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Home | Internacional | DFDS sets out ambitious five-year growth strategy
Postado em 27 de junho de 2019 | 17:21

DFDS sets out ambitious five-year growth strategy

Danish shipping group planning acquisitions to support growth in key supply chain solutions, targeting the cold chain, automotive, forestry products and metals verticals.

DFDS has outlined plans to achieve further strong growth in revenue and earnings over the next five years despite a market currently weakened by renewed uncertainty about Brexit, a slowdown in manufacturing in and around Europe, and a prolonged recession in Turkey.

CEO Torben Carlsen said the Danish shipping group’s freight strategy would be focused on the further development of end-to-end supply chain solutions for selected industries, the digitisation of services to accelerate growth, and the continued expansion of ferry and logistics networks, leading to a significant increase in profitability.

Its successful implementation would see EBITDA lifted from DKK 3.6 billion (US$539.8 million) in 2018 to DKK 5.5 billion in 2023.  One-third of the increase is expected to be generated by organic growth and initiatives, one third from achievement of the business plan goals for the Mediterranean business unit, and one third from acquisitions.

In the area of supply chain solutions, DFDS will initially target the cold chain, automotive, and forestry products and metals verticals which, combined, accounted for 23% of DFDS’s group revenue in 2018 (DKK3.6 billion) and offered an EBITDA-margin range of 6-10%. Acquisitions are planned in order to support growth in these verticals, Carlsen noted.

He explained that DFDS’ strength in these verticals was currently specific to certain regions: cold chain in the UK, automotive in Sweden, and forestry products and metals in Sweden and the Baltics.

The aim is to grow the customer base in these “strongholds” through end-to-end solutions selling while increasing DFDS’ presence in these three verticals by moving into other regions. For example, developing cold-chain activities to the Nordic region and continental Europe, automotive-related business to the UK and continental Europe, and trade flows of forestry products and metals to the UK.

Driving digital solutions is also a priority for DFDS in order to “make services easier and more cost-efficient for freight forwarders and other customers.”

As for the strategic objective to develop and expand its ferry and logistics networks, a key aspect is the achievement of a long-term business plan for its new Mediterranean unit, which was created following the acquisition last summer of U.N. Ro-Ro, Turkey’s largest operator of freight ferry routes connecting Europe and Turkey.

The Turkish economy went into recession shortly after DFDS completed what was its biggest-ever buy, triggering a significant depreciation in the local currency and high inflation, impacting trade directly. Very challenging market conditions continue to persist today, with Carlsen telling a conference call with analysts last month that the expected upturn in the Turkish economy in Q1 did not materialise and that there have been little signs of it in Q2 either. He said there was now a growing consensus that a rebound in Turkish exports won’t kick in until towards the end of this year or the beginning of next year.

Nevertheless, DFDS remains upbeat on the prospects of its Mediterranean business unit which, following the signing of a partnership agreement with Turkish logistics player EKOL at the start of the year and the launch new routes to Greece, France and Italy, together with intermodal expansion, now claims a 44% share of the Turkey-Europe trade.

After a “transitional year of expansion and a recession headwind” in 2019, DFDS Mediterranean is “all set to optimise its operations and cost structure in 2020,” Carlsen said. The group is also looking to reap the benefits from the deployment of several new ferries with lower unit costs.

Carlsen concluded: “Our ambition exceeds the outlook for continued modest market growth. Therefore, our strategy is to leverage the reach and strength of our network to do more for customers and to raise efficiency. This way we intend to grow considerably over the next five years.”

 

Source: Lloyd’s


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