (DKKm) Gross profit (DKKm) 80.000 18.000 70.000 16.000 60.000 14.000 50.000 12.000 10.000 40.000 8.000 30.000 6.000 20.000 4.000 10.000 2.000 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 34: Financial performance per division Selected KPI’s
Financial performance per division Selected KPI’s DSV A/S DSV A/S DSV Air & Sea EBIT Conversion ratio (Rhs) Profit margin (Rhs) EBIT Conversion ratio (Rhs) Profit margin (Rhs) 80.000 35% 3.600 40% 3.200 35% 70.000 30% 2.800 30% 60.000 25% 2.400 50.000 25% 20% 2.000 40.000 20% 1.600 15% 30.000 15% 1.
Slide 35: Growth details Q4-17 and FY-17
Growth details Q4-17 and FY-17 DSV Currency translation Growth incl. Growth incl. (DKKm) YTD 2016 adjustments acquisition acquisition YTD 2017 Net revenue 67,747 -851 8,005 11.8% 74,901 Gross profit 15,838 -160 927 5.8% 16,605 EBIT before special items 3,475 -74 1,477 42.5% 4,878 Currency translatio
Slide 36: Growth details Q4-17 and FY-17
Growth details Q4-17 and FY-17 ROAD Currency translation Growth incl. Growth incl. (DKKm) YTD 2016 adjustments acquisition acquisition YTD 2017 Net revenue 28,223 -217 2,520 8.9% 30,627 Gross profit 5,094 -35 228 4.5% 5,287 EBIT before special items 1,049 -14 167 15.9% 1,201 Currency translation Gro
Slide 37: Quarterly P&L details
Quarterly P&L details DSV (DKKm) FY 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 FY 2017 Net revenue 50,869 50,869 15,319 15,319 17,606 17,606 17,205 17,205 17,617 17,617 67,747 67,747 18,223 18,223 18,924 18,924 18,735 18,735 19,019 19,019 74,901 74,901 Direct costs
Slide 38: Quarterly P&L details – Air & Sea
Quarterly P&L details Air & Sea (DKKm) FY 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 FY 2017 Divisional net revenue 21,685 7,055 8,416 8,282 8,347 32,100 8,470 8,873 9,044 8,817 35,204 Direct costs 16,394 5,178 6,108 6,159 6,317 23,762 6,354 6,656 6,845 6,725 26,580
Slide 39: Quarterly P&L details – Solutions
Quarterly P&L details Solutions (DKKm) FY 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 FY 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 FY 2017 Divisional net revenue 5,960 2,043 2,406 2,492 2,742 9,683 2,678 2,913 2,757 3,014 11,362 Direct costs 4,540 1,507 1,737 1,808 2,015 7,067 2,007 2,223 2,111 2,291 8,632 Gros
Slide 40: IT infrastructure
IT infrastructure Customer myDSV EDI Air & Sea Road Solutions • Global Transport Management • Global Transport Management • One primary Warehouse System for Air & Sea System for Road Management System for Solutions • Off-the-shelf system • Upgrade to CargoLink Way Forward • Modified off-the-shelf sy
Slide 41: Logistics services are moving up in the value chain
Logistics services are moving up in the value chain Resources needed Tailored Low High Strong Low 4PLs Intellectual Skills & Information Systems Supply Chain 3.5PLs Management Client Loyalty Competition Complexity orientation Maturity Service Market Contract Logistics Operation Systems 3PLs / End-to
Slide 42: Digitisation
Digitisation DSV’s workflows are already digitised / automated to a large extent Agreement between Integration Follow up buyer and with with Terminal KPI supplier customer supplier Quote Booking Planning Pick-up handling Delivery Payment reporting Current level of digitisation / automation Physical
Slide 43: DSV is well positioned for further digitisation
DSV is well positioned for further digitisation Making progress on several initiatives already Strong foundation ...with further potential (examples) Shipping made Consolidated Master Data easy with Robotics IT landscape Management myDSV Workflows are already Purchase Order digitised / automated to
Slide 44: Purchase Order Management
Purchase Order Management An example of how we add value to our customers supply chain Purchase Order Visibility Purchase Order Control Purchase Order Management The dynamic service with active The entry-level module that Allows customers full control interventions by our network of provides visibil
Slide 45: Investor contact information
Investor contact information Share information Financial calendar 2018 DSV shares are listed on the stock exchange in 8 Feb. 2018 Annual Report 2017 Copenhagen under the symbol ‘DSV’. For further company information, please visit DSV’s 8 Mar. 2018 Annual General Meeting website at: www.dsv.com 1 May