DSV Earnings: Muddling Through as Global Freight Volumes Continue to Drop

Despite DSV reporting a revenue decline of 40% year over year for the third quarter, relative to the global decline in freight volumes, we believe its performance was reasonable. The asset-light nature of the third-party logistics business also meant that narrow-moat DSV’s EBIT fell by one third, a number that is slightly more tolerable. One positive that investors should take from this update is that management tightened the full-year guidance range for EBIT by raising the lower end. We reiterate our DKK 1,120 fair value estimate and see the shares as fairly valued currently.

So far, there is no sign of a recovery in global freight volumes, with flat performances in the road and solutions business being dragged down by weakness in the primary air and sea divisions. After a bumper 2021 and 2022, the good times have come to an end for DSV and the 3PL segment. However, as one of the largest players globally, DSV is well positioned to weather the coming conditions and likely take market share from smaller less-capable peers that may fall by the wayside in the coming months.

In a slightly unusual twist, former CFO, and now COO, Jens Lund is primed to take the CEO role in late 2024, with current CEO Jens Bjørn Andersen to step down after 16 years in the position. Lund’s reshuffle across various C-level positions has been a bit unusual, but we believe it won’t lead to any significant change in direction for the firm.