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Article Excerpt
JENS BJORN ANDERSEN, CEO, DSV A/S: Welcome to DSV, welcome to Copenhagen, welcome to the presentation of the Annual Report of 2008. I am here today as usual, with our CFO, Jens Lund, and we will take you through a presentation.
This time, we have done a slideshow that you will be able to see on the web, whilst we guide you through the different issues that we want to talk about.
If we go to page number two, you we see the agenda for this presentation. We will talk a little bit about the highlights of 2008. We will give you an operating, or I will give you an operating review of the previous year 2008. We will talk a little bit in more detail about the divisions. It will not be as detailed as it normally is this year; we will not take it country by country, but more like division by division.
After that, we will open for Q&As. After that, Jens will guide you through the financial side of the Report of 2008. And after that, again we will have Q&As.
Finally for this afternoon, we will talk about the budget for the present year, 2009. We will discuss with you some of the focus areas that we have in DSV, that we want to work with. And amongst others, we will talk about the capital structure we have in DSV and the announced capital increase as well. After that, we will wrap it up with the final Q&A of the day.
So, if we flip over to page number three. In bullet points, 2008 has been an interesting and exciting year for DSV. We had a good start to the year. The first three quarters, they were very good; we were not really impacted by any crisis in the world. We did also, in the end of the year, October 1, the acquisition -- we closed the acquisition of ABX, which is an opportunity that we have pursued for a long, long time.
That led us to a good result in 2008, we were very happy with the result. It's the highest result we have ever had in the history of DSV. We achieve an EBITA result of DKK1,935 million, which was basically spot on the guidance we gave earlier in 2008, where we said we would have a result of DKK1,950 million, so we are very happy with that.
The turnover, we were slightly below the guidance we gave, but taking into consideration the development in Q4, we were happy with the result of DKK37.4 billion.
We achieved an organic growth of more than 4% in turnover, and 5% in EBITA, and that was even absorbing the very difficult market conditions that we saw in Q4.
We also saw a financial crisis developing throughout the year, and, that also had an influence on the capital structure of DSV, an issue that Jens Lund will guide you through a little bit later in the presentation.
It's important also for us to stress that we have had no impairment issues in 2008, nor do we believe we will have any issues in that respect in 2009. We have noted that there has been some speculation amongst analysts and the present general about this. We don't believe that we have any problems with our goodwill at this present moment in time.
Now please, let's go to page four, where we can see the results in more detail. As you can see, the developments in EBITA are very satisfactory for us. As I said before, we achieved a result of DKK1.936 billion, which gives a contribution margin of 21.8% and an EBIT margin of 5.2%. We are very happy with that.
We will come back to the budget a little bit later in the presentation, but as you can see now, we have a turnover budget of DKK44 billion and an EBITA forecast of DKK2 billion. I will come back to that a little bit later.
The EBITA margin is dipping a little bit in the budget, which is caused by these integration issues that we have with ABX, because of the fact that the new volume that we have purchased, do not deliver as high as EBITA as we are used to in DSV.
Please go to page five, where you will see summarized the development of the turnover, the revenue and the EBITA in 2007, 2008 and 2009. What is to be noted there is that we will be less dependent on the previous so big Road division; we are more equally split now between Air & Sea and Road when it comes to turnover. And, when it comes to the EBITA forecast for 2009, we will actually see that the Air & Sea division substantially outperforms actually both the Solutions and the Road division.
This is a strategy that we have been pursuing for a long time, and this is just in line with what we expected when we did purchase ABX.
We can now go to page six, where I will take you through the developments in the Road division. In 2008, the division had an organic growth of 5.7% in the turnover, and a 13% organic growth in the EBITA result, when we adjust for the gain on the assets in 2007. We sold a property and we sold Tollpost Globe also in 2007. So all in all, it was a good development for us.
We will -- we also did some minor acquisitions, apart from the ABX acquisition, in the Road division in 2008. We bought the UK-Irish based Roadferry, which gave us some more substance on the very important UK-Irish trade. We did some minor acquisitions. Also minor, but important, and very good I have to stress, acquisitions in Norway by acquiring the company Vorgan, predominantly a domestic operator, and also a company called Unicargo, which had a very strong position on the important Eastern European market.
If I have to pull some countries into the limelight, I would like to mention Denmark. It's still the best performing country that we have; outstanding management, good solid operations, very good developments.
Sweden have finally broken through the sound barrier. We have said a lot about Sweden in the past; finally, they succeeded in 2008. They had a very nice result, their EBIT result grew almost 80% organically, compared to the year before. We have had high expectations about Sweden for a long time, and it's very, very satisfactory for us to see that Sweden have finally made it.
Also the UK did well in 2008, despite very tough market conditions in the second half of 2008 and also despite a weakening pound sterling. Of course, we are hit by that in converting to Danish kroner. We have seen a reduction in the value of sterling of about 20%.
The last I would like to talk about, the Netherlands. Since the integration of Frans Maas, we have had certain issues in the Netherlands. We actually had two very well performing companies, but when we put them together, it sort of collapsed and it left us in limbo. We changed the management in the Netherlands, in the beginning of 2008 and this gentleman from Denmark, the Danish guy, he actually has done a very quick and successful turnaround in Holland, and we now perceive that the previous problems we had in the Netherlands to be solved.
Not everything is rosy in the garden. We have some challenges as always, and unfortunately, Germany is still on that list. Having said that, we have seen an improvement in Germany. The 2008 result is better than what we did in 2007, which in itself is satisfactory for us. We are a little bit impatient when it comes to Germany, so, we took actually a decision early this year to change not only the top management, the CEO of the German organization, but also some of the branch managers we had in Germany.
We actually took the Dutch managing director, as I said, who has done a very good turnaround, and put him in charge of the very important German operation. He lives on the border between Germany and the Netherlands and he can have access to our German headquarters within 20 minutes. So we expect a lot from him, he is pretty optimistic about the future, and it's going to be exciting to see how that goes.
When it comes to Spain, it was a negative surprise for us to see that Spain developed the way it did in 2008. We believe that we now, with the acquisition of ABX, have substantially more muscles, you could say, in Spain. We have new management coming from ABX and there is a very, very exciting integration plan. I was in Spain myself a couple of weeks ago to see it myself and amongst others, we are closing down a huge ABX facility in Barcelona, moving that into our own DSV premises. So facilities will be very large in Spain, and even though the economical environment is not very good in Spain, we believe that we can make a substantially improved result in Spain.
France. Maybe it's a little bit unfair to them to put them under challenging countries. France is a very important country for us, it's a very important market to be in and we would have expected a little bit more, that's why we have put them there. Having said that, they have also improved compared to 2007, but there is still a long way to go.
The same goes for Italy. Italy is a whole new world for us now, after the ABX acquisition. We are much, much, much stronger. You cannot even compare the size we have in Italy now compared to what we had in the past. We expect a lot from our new Italian friends, and we are sure that they will turn these negative results around.
You can see the results at the bottom of the Road division, they speak for themselves. We still have a high margin, we think, of over 4% and we want to build up on that and improve that also in the future.
If we flip to page seven, it's the Air & Sea division. As you saw before; it is now our largest and most important division, when it comes to profit, anyway. They are strongly influenced by the acquisition of ABX, especially in Italy, where we are substantially bigger and better and more professional than we were before. It's simply an outstanding Company we have in Italy.
They grew 2.2% in turnover and 12% in EBITA and when you take into consideration the very steep decline in the rate levels from the Far East to both Europe and USA, it's simply impressive to see that.
We have some strong performing countries as well, one is the old favorite, the USA. They still have top of the range margins, double-digit margins, and even after the integration of the not very profitable ABX, they are achieving a very, very high profit.
Denmark, the same. We have a project division and a normal, so to say, Air & Sea division in Denmark. They are doing in 2008 very, very well, making a very high profit as well.
Also in Air & Sea we have a few countries that we need to improve in. One is Spain, one is France, it's the same story as Road. We need to improve. We need to get a bigger...
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