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Article Excerpt
JENS BJORN ANDERSEN, CEO, DSV A/S: Welcome to this DSV webcast. Welcome to Copenhagen, Denmark. We are here today, Jens Lund, and myself. We are very happy to tell you about our Q3 results today. We have achieved the best ever results in the history of DSV and weak are very happy about that.
The structure and the way we will conduct this webcast is as usual. I will go through the figures of the three divisions. After each division, there will be an opportunity to ask questions. After the run-through of the three divisions, Jens Lund will take us through some figures on the balance sheet, financing of the recent ABX acquisition and you will also have an opportunity to ask questions after Jens's presentation.
Before we start with the presentation of the conference, I would like to say some overall things about how this development has been in DSV. We have achieved, when it comes to the turnover and organic growth, in the first nine months of almost 9%. When we take the exchange rates and acquisitions of companies into consideration, which we are very, very happy about.
In Q3 itself, we have achieved an organic growth of almost 5% and both in the quarter and also in the year-to-date figures, we believe that this development far exceeds the growth that there is in the market.
The contribution margin is slightly down in DSV. This is predominantly due to the fact that we have sold our domestic operations in Norway to help us grow and also the fact that we have higher invoiced fuel surcharges now that we have compared to last year. That is profit neutral or closer decreases in profit margin.
The EBITA result has developed very nicely. We have achieved a result, which is about 25% higher than the same period last year, when we talk about the first nine months. And in the quarter itself, we have achieved an increase in the EBITA result of 35%. In the quarter, you have to take into account that we have an extraordinary profit in the Belgian Road Company of about DKK20 million due to an investment of building. This is a figure, which is also included in our budget.
The last thing I will talk about before we go to the countries is the ABX. Just give a brief status on the ABX acquisition. The integration work is well underway. We have owned the company now, we have had the key to the company for about a month now. We are very happy about the integration so far. We are very thrilled about this new merger. This new position that we have on the market and we already now see some clear advantages, also going into the future.
All the country managers -- we will be present in 60 countries. All the country managers are now appointed. They all know who is going to be in all three divisions as well. And we think that we are well ahead of where we were, for instance, at the time when we did the funds market acquisition.
All countries have now produced very, very detailed integration plans that has been sent to head office here in Copenhagen. We are in the process of studying these integration plans there right now, but it looks very, very nice. All -- most of the traffics are coordinated in a way now between ABX and DSV. And we already see a significant benefit in our purchasing power, enabling us to get nicer -- and what should we say -- positions with our short contractors in general. So that's very, very good.
We are now awaiting a lot of local initiatives that need to be taken into place. The legal merger cannot happen in all countries, it varies a lot from country to country, from division to division. But as soon as it is legally possible for us to make a full merger, we do it in each country.
I would just end this short presentation by saying also that we have found that all the ABX people are highly enthusiastic about coming into DSV. We believe we are the right owners for a company as DSV. We do this for a living. We have straight-forwarders, we are here for the long term.
Good. That was the introduction. Now I will go through the Road division first, take you through the figures, as you can see in our report, we will not dwell too long on this. We will go through it quite rapidly and then you will have an opportunity to ask any questions.
First, we will say a little bit about Denmark. They have performed, again, very nice. They are -- they have a small growth in the turnover. We have to remember Denmark is in a very good situation. We are very big in Denmark. We have a very high market position. When you have such a high market position it can sometimes be difficult to develop dramatically. They have done nice. They have kept their budgets also on EBITA and they still have one of the very, very highest EBIT margins that we have seen in the group, not only in Denmark, but I would say by any great order in Europe.
Sweden is almost too good to be true. And we have said to the Swedish people that they have gone from zero to hero and that is actually the fact. They have doubled their EBIT result now compared to the same period last year and they also have an EBIT percentage, which far exceeds what we see in the Group, of over 6%. It's very, very good. It's good management. We fully acknowledge the Swedish organization for what they have achieved. We will then ask them to continue what they have started. And we believe that they will actually continue producing very nice results.
Norway is also producing very nice EBITA margins of in excess of 6%. They are doing well. They live now without the domestic operations, or we live without the domestic operations, in Norway. We have an agreement with Tollpost as our domestic operations, was sold in Norway. We sold them to the Swedish Post. They cooperate well and we are happy about Norway as well.
Finland has been under some pressure also in previous quarters. They are over the worst. It was an IT related problem and a domestic operation in Finland. I was in Helsinki only a few days ago and the management was quite optimistic about the domestic side. Certain things have happened now when it comes to the imbalance situation on the Finnish market, meaning that we have a little bit more empty trailers than in Helsinki than we like. The management is optimistic and we believe that we will change the situation very soon.
Then we come to the UK, also, especially compared to the past, very nice results. Stable organization. They are doing very well. They have a very high EBIT margin. We are very happy about the management over there. They're not only the top management, but the other team members of the management group in the UK are doing a very good job. They have integrated the acquisition of Roadferry in a very good way and we -- UK is probably a market where we see some weakness in terms of turnover. Maybe UK felt the finance crisis a little bit earlier than others, but we are very happy and we have maintained a very, very high profit.
The same goes for Ireland. They are slightly below the budget but it is still good, solid operations. And they will also benefit very much from the acquisition we have done of Roadferry.
Germany, we have said a lot about Germany and we will still say a lot about Germany. They are performing better than they did last year, but not as good as we had expected or they had expected themselves. We have, though, a changed situation in Germany, where we see big improvements in the big, heavy production areas of Germany. They have improved the situation a lot compared to last year. But unfortunately, at the same time, we see quite big problems in smaller areas of German operations in the western part of Germany, close to the French border, where we have two very small activities that probably accounts for less than 10% of the turnover, but now produces massive, I must say, losses. It's not satisfactory for the German management and not satisfactory for the management in Copenhagen. We believe that with the acquisition of ABX, one of these problems will be solved by merging the operations into one quick office, that of ABX has. We believe that next year will -- we will see an improvement and we are actually relatively optimistic when it comes to Germany.
Holland, we had big -- relative big problems, I must say, last year when we changed the management in Holland. We had a not so good integration with Frans Maas. We put a Danish guy in charge of Holland [Brian], he has done a fantastic job. He has managed to get the organization to work together in a very smooth way. We actually do believe that the problems we once had in The Netherlands are behind us now. So very well done.
Belgium. You can see the impact of the divestment of the property influencing the results. Still put, even without this extraordinary profit, still very good operations. Quality management. They have handled the ABX acquisition in a brilliant way so far. They never let us down. We are very happy about our Belgian model.
When it comes to France, probably together with Sweden, the place where we have seen the biggest improvement this year. They have gone from a big loss to a relative small, but still acceptable positive result. They have finally succeeded to get the synergies out after the Frans Maas acquisition. We have faith in the French management. We have asked them also to look after the ABX integration, actually together with the local French ABX management. And we believe that they will continue the results and the development that we have seen in total.
Then we come to Italy. We have seen a deterioration in the results in Italy. We are not happy about them. I think the management -- the three management in Italy got a little bit motivated after we announced the ABX acquisition. ABX are many, many times bigger than DSV in Italy. And it is fair to assume -- it was fair at that time to assume that the ABX management would head off the integration. That is also what has happened. So we believe that the situation will change dramatically in Italy and that we will see significantly -- we know that. We don't think that. We know that the situation will be completed in Italy as of next quarter.
Spain has had a less problematic quarter than they had in the two first quarters of this year. That doesn't mean that the problems have been solved in Spain, unfortunately. The result is not very good when you lose 10% of your turnover. It's not acceptable. We have changed the management now in Spain. The DSV management, the ABX management will lead the integration work. We already now see some big synergies, big improvement areas in Spain and we look very much forward to following the integration work in Spain.
Portugal delivers stable results. They actually have slightly lower results than what we saw last year. They are not very big. They are still a nice country. We have strong management down there. I know they are more ambitious than what they have produced this year. And we believe that they will improve slightly.
Poland is doing well. It's a very important market, Poland. They are producing good figures, slightly below 5% EBITA margin, it's satisfactory. It's just good management, good administration I would say also. And we are very happy. Good, stable company.
Then we come to the Baltics, Russia and Ukraine. We have seen a very big slowdown in the economy, in the Baltics. we are down to EBIT margins that we are more in line with the rest of the group. In the past they were -- they significantly outperformed more the old Western European EBIT margins. But we are still very happy about our organization and we believe that we can turn the notes just a little...
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