DSV's air freight revenues and
volumes improved last year after buying Panalpina. Total DSV Panalpina Group
2019 revenues swelled by 19.8 per cent compared to 2018 to DKK94.7 billion
(US$13.82 billion), earnings
before interest and tax (ebit) rose by 22.1 per cent to DKK6.6 billion, yet
profits slumped seven per cent to DKK3.7 billion.
The
company attributed the drop in net profits to integration costs and higher net
financial expenses, reported London's Air Cargo News.
The operating margin, when
excluding the impact of new accounting standards, slipped from 6.9 to 6.6 per
cent.
"The decline in margins was
attributable to the Panalpina integration, which initially had an adverse
effect on the margins of the group," the company said. "As
integration progresses and synergies are realised, margins are expected to
increase."
Looking at the air freight
business, full-year volumes rose by 55 per cent compared to 2018 to 1.1 million
tonnes, while revenues were up 43.6 per cent to DKK27.1 billion and gross
profit jumped by 42.5 per cent to DKK6.6 billion.
If Panalpina's figures are taken
out of the equation, DSV would have registered a two per cent decrease in air
freight demand.
"The global air freight
market saw a decline in transport volumes of three to four per cent in
2019," DSV Panalpina said in a statement.
"Exports out of China and
Germany were among the weakest markets measured by volume. From an industry
perspective, the slowdown in the automotive industry had a negative impact on
air volumes, but several other sectors were also in decline.
"The weak air freight market
led to overcapacity and low air freight rates on most trade lanes.
DSV
Panalpina said the second half of the year was intensely focussed on
integrating the two businesses.
In addition to the physical
integration, a comprehensive IT integration was initiated across the whole
organisation, gradually migrating Panalpina users and customers onto DSV's IT
infrastructure and merging back-office functions.
Panalpina added new activities to
the division: Perishables represented a significant part of its airfreight
volume.
Also, through its freighter
network, the company now controls a limited amount of own air freight capacity,
including a leased Boeing 747 freighter.
Looking ahead, the Panalpina
integration is expected to be wrapped up next year.
"Our ability to take market
share will be limited in the busiest integration period, but we will do our
utmost to get back on the growth track as soon as possible," said chief
executive Jens Bjorn Andersen. "We are well-positioned for further growth
within all three divisions."
Source : HKSG.
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