Danish forwarder DSV today reported first-quarter revenue of 38.3 billion kroner ($5.5 billion), down 5% year over year.
Revenue from DSV Air and Sea decreased 11.5% YoY to $3.2 billion.
THE BIG PICTURE: While Air and Sea volumes increased in Q1, DSV’s revenue decline was driven by below-average freight rates, according to the company’s earnings statement released today.
“Although spot rates are higher than last year, the average contract rate for the current period is lower compared to [the] same period last year,” according to the statement.
BY THE NUMBERS: DSV reported gross profit of $1.4 billion, an 8.6% YoY decrease. The forwarder also reported in Q1:
- EBIT before special items of $521 million, down 21% YoY;
- Air cargo tonnes up 2.3% YoY;
- Air and Sea gross profit of $825 million, down 16.2% YoY; and
- Air and Sea EBIT before special items of $376 million, up 26% YoY.
“The gross margin for [DSV] was 26.8% for Q1 2024, compared to 27.8% for the same period last year,” according to the statement. “The decline was mainly due to Air and Sea and reflects a normalization of both freight rates and yields.”
Lower freight rates offset volumes and contributed to overall losses, as expected, while air freight capacity is steadily increasing, according to the earnings statement.
“Air freight capacity continues to increase due to more passenger travel, which generates more available belly capacity,” the statement said. “Combined with more freighter capacity compared to pre-pandemic, this has led to overcapacity in the air freight market. During 2024, we expect that some of the excess capacity will be offset by retirement of old aircraft.”
NOTEWORTHY: DSV was No. 3 on Air Cargo Next’s Power 25 list of top forwarders in 2023 with a throughput of 1.5 million air cargo tonnes, a 3.12% YoY increase.
The forwarder opened its second 1 million-square-foot cargo facility 30 miles from Dallas-Fort Worth International Airport (DFW) this month to bolster cross-border e-commerce growth with Mexico.
FUTURE LOOK: “In a normalizing market, we are off to a good start delivering strong financial results in the first quarter of 2024, and I am particularly satisfied that we are gaining market shares in all three divisions,” Chief Executive Jens H. Lund said in the statement. “We have also completed the leadership changes, the organization has settled, and together with the new and experienced leadership team we will concentrate our efforts on executing on our strategy, with particular focus on our customers.”
MARKET OUTLOOK: DSV has a market capitalization of $39.5 billion.
Editor’s note: All amounts have been converted to U.S. dollars.