Shares of DSV (CPH:DSV) surged 10% today following the company’s upgraded earnings guidance for the year, largely due to the positive impact of the Schenker acquisition.
The logistics company now anticipates full-year earnings before interest and taxes (EBIT) to be in the range of DKK 19,500 million to DKK 21,500 million, a significant increase from the previous forecast of DKK 15,500 million to DKK 17,500 million.
The company’s Air & Sea division reported a 15% increase in revenue year-over-year (YoY), which was 5% higher than consensus estimates. The division’s EBIT for the first quarter stood at DKK 2,949 million, slightly above consensus by 3%. However, EBIT margins slightly contracted to 11.3% from 11.6% in the first quarter of the previous year and were below the consensus of 11.5%.
The Road division experienced a decline in revenue by 3% YoY, falling short of consensus estimates by 11%. Its EBIT was reported at DKK 408 million, which was 8% below consensus, with EBIT margins at 4%, compared to 4.7% in the same quarter of the previous year and consensus of 4.3%.
DSV’s Solutions division saw a revenue increase of 6% YoY, outperforming consensus by 2%, and an EBIT of DKK 470 million, which was 7% higher than consensus. The EBIT margins for this division were reported at 7.4%, down from 8.3% in the first quarter of the previous year and below the consensus of 8.1%.
The company’s operating cash flow for the first quarter was robust at DKK 4,728 million compared to DKK 1,756 million in the first quarter of the previous year. Adjusted free cash flow (FCF) also showed significant strength, standing at DKK 3,165 million versus DKK 443 million in the same period last year.
Regarding the Schenker acquisition, DSV has announced anticipated synergies of DKK 9 billion, exceeding the DKK 4.5 billion estimated by Jefferies. The normalized EBIT for Schenker is expected to be DKK 6 billion for the year 2024. Despite the cost to achieve these synergies being forecasted at DKK 11 billion, the transaction is expected to be accretive to earnings per share (EPS) by the latest in 2026.
Jefferies analysts commented on the acquisition, stating, "we see acquisition metrics ahead of consensus."
