DSV's 2024 Earnings and Strategic Resilience: A Long-Term Investment Perspective

In 2024, DSV A/S navigated a volatile global logistics landscape with a mix of resilience and strategic foresight. The Danish logistics giant reported full-year revenue of DKK 167,106 million, with EBIT before special items of DKK 16,096 million—falling within its guidance range despite a challenging macroeconomic environment. While the Road division faltered in Q4, the company's broader strategic initiatives, including its transformative acquisition of Schenker and sustainability-driven growth, underscore its long-term potential. For investors, the question remains: does DSV's current earnings dip represent a compelling entry point in a sector poised for structural change?

Navigating Q4 Headwinds: Road Division Challenges

DSV's Road division, which contributes 30% of group revenue, faced a 9.8% decline in gross profit and a 33.4% drop in EBIT before special items in Q4 2024. Weak demand in Europe's automotive sector, low freight rates, and one-off costs—including a U.S. receivables write-off—weighed heavily on performance. The Red Sea disruptions further exacerbated these issues, creating a perfect storm of cost pressures and operational inefficiencies.

However, these challenges were not indicative of systemic failure. DSV's management emphasized that the Road division's struggles were driven by external factors rather than operational missteps. The company expects a stabilization of gross profit margins in 2025, with flat to low-single-digit market growth projected for the segment. This suggests the division's underperformance is a temporary headwind rather than a long-term trend.

Strategic Strengths: Schenker Acquisition and Global Expansion

The acquisition of Schenker, finalized in Q4 2024, has been a game-changer. Priced at DKK 106.7 billion, the deal doubled DSV's revenue to DKK 310 billion and expanded its workforce to 160,000 employees across 90 countries. This move not only solidified DSV's position as the world's largest freight forwarder but also created a platform for cross-selling and operational synergies.

The integration of Schenker's Asia-Pacific and European operations has already unlocked DKK 9 billion in annual synergies by 2028, primarily through IT consolidation, logistics facility optimization, and back-office efficiencies. Crucially, the acquisition is expected to be EPS accretive by 2026, with DSV upgrading its 2025 EBIT guidance to DKK 19.5–21.5 billion—up from DKK 15.5–17.5 billion—reflecting confidence in the combined entity's growth trajectory.

Sustainability as a Strategic Pillar

DSV's commitment to decarbonisation is another key differentiator. The company is on track to meet its 2030 emissions targets, with sustainability initiatives now embedded in its commercial execution. For example, DSV's Solutions division is prioritizing warehouse utilisation improvements, reducing idle space and energy consumption. Meanwhile, the Air & Sea division—responsible for 60% of group revenue—is leveraging digital tools to optimize freight routes and cut fuel waste.

Investors should note that sustainability is not merely a cost center for DSV but a revenue driver. By aligning with customer demand for green logistics, DSV is capturing market share in sectors such as e-commerce and automotive, where carbon-neutral supply chains are becoming a competitive necessity.

Evaluating the Earnings Dip: Is DSV a Buy?

The current earnings dip, particularly in the Road division, may appear concerning at first glance. However, this underperformance is largely cyclical and context-driven. DSV's core Air & Sea and Solutions divisions grew organically in 2024, with global air and sea freight volumes expected to rise 3% in 2025. Moreover, the Schenker acquisition has already driven revenue growth and margin expansion in the combined entity.

For long-term investors, DSV's current valuation offers a compelling entry point. The company's upgraded EBIT guidance, coupled with its strong balance sheet (adjusted free cash flow of DKK 5,550 million in 2024), suggests robust financial flexibility. With a 24% effective tax rate and a focus on cost discipline, DSV is well-positioned to navigate macroeconomic volatility while maintaining profitability.

Conclusion: Resilience and Opportunity

DSV's 2024 earnings highlight the company's ability to adapt to a turbulent market. While the Road division's challenges are real, they are being offset by strategic investments in global expansion, sustainability, and operational efficiency. The Schenker acquisition, in particular, has transformed DSV into a logistics powerhouse with unparalleled scale and agility.

For investors with a three-to-five-year horizon, the current earnings dip represents a strategic opportunity. DSV's resilience in the face of macroeconomic and geopolitical risks, combined with its long-term growth drivers, makes it a standout play in a sector undergoing rapid transformation. As the logistics industry evolves toward sustainability and digitalisation, DSV's strategic positioning—anchored by its recent milestones—positions it as a leader in the next phase of global trade.