DSV's Q1 2025 Results: A Logistics Giant Accelerates Post-Schenker

DSV, a Danish multinational logistics company, has delivered a strong start to 2025, reporting robust financial performance and completing its landmark acquisition of Schenker. The integration of Schenker’s operations positions DSV as a global logistics leader, while its Q1 results underscore resilience in a challenging market environment.

Key Financial Highlights

DSV’s Q1 2025 interim report revealed revenue growth of 8.2% year-on-year to DKK 41.7 billion, driven by its Air & Sea division. Gross profit rose 6.2% to DKK 11.0 billion, while EBIT before special items increased 4.8% to DKK 3.9 billion. Perhaps most impressively, adjusted free cash flow surged to DKK 3.2 billion, a 659% jump from Q1 2024, reflecting improved liquidity and operational discipline.

Divisional Performance: Strengths and Challenges

• Air & Sea: Delivered standout results, with EBIT up 10.6% to DKK 2.9 billion. Air freight volumes remained stable, while sea freight volumes grew 3%, aided by higher yields in the technology sector.
• Road Division: Struggled with weak European demand, posting a 16.9% EBIT decline to DKK 408 million. Cost inflation and terminal depreciation weighed on results.
• Solutions Division (soon to be rebranded Contract Logistics): Revenue rose 4.9%, but EBIT fell 6.3% due to depreciation from new warehouses and soft European retail activity.

The Schenker Acquisition: A Game-Changer

The completion of DSV’s DKK 106.7 billion (€14.3 billion) acquisition of Schenker marks a pivotal moment. The combined entity now boasts:
- Revenue: ~€41.6 billion annually.
- Global Scale: 160,000 employees and operations in 100+ countries.
- Synergy Potential: Targeting DKK9 billion in annual savings by 2028, primarily through cost efficiencies and revenue cross-selling.

DSV CEO Jens H. Lund emphasized the strategic value:
> "The Schenker acquisition transforms us into a global leader. Our combined strengths will drive long-term growth, even in volatile markets."

Updated Guidance: Ambitious but Achievable

DSV raised its full-year EBIT guidance to DKK19.5–21.5 billion, up from DKK15.5–17.5 billion, reflecting Schenker’s contribution. While synergies will take time to materialize, management projects accretive EPS by 2026. Integration costs are expected to total DKK11.0 billion, with DKK2.0–2.5 billion incurred in 2025.

Risks and Roadblocks

Despite the optimism, risks loom large:
1. Geopolitical Tensions: Conflicts like the Red Sea crisis and China-Europe trade disputes could disrupt supply chains.
2. Debt Burden: The acquisition pushed DSV’s pro-forma financial gearing to ~3.0x, though management aims to reduce this to ≤2.0x by mid-2027.
3. Integration Hurdles: Merging 160,000 employees and overlapping operations in Europe and Asia requires flawless execution.

Conclusion: A Compelling Long-Term Play

DSV’s Q1 results and Schenker integration signal a confident step toward global logistics dominance. With adjusted free cash flow hitting record levels and revenue growth outpacing peers, the company is well-positioned to capitalize on synergies. While near-term challenges in the Road division and macroeconomic uncertainty remain, the long-term outlook is compelling.

Investors should note that DSV’s stock has risen 28.6% since the Schenker deal was announced, pricing in much of the good news. However, with synergy targets of DKK9 billion by 2028 and a pro-forma revenue base of DKK310 billion, the company could deliver meaningful value over the next three to five years. For those willing to endure short-term volatility, DSV’s strategic ambition and financial muscle make it a standout pick in the logistics sector.

Final Take: DSV’s Q1 results and Schenker integration solidify its position as a logistics powerhouse. While risks exist, the combination of scale, cash flow, and execution capability makes it a compelling investment for the long haul.