Slide 1: H1 2014 Investor Presentation
H1 2014 Investor Presentation Analyst conference call – 30 July 2014, 2.00 p.m. CET Presentation available at www.dsv.com
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 development and results to differ materially from the expectations contained in the
Slide 3: Agenda
Agenda 1. Highlights Q2 2014 2. Business segments 3. Financial review, cash flow and capital allocation 4. Update on market and financial outlook 5. Q&A 3 | H1 2014 Interim Financial Report – 30 July 2014
Slide 4: Highlights Q2 2014
Highlights Q2 2014 • Positive volume development continued in Q2 - Sea +9% - Air +11% - Road +4% - Solutions +2% • 4.3% organic growth in EBIT before special items in Q2 2014 (5.9% in H1 2014) • Air & Sea delivered 15.4% organic growth in EBIT in Q2 2014 (13.8% in H1 2014) • Road and Solutions are s
Slide 5: Business segments – Air & Sea
Business segments – Air & Sea • Sea freight volume growth of 8.8% in Q2 2014 (2% growth from M&A) • Air freight volume growth of 10.9% in Q2 2014 (2% growth from M&A) • Approx. 4% negative impact from currency translation • 15.4% organic EBIT growth in Q2 2014 – New volume handled without increasing
Slide 6: Gross profit per unit – Air & Sea
Gross profit per unit – Air & Sea Air Sea Gross profit per tonne, DKK Gross profit per TEU, DKK 6,866 7,179 6,966 7,107 6,954 6,738 6,586 6,795 3,318 3,144 3,248 3,224 3,242 3,234 3,142 3,116 Full year Full year Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Full year Full year Q1 2013 Q2 2013 Q3 2
Slide 7: Business segments – Road
Business segments – Road • 4% volume growth in Q2 2014 (approx. 1% from M&A) – Positive trend across most countries in Europe • Gross margin remains under pressure in a highly competitive market • EBIT for Q2 2014 DKK 27 million lower than same period last year – Negative impact from integration of
Slide 8: Business segments – Solutions
Business segments – Solutions • 2% growth in order lines in Q2 2014 – In line with market • 3.9% organic decline in gross profit in Q2 2014 – Market remains competitive – Utilisation of warehouses is improving, however the division is still struggling with low empty space utilisation in certain area
Slide 9: Financial review Q2 and H1 2014
Financial review Q2 and H1 2014 Q2 YTD Growth details Growth details 2014 2013 Var. 2014 2013 Var. DKK million Org. M&A Fx Org. M&A Fx Net revenue 12,162 11,406 6.6% 6.6% 2.3% -2.3% 23,764 22,387 6.2% 5.5% 3.0% -2.4% Gross profit 2,608 2,553 2.2% 2.8% 1.7% -2.4% 5,073 4,957 2.3% 3.0% 2.1% -2.7% EBIT
Slide 10: Financial review – cash flow and debt
Financial review – cash flow and debt DKK million H1 2014 H1 2013 • Cash flow from operating activities EBITDA before special items 1,508 1,446 for H1 2014 was positively impacted Cash flow from operating activities 906 724 by higher results and positive development in net working capital Cash flow
Slide 11: Share buyback and dividend
Share buyback and dividend • New share buyback programme of DKK 400 million according to safe harbour method to be launched on 11 August 2014 and run until 27 October 2014 • Priority for use of free cash flow remains unchanged 1. Repayment of debt, if financial gearing is above 2.0x EBITDA 2. M&A 3.
Slide 12: Market growth forecast (freight volume) - slight upwards adjustment in Air, Road and Solutions
Market growth forecast (freight volume) - slight upwards adjustment in Air, Road and Solutions Revised full- Previous ful- DSV Market Volume growth year on year year 2014 year 2014 H1 2014 H1 2014 forecast forecast Sea 9% 3 - 5% 3 - 5% 3 - 5% Air 11% 2 - 4% 2 - 4% 1 - 3% Road (Europe) 5% 2 - 3% 1 -
Slide 13: Outlook for 2014 is maintained, but low end of EBIT range adjusted slightly
Outlook for 2014 is maintained, but low end of EBIT range adjusted slightly DKK million Actual 2013 Outlook 2014 Growth % Gross profit 10,005 10,100 - 10,500 +1% to +5% EBIT before special items* 2,552 2,550 - 2,700 0% to +6% Special items costs – Operational Excellence 2.0 300 Net financial expense
Slide 14: To attend the teleconference, please dial one of the following phone numbers
To attend the teleconference, please dial one of the following phone numbers: Danish participants + 45 32 72 80 18 International participants UK +44 (0) 844 571 8957 US +1 866 682 8490 Int. +44 (0) 1452 555131 To ask questions press “* 1” 14 | H1 2014 Interim Financial Report – 30 July 2014
Slide 15: Backup slides
Backup slides
Slide 16: Regional development Q2 2014 (DKK million)
Regional development Q2 2014 (DKK million) Gross profit* EBIT before special items* +2% 2,608 +3% 701 2,553 680 611 164 Nordic countries 624 -2% 23% 173 -5% 24% 24% 25% 87 468 92 12% 493 -5% 18% -5% Southern Europe** 19% 14% 236 33% 230 +3% 33% 1,041 995 +5% 40% Other Europe / EMEA 39% 119 92 +29% 1
Slide 17: Regional development H1 2014 (DKK million)
Regional development H1 2014 (DKK million) Gross profit* EBIT before special items* +2% 5,073 1,247 4,957 +5% 1,189 1,229 313 Nordic countries 1,207 +2% 24% 25% 24% 309 26% +1% 910 141 Southern Europe** 950 -4% 18% 137 +3% 11% 19% 11% 409 415 -1% 33% 2,014 35% Other Europe / EMEA 1,965 +3% 40% 40% 2
Slide 18: Long-term financial targets – timeframe extended, otherwise unchanged
Long-term financial targets – timeframe extended, otherwise unchanged Targets Actual 2013 DSV – total • We expect to reach the targets within 5 Profit margin 7% 5.6% years counting from 2013 Conversion ratio 30% 25.5% ROIC (pre tax) 25% 21.1% • Time frame has been extended by 2 years due to lower th
Slide 19: Keeping the cost base stable
Keeping the cost base stable Cost base – staff + other external costs (DKK million) The cost base has been stable for 3½ 2,000 consecutive years. 1,500 Inflationary increases of 1-2% per year and impact from M&A were absorbed by 1,000 cost control and productivity gains. 500 A number of initiatives
Slide 20: Operational Excellence 2.0 – update
Operational Excellence 2.0 – update The initiatives are expected to deliver cost savings of DKK 150 million per year • P&L effect of approx. DKK 50 million in H2 2014 • Full year P&L effect expected in 2015 • Impact from cost savings mainly in Road and Solutions Headlines • Consolidation and optimis
Slide 21: Gross profit per unit – Air & Sea “Old indexed format”
Gross profit per unit – Air & Sea “Old indexed format” Air Sea Gross profit per tonne Gross profit per TEU 2008 = Index 100 2008 = Index 100 102.8 100.6 100.4 100.0 100.0 99.7 99.8 100.2 97.4 97.3 96.5 92.9 91.1 85.8 83.3 85.0 82.4 82.1 83.1 81.3 81.2 78.7 Full Full Full Full Full Q1 Q2 Q3 Q4 Q1 Q2
Slide 22: Quarterly P&L details
Quarterly P&L details DSV Group (DKKm) FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 FY 2013 Q1 2014 Q2 2014 Revenue 36,085 42,562 43,710 44,912 10,981 11,406 11,466 11,857 45,710 11,602 12,162 Direct costs 27,187 33,242 33,891 34,858 8,577 8,853 8,944 9,331 35,705 9,137 9,554 Gros
Slide 23: Quarterly P&L details
Quarterly P&L details Air & Sea (DKKm) FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 FY 2013 Q1 2014 Q2 2014 Revenue 13,994 19,404 18,926 19,855 4,726 5,000 5,171 5,298 20,195 5,024 5,485 Direct costs 10,570 15,609 14,836 15,586 3,732 3,910 4,074 4,181 15,897 3,970 4,335 Gross prof
Slide 24: Quarterly P&L details
Quarterly P&L details Solutions (DKKm) FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 FY 2013 Q1 2014 Q2 2014 Revenue 4,775 4,861 5,009 5,181 1,344 1,372 1,374 1,379 5,470 1,345 1,400 Direct costs 3,322 3,401 3,526 3,743 996 1,012 1,018 1,034 4,061 1,015 1,054 Gross profit 1,453 1,4