Investment Idea

Investmentidea: DSV A/S

03/03/2017 | 3 min read

A global supplier of transport and logistics released its annual report for 2016

DSV A/S is a Danish transport and logistics company offering transport services worldwide by road, air, sea and train. Since its foundation in 1976 by nine independent Danish hauliers, the company has achieved rapid expansion and international presence, predominantly through a series of strategic competitor acquisitions.

Some of the most important acquisitions for example had been Samson Transport, DFDS Dan Transport Group, J.H.Bachmann, Frans Maas and ABX LOGISTICS. In October 2015 DSV signed an agreement to acquire UTi Worldwide, Inc. The deal was closed in January 2016.

With headquarters in Hedehusene (near Copenhagen) and offices in more than 80 countries, DSV employs more than 40,000 people and collaborates with partners and agents worldwide. DSV is listed on NASDAQ OMX Copenhagen and included in the OMXC20 index as one of the 20 most actively traded shares on the Copenhagen stock exchange. The organization is divided into three divisions:

DSV Air & Sea, DSV Road and DSV Solutions

According to DSV website information, DSV Air & Sea specializes in the handling of air and sea freight to destinations all over the world. The division plans and executes shipments in a quick, efficient, safe and environmentally friendly manner and combines the means of transportation when most appropriate. The Division has 16,000 employees and offices in more than 80 countries.

DSV Road offers transportation of full, part and groupage loads all over Europe in a quick, efficient, flexible and environmentally friendly manner and provides good connections to the rest of the world. The Division has 11,000 employees and subsidiaries in more than 35 countries worldwide.

DSV Solutions specializes in logistics solutions across the entire supply chain from design through freight management, customs clearance, warehousing and distribution to information management and e-business support. The Division has 15,000 employees and offices in more than 30 countries throughout the globe.

Q4 2016 report released

“While maintaining momentum in our integration efforts in 2016, we kept focus on running the business, leading to very satisfactory results in all divisions. We expect to complete the integration of UTi and continue to take market share in 2017 creating earnings growth of 21 - 29%” says Jens Bjørn Andersen, CEO.

For Q4 2016, net revenue increased 39.8% and amounted to DKK 17,617 million (Q4 2015: DKK 12,606 million). The growth was mainly due to the acquisition of UTi Worldwide Inc. The Air & Sea Division reported a 61.1% increase, the Road Division 14.4% and the Solutions Division 77.6%.

Freight volume growth for the quarter was 86% for air freight, 56% for sea freight and 5% for road transport (Europe). Gross profit was also significantly impacted by UTi. For Q4 2016, gross profit increased 41.3% and came to DKK 3,998 million (Q4 2015: DKK 2,830 million). Air & Sea landed growth of 50.8%. Road achieved growth of 11.5%, whereas Solutions reported gross profit growth of 94.9%.

Dividend increase by DKK 0.10 for 2016

The operating profit before special items for the quarter was up by 24.0% at DKK 929 million for Q4 2016 (Q4 2015: DKK 749 million). All three divisions achieved earnings growth in fourth quarter. Growth in earnings gradually increased throughout the year as synergies from the integration of UTi were achieved.

Based on the financial results for the year, the Board of Directors proposes ordinary dividends of DKK 1.80 per share for 2016 (2015: DKK 1.70 per share).

Currently, DSV A/S stocks quote at around DDK 342.10 and have a twelve-month target price of DDK 377.63 (Bloomberg). The trailing P/E-ratio of the last twelve months is 37.97. At Bloomberg, 16 analysts recommend to buy the stock, 7 to hold and 2 to sell.

Investors can leverage their DSV-trades with Vontobel Bull & Bear Certificates.

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