DSV Earnings: The Comedown Begins

Narrow-moat DSV’s DSV first-quarter update was a huge climbdown from the highs of 2022, but broadly in line with what we expected. Revenue fell by one third as lower volumes combined with declining freight rates. Management maintained their full-year guidance for EBIT, which represents about a 30% fall at the midpoint on 2022. We also maintain our forecasts and reiterate our DKK 1,120 fair value estimate. We see the shares as fairly valued currently.

Unsurprisingly, declines were driven by the air and sea businesses. As supply chains normalise, following the extended period of disruptions and bottlenecks, freight rates have naturally fallen, which combined with falling demand, have led to declines of more than 40% in revenue across these two areas. The road business held up the best, with revenue flat year over year, although EBIT fell a touch as cost increases are still having an effect here.

After a bumper 2021 and 2022, the party is coming to an end for DSV and major players in the third-party logistics segment. DSV is feeling the pinch from declining freight volumes and rates so far during 2023, but should be able to pull more levers in the second half to mitigate the situation. Additionally, as one of the largest 3PLs globally, DSV is well positioned to weather coming conditions and likely take market share from smaller, less capable peers that may fall by the wayside in coming months.