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Home | Internacional | DSV Panalpina posts strong Q2 led by air freight
Postado em 4 de agosto de 2020 | 16:55

DSV Panalpina posts strong Q2 led by air freight

But ‘basic assumptions’ on outlook for second half of the year ‘more uncertain than normal’. DSV Panalpina posted a “strong” performance in “a challenging market” in the second quarter of the year, with the “extraordinary” air freight market having a positive impact during the period.

However, the group underlined that there is limited visibility on the outlook for the second half of the year with the “basic assumptions” behind its guidance, such as a gradual improvement in global freight markets over the third and fourth quarters and air freight capacity remaining tight for the remainder  of 2020 being “more uncertain than normal.”

Commenting on the Q2 and H1 results, Jens Bjørn Andersen, Group CEO, said:  “Recent months have developed better than we anticipated when the COVID-19 crisis started, and we are pleased to report 63% growth in EBIT before special items for Q2 2020 and 37% growth for the first half of the year.

“Strong cost management and the continued successful integration of Panalpina have been important drivers for our results. COVID-19 has created an extraordinary market situation in air freight, and here we have been able to help our customers and have benefitted from the legacy Panalpina freighter network. The uncertainty remains higher than normal, but based on a strong first half of 2020 we are now able to reinstate guidance for the full year. We now expect EBIT before special items on level with the guidance we gave to the market before this crisis started.”

Panalpina has been included in DSV’s consolidated statements since 19 August 2019. The combination had a significant impact on the consolidated balance sheet, income statement and cargo volumes for the group in Q2  and H1 2020 compared to the same periods in 2019.

The Denmark-based global freight and logistics group’s Q2 revenue totalled DKK 28,782 million (approximately US$3,200 million), an increase of 46.0% on the same period last year. EBIT totalled DKK 2,613 million for the quarter and DKK 4,179 million for the first six months of the year.

The stand-out performance came from the Air & Sea division whose revenue was up 102% to DKK 19,144 million. Gross profit increased by 87% to DKK 4,663 million and EBIT rose by 96%  to DKK 2,112 million.

The division achieved an “all-time high” gross profit to EBIT conversion ratio for the quarter of 45.3%.

DSV Panalpina noted the positive impact of “high air freight yields due to unusual market conditions and change in cargo mix” with “a gradual normalisation” expected in the second half of the year.

Sea freight rates “have been relatively stable due to efficient capacity management by the carriers (blanked sailings) accompanied by moderate volume recovery.

The group’s air freight volumes totalled 287,452 tonnes compared to 170,301 tonnes a year earlier while sea freight traffic increased to 512,138 TEU from 391,333 TEU.

Turning to the Road division, revenue was down 9.6% to DKK 6,987 million

Gross profit was down 5.5% at  DKK 1,431 million and EBIT fell by 22.2%  to DKK 263 million.

DSV Panalpina said the results were“good considering the market situation. COVID-19 has had a limited impact on domestic transport, whereas international transport has been severely hit.”

There has been a gradual recovery of activity in Europe after a low point in April, it added.

The gross margin showed an improvement in Q2 due to smaller average shipment size and activity mix while cost savings are progressing as planned but have not fully compensated for lower activity.

In the Solutions (contract logistics division), revenue was up 5.7% to DKK 3,256 million

Gross profit increased 10.2% to DKK 1,271 million and EBIT was largely unchanged at   DKK 234 million.

Automotive, industrials and parts of retail were negatively impacted by COVID-19 but  e-commerce and pharma/healthcare saw a positive development.

The growth in revenue and gross profit was mainly driven by the Panalpina acquisition. However, EBIT was negatively impacted by costs related to customer contracts.

The group also highlighted the continued successful  integration of Panalpina with (integration) synergies and cost savings ahead of plan.

“Synergies have been achieved faster than expected and the timeline has been updated. The transfer of customers to DSV systems is progressing well and no significant service issues have emerged. Around 50 countries have been onboarded, representing more than 90% of Panalpina’s volume. The legacy Panalpina air charter network continues and we have increased the number of services and destinations in the network.”

DSV  Panalpina has reinstated its financial guidance and expects EBIT before special items for 2020 in the range of DKK 8,200-8,700 million.

“The outlook for 2020 is based on the actual results for H1 (2020) and on the following main assumptions: a gradual improvement of the global freight markets over the third and fourth quarters as markets reopen and with no material disruptions of global supply chains; freight market volumes in H2 2020 will remain below last year – but we expect the negative run rates to lessen; and air freight capacity is expected to remain tight for the rest of 2020; however, we expect a gradual normalisation of air freight yields. It must be stressed that basic assumptions behind the guidance are more uncertain than normal.”

 

 

Source: Lloyd’s


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