INTERIM FINANCIAL REPORT Q3 2018

Jens Bjørn Andersen, Group CEO: ”We delivered strong results in the first nine months of 2018, including healthy top-line growth across all business a...

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INTERIM FINANCIAL REPORT Q3 2018 Company Announcement no. 720 26 October 2018 Selected financial and operating data for the period 1 January - 30 September 2018 (DKKm) Net revenue Gross profit Operating profit (EBIT) before special items Operating margin Conversion ratio Profit for the period Adjusted earnings for the period Adjusted free cash flow Diluted adjusted earnings per share of DKK 1 for the period

Q3 2018

Q3 2017

YTD 2018

YTD 2017

20,237 4,472 1,507 7.4% 33.7% 1,104 1,126

18,735 4,114 1,313 7.0% 31.9% 826 940

6.1

5.0

58,108 13,042 4,112 7.1% 31.5% 3,060 3,126 2,631 16.8

55,882 12,551 3,682 6.6% 29.3% 2,237 2,578 3,047 13.6

Jens Bjørn Andersen, Group CEO: ”We delivered strong results in the first nine months of 2018, including healthy top-line growth across all business areas and continued improvement of our margins. The implementation of trade tariffs continues to create uncertainty in our industry, but so far, we see a negligible impact on our activities. Based on our performance so far and expectations for the rest of the year, we are adjusting our earnings outlook.” The consolidated full-year outlook for 2018 previously announced is adjusted as follows: • • •

Operating profit before special items is expected to be in the range of DKK 5,400-5,600 million (previously DKK 5,300-5,600 million). Adjusted free cash flow is expected to approximate DKK 4,200 million (unchanged). The effective tax rate is expected to approximate 23% (unchanged).

A separate company announcement about the launch of a new share buyback programme of DKK 1,200 million will be issued today. Contacts Investor Relations Flemming Ole Nielsen, tel. +45 43 20 33 92, [email protected] Frederikke Linde, tel. +45 43 20 31 95, [email protected] Media Tina Hindsbo, tel. +45 43 20 36 63, [email protected] This announcement has been forwarded to Nasdaq Copenhagen and to the press. It is also available at www.dsv.com. Yours sincerely, DSV A/S

DSV A/S, Hovedgaden 630, 2640 Hedehusene, Denmark, tel. +45 43 20 30 40, CVR No. 58233528, www.dsv.com. Global Transport and Logistics With offices and facilities in more than 80 countries on six continents, we provide and run supply chain solutions for thousands of companies on a daily basis. Our reach is global yet our presence is local and close to our customers. Read more at www.dsv.com

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Financial highlights* Q3 2018

Q3 2017

YTD 2018

YTD 2017

20,237 4,472 1,699 1,507 94 1,104 1,126

18,735 4,114 1,503 1,313 123 149 826 940

58,108 13,042 4,668 4,112 129 3,060 3,126

55,882 12,551 4,248 3,682 371 425 2,237 2,578

Balance sheet (DKKm) DSV A/S shareholders' share of equity Non-controlling interests Balance sheet total Net working capital Net interest-bearing debt Invested capital Gross investment in property, plant and equipment

15,327 (33) 40,201 2,342 5,602 20,912 466

14,524 (34) 39,206 2,113 6,298 21,183 478

Cash flows (DKKm) Operating activities Investing activities Free cash flow Adjusted free cash flow Financing activities Share buyback Dividends distributed Cash flow for the period

2,776 (204) 2,572 2,631 (2,420) (2,579) (380) 152

2,910 (185) 2,725 3,047 (3,193) (735) (345) (468)

Income statement (DKKm) Net revenue Gross profit Operating profit before amortisation, depreciation and special items Operating profit (EBIT) before special items Special items, costs Net financial expenses Profit for the period Adjusted earnings for the period

Financial ratios (%) Gross margin Operating margin Conversion ratio Effective tax rate ROIC before tax Return on equity (ROE) Solvency ratio Gearing ratio Share ratios Earnings per share of DKK 1 Earnings per share of DKK 1 for the last 12 months Diluted adjusted earnings per share of DKK 1 Diluted adjusted earnings per share of DKK 1 for the last 12 months Number of shares issued ('000) Number of treasury shares ('000) Average number of shares issued ('000) for the period Average number of shares issued ('000) for the last 12 months Average diluted number of shares ('000) for the period Average diluted number of shares ('000) for the last 12 months Share price on 30 September (DKK)

22.1 7.4 33.7 21.9

22.0 7.0 31.9 20.7

22.4 7.1 31.5 23.2 25.2 25.6 38.1 0.9

22.5 6.6 29.3 22.5 21.4 20.6 37.0 1.2

6.1

4.4

6.1

5.0

181,955

186,755

185,117

189,648

16.8 20.9 16.8 21.6 188,000 6,933 182,918 183,399 186,095 186,522 584.0

12.0 15.0 13.6 17.3 190,000 4,341 186,433 186,192 189,153 188,607 476.3

48,182

45,161

Staff Number of full-time employees on 30 September *) For a definition of the financial highlights, please refer to page 81 of the 2017 Annual Report.

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INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 October 2018

Management’s commentary The Group achieved a gross profit of DKK 13,042 million for the first nine months of 2018 against DKK 12,551 million for the same period last year. In constant currencies, the growth in gross profit was 7%. EBIT before special items was DKK 4,112 million for the first nine months of 2018 against DKK 3,682 million for the same period of 2017. In constant currencies, growth in EBIT before special items came to 15% for the period.



As a result of improved productivity, the conversion ratio was 33.7% for Q3 2018 against 31.9% for the same period last year.

Profit for the period Net revenue For the first nine months of 2018, DSV recorded a net revenue of DKK 58,108 million (2017: DKK 55,882 million). Adjusted for exchange rate fluctuations (constant currencies), growth for the period was 7.3%. The growth was driven by higher activity levels in all divisions, and DSV has gained market share, particularly within air freight and contract logistics. In the first nine months of 2018, the Air & Sea division achieved a growth of 7.2%; Road 4.5%; and Solutions 14.9% (constant currencies). For Q3 2018, revenue amounted to DKK 20,237 million against DKK 18,735 million for the same period last year. Growth for the period was 9.7% (constant currencies).

The global freight and logistics markets continue to trend upwards in most areas with growth rates close to the underlying GDP growth. After a two-year period where the growth in global air freight volumes have outpaced the underlying economy we have now seen a normalisation and estimate that both the airfreight and seafreight markets will grow 3-4% in 2018. The recent introduction of further protectionist measures, primarily between the US and China, have not yet had any material impact on DSV’s transport volumes. We continue to monitor this development closely. NET REVENUE YTD 2018 (DKKm)

Air & Sea

9,376 16%

The Air & Sea division achieved a growth of 8.3%; Road 5.5%; and Solutions 25.0% in the third quarter of 2018 (constant currencies).

Road 27,134 45%

Solutions 23,350 39%

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INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 October 2018

Ex. Group and elimination

Gross profit Gross profit was DKK 13,042 million for the first nine months of the year against DKK 12,551 million for the same period of 2017. In constant currencies, the growth in gross profit was 7.3%. The growth was primarily driven by higher activity levels in all divisions, and improved gross profit per shipment in the Air & Sea and Road divisions.

The growth in earnings in Q3 2018 is attributable to a strong performance in all divisions, not least in the Solutions division. Air & Sea achieved a growth of 13.1%; Road 11.7%; and Solutions 61.4%.

EBIT BEFORE SPECIAL ITEMS YTD 2018 (DKKm)

In the first nine months of 2018, the Air & Sea division achieved a growth of 10.0%; Road 1.2%; and Solutions 12.3% (constant currencies).

486 11%

Air & Sea Road

908 22%

For Q3 2018, gross profit amounted to DKK 4,472 million against DKK 4,114 million for the same period last year. The growth was 10.1%. Air & Sea achieved a growth of 8.7%; Road 8.8%; and Solutions 18.6% (constant currencies).

Solutions 2,796 67%

Ex. Group and elimination

GROSS PROFIT YTD 2018 (DKKm)

Air & Sea

2,198 17%

As a result of improved productivity, the conversion ratio was 31.5% for the nine-month period against 29.3% for the corresponding period of 2017.

Road 6,891 53%

3,997 30%

Solutions Ex. Group and elimination

The gross margin was 22.4% for the first nine months of 2018 against 22.5% for the same period of 2017.

EBIT before special items Operating profit before special items was DKK 4,112 million for the first nine month of 2018 against DKK 3,682 million for the same period of 2017. In constant currencies, growth for the period was 15.3%. For Q3 2018, operating profit before special items amounted to DKK 1,507 million against DKK 1,313 million for the same period last year. In constant currencies, growth for the period was 15.7%.

The operating margin (before special items) was 7.1% for the nine-month period against 6.6% for the same period last year. Based on a strategic road-map DSV is continuously investing in and developing the digital platforms across the organisation. A major digital milestone was reached in Q3-18 when our selfservice portal myDSV was fully rolled out in the Road division. The portal is also well underway in the Air & Sea division.

Financial items Financial items totalled a net expense of DKK 129 million for the first nine months of 2018: net interest expenses of DKK 199 million and net exchange rate gains of DKK 70 million. For the first nine months of 2017, financial items totalled a net expense of DKK 425 million: net interest expenses of DKK 230 million and net exchange rate losses of DKK 195 million. The exchange rate fluctuations were mainly related to intraGroup loans, which are not hedged.

GROWTH

(DKKm) Net revenue Gross profit EBIT before special items

Q3 2017 18,735 4,114 1,313

Currency translation adjustments (283) (51) (10)

Net revenue Gross profit EBIT before special items

YTD 2017 55,882 12,551 3,682

(1,709) (394) (116)

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Growth 1,785 409 204

Growth in constant currencies 9.7% 10.1% 15.7%

Q3 2018 20,237 4,472 1,507

3,935 885 546

7.3% 7.3% 15.3%

YTD 2018 58,108 13,042 4,112

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Tax on profit for the period The effective tax rate of 23.2% for the first nine months of 2018 was at the expected level.

Profit for the period

Relative to full-year revenue, the net working capital amounted to 3.0% on 30 September 2018 (30 September 2017: 2.9%). The target for NWC is 2% of net revenue by year-end, but due to seasonality NWC is normally higher during the year.

Capital structure and finances

Profit for the period was DKK 3,060 million for the first nine months of the year against DKK 2,237 million for the same period of 2017. The growth was driven by higher operating profit, lower net financial expenses – and the absence of integration costs (special items) in 2018.

DSV A/S shareholders’ share of equity The equity interest of DSV shareholders was DKK 15,327 million on 30 September 2018 (DKK 14,835 million on 31 December 2017).

Diluted adjusted earnings per share Diluted adjusted earnings per share was DKK 16.8 for the first nine months of 2018, up 23.5% compared to the same period last year. The 12-month figure to the end of September 2018 was DKK 21.6 per share against DKK 17.3 for the same period last year, corresponding to an increase of 24.9%.

On 30 September 2018, the DSV’s portfolio of treasury shares amounted to 6,933,377 shares, corresponding to 3.69% of the total number of shares issued. On 26 October 2018, DSV’s portfolio of treasury shares amounts to 7,650,377 shares. The solvency ratio excluding non-controlling interests was 38.1% on 30 September 2018 (30 September 2017: 37.0%).

Cash flow statement CASH FLOW STATEMENT YTD 2018

(DKKm)

Equity was mainly affected by the profit for the period, distribution of dividends and share buybacks.

YTD 2017

DEVELOPMENT IN EQUITY YTD 2018

YTD 2017

Equity on 1 January Profit for the period Currency translation adjustments, foreign enterprises Allocated to shareholders Sale of treasury shares Other equity movements

14,835 3,072 (191) (2,959) 366 204

13,416 2,228 (487) (1,077) 282 162

Equity on 30 September

15,327

14,524

(DKKm)

Cash flow from operating activities Cash flow from investing activities

2,776 (204)

2,910 (185)

Free cash flow

2,572

2,725

(2,420)

(3,193)

Cash flow for the period

152

(468)

Adjusted free cash flow

2,631

3,047

Cash flow from financing activities

Cash flow from operating activities Cash flow from operating activities was DKK 2,776 million for the first nine months of 2018 against DKK 2,910 million for the same period of 2017. Operating profit before amortisation, depreciation and special items for the period was higher than last year, but fluctuations in net working capital led to a net decrease in cash flow from operating activities.

Cash flow from investing activities Cash flow from investing activities amounted to DKK -204 million for the first nine months of 2018 against DKK -185 million for the same period of 2017.

Adjusted free cash flow Adjusted free cash flow for the period was DKK 2,631 million against DKK 3,047 million for the same period last year. The difference is primarily due to the development in net working capital.

Net interest-bearing debt Consolidated net interest-bearing debt amounted to DKK 5,602 million on 30 September 2018 against DKK 6,298 million on 30 September 2017. The financial gearing ratio was 0.9 on 30 September 2018 against 1.2 for the same period last year. In line with DSV’s capital allocation principles, a share buyback programme of DKK 1,200 million will be initiated on 26 October 2018 to bring the financial gearing ratio within our target range (between 1.0 and 1.5x net interest-bearing debt to EBITDA). The programme will run until 1 February 2019. The duration of DSV's bond, loan and credit facilities was 2.6 years on 30 September 2018 against 3.4 years on 30 September 2017. On 19 September 2018, S&P Global Ratings assigned a BBB+ long-term issuer credit rating to DSV A/S with a stable outlook. It is the expectation that the rating obtained will further strengthen DSV’s financing platform and reduce funding costs.

Net working capital DSV's reported funds tied up in net working capital of DKK 2,342 million on 30 September 2018 against DKK 2,113 million on 30 September 2017.

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INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Invested capital

Outlook for 2018

The Group's invested capital including goodwill and customer relationships amounted to DKK 20,912 million on 30 September 2018 against DKK 21,183 million on 30 September 2017.

The consolidated full-year outlook for 2018 previously announced is upgraded as follows: •

Return on invested capital (ROIC before tax)

Operating profit before special items is expected to be in the range of DKK 5,400-5,600 million (previously DKK 5,300-5,600 million). Adjusted free cash flow is expected to approximate DKK 4,200 million (unchanged). The effective tax rate is expected to approximate 23% (unchanged).

Return on invested capital including goodwill and customer relationships was 25.2% for the 12-month period ended on 30 September 2018 against 21.4% for the 12-month period ended on 30 September 2017.



Subsequent events

The upgrade is based on solid financial results in the first nine months, driven by both top line growth and a high conversion ratio.

In company announcements number 718 and 719 from 11 and 23 October 2018, we informed that we have made two private proposals to acquire CEVA Logistics AG. The proposals were rejected by CEVA’s Board of Directors and DSV has no further dialogue with CEVA.



We expect this good momentum will continue in the rest of 2018. The outlook for 2018 is based on the assumption of a stable development in the markets in which the Group operates and that currency exchange rates, especially USD against DKK, will remain at the current level.

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INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

DSV Air & Sea Activities The Air & Sea division operates through a global network and specialises in the transportation of cargo by air and sea. The division offers both conventional freight services and tailored project cargo solutions. For the first nine months of 2018, the division reported a 10% growth in air freight volumes and a 4% growth for sea freight. The division reported EBIT before special items of DKK 2,796 million for the first nine months of 2018 (2017: DKK 2,436 million). The conversion ratio for the first nine months of 2018 was 40.6% (2017: 37.3%).



For Q3 2018, EBIT before special items totalled DKK 1,013 million against DKK 903 million last year.

INCOME STATEMENT (DKKm)

Q3 2018

Q3 2017

YTD 2018

YTD 2017

Divisional net revenue Direct costs

9,625 7,266

9,044 6,845

27,134 20,243

26,387 19,855

Gross profit

2,359

2,199

6,891

6,532

439 886

431 839

1,381 2,649

1,373 2,638

1,034

929

2,861

2,521

21

26

65

85

1,013

903

2,796

2,436

Q3 2018

Q3 2017

YTD 2018

YTD 2017

24.5 42.9 10.5

24.3 41.1 10.0

25.4 40.6 10.3

24.8 37.3 9.2

Number of full-time employees on 30 September

12,090

12,177

Total invested capital (DKKm) Net working capital (DKKm) ROIC before tax (%)

10,884 1,611 32.6

11,109 1,296 26.0

Other external expenses Staff costs EBITDA before special items Amortisation and depreciation of intangibles, property, plant and equipment EBIT before special items KEY OPERATING DATA Gross margin (%) Conversion ratio (%) Operating margin (%)

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INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Market development

Gross profit per shipment showed a satisfactory development in the first nine months of 2018 and improved for both air and sea, when adjusted for the currency headwind.

Freight volume growth on 2017 DSV Q3

Market Q3

DSV YTD

Market YTD

2018

2018

2018

2018

Sea freight – TEUs

4%

3%

4%

3%

Air freight – tonnes

7%

3%

10%

4%

Market growth rates are based on own estimates.

The division reported an increase in sea freight volumes (TEUs) of 4% for the first nine months of 2018. This is estimated to be slightly above the underlying market. DSV’s growth was mainly driven by growth in export volumes from EMEA and Americas. In the first nine months of 2018, the division reported a volume increase (tonnes) of 10% for air freight, mainly driven by strong performance on EMEA and Americas exports. The market grew an estimated 4% in the same period. The recent introduction of further protectionist measures, primarily between the US and China, has created uncertainty for global trade. So far, the direct impact from the initial tariffs is limited, however there is a risk of potentially larger impact in the future. The trade lanes between China and US represent approx. 10-12% of DSV’s air and sea volumes.

Divisional net revenue The division’s net revenue amounted to DKK 27,134 million for the first nine months of 2018 against DKK 26,387 million for the same period last year. In constant currencies, growth for the period was 7.2%. For Q3 2018, net revenue amounted to DKK 9,625 million against DKK 9,044 million for the same period last year, corresponding to a growth in constant currencies of 8.3%. The increase was mainly driven by the growth in freight volumes in both air and sea freight.

Gross profit

EBIT before special items EBIT before special items was DKK 2,796 million for the first nine months of 2018 against DKK 2,436 million for the same period last year. In constant currencies, growth for the period was 19.6%. For Q3 2018, EBIT before special items totalled DKK 1,013 million against DKK 903 million for the same period last year, corresponding to a growth in constant currencies of 13.1%. The growth in earnings was driven by all regions with a strong performance across EMEA, the Americas and APAC. The conversion ratio was 40.6% for the first nine months of 2018 against 37.3% for the same period last year. The operating margin was 10.3% against 9.2% for the same period last year. For Q3 2018, the conversion ratio was 42.9% against 41.1% for the same period last year. The operating margin was 10.5% compared to 10.0% for Q3 2017. The increases in operating margins were driven by continued improvement in productivity across the organisation. The division has successfully leveraged on the global network and efficient IT infrastructure and back office functions. Several initiatives to further digitalise workflows and improve customer services are in progress. These initiatives include rollout of a mobile IOD (information of delivery) app, and implementation of software robotics. Furthermore, the division continues to develop customer services, e.g. within purchase order management.

Net working capital The Air & Sea division's funds tied up in net working capital came to DKK 1,611 million on 30 September 2018 against DKK 1,296 million on 30 September 2017.

Gross profit was DKK 6,891 million for the first nine months of 2018 against DKK 6,532 million for the same period of 2017. In constant currencies, growth for the period was 10.0%. For Q3 2018, gross profit amounted to DKK 2,359 million against DKK 2,199 million for the same period last year, corresponding to a growth in constant currencies of 8.7%. The division’s gross margin was 25.4% for the first nine months of 2018 against 24.8% for the same period last year.

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INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

GROWTH

(DKKm) Divisional net revenue Gross profit EBIT before special items

Q3 2017 9,044 2,199 903

Currency translation adjustments (157) (28) (7)

Divisional net revenue Gross profit EBIT before special items

YTD 2017 26,387 6,532 2,436

(1,087) (267) (99)

Growth 738 188 117

Growth in constant currencies 8.3% 8.7% 13.1%

Q3 2018 9,625 2,359 1,013

1,834 626 459

7.2% 10.0% 19.6%

YTD 2018 27,134 6,891 2,796

AIR AND SEA SPLIT

(DKKm)

Q3 2018

Divisional net revenue Direct costs Gross profit Gross margin (%) Volume (TEUs/tonnes) Gross profit per unit (DKK)

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Sea freight Q3 2017 YTD 2018

YTD 2017

Q3 2018

Air freight Q3 2017 YTD 2018

YTD 2017

4,731 3,566 1,165

4,594 3,468 1,126

13,425 9,978 3,447

13,698 10,344 3,354

4,894 3,700 1,194

4,450 3,377 1,073

13,709 10,265 3,444

12,689 9,511 3,178

24.6 369,143 3,156

24.5 355,291 3,169

25.7 1,085,141 3,177

24.5 1,046,461 3,205

24.4 177,155 6,736

24.1 165,051 6,501

25.1 513,422 6,707

25.0 467,920 6,792

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

DSV Road Activities DSV Road is among the market leaders in Europe and, furthermore the division has operations in North America and South Africa. The division offers full load, part load and groupage services through a strong network of more than 200 terminals and operates approximately 20,000 trucks. In the first nine months of 2018, DSV Road continued to gain market share and reported 4% growth in shipments. EBIT before special items was DKK 908 million for the first nine months of 2018 against DKK 970 million for the same period of 2017. 2017 was impacted by a gain on property transactions of DKK 125 million.



For Q3 2018, EBIT before special items totalled DKK 345 million against DKK 311 million last year.

INCOME STATEMENT (DKKm)

Q3 2018

Q3 2017

YTD 2018

YTD 2017

Divisional net revenue Direct costs

7,812 6,439

7,514 6,235

23,350 19,353

22,831 18,803

Gross profit

1,373

1,279

3,997

4,028

Other external expenses Staff costs

357 639

294 641

979 2,012

935 2,015

EBITDA before special items

377

344

1,006

1,078

Amortisation and depreciation of intangibles, property, plant and equipment EBIT before special items

32

33

98

108

345

311

908

970

Q3 2018

Q3 2017

YTD 2018

YTD 2017

17.6 25.1 4.4

17.0 24.3 4.1

17.1 22.7 3.9

17.6 24.1 4.2

13,345

12,788

4,579 (473) 23.1

5,291 36 25.5

KEY OPERATING DATA Gross margin (%) Conversion ratio (%) Operating margin (%) Number of full-time employees on 30 September Total invested capital (DKKm) Net working capital (DKKm) ROIC before tax (%)

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INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Market development Freight volume growth on 2017 DSV Q3 Shipments

Market Q3

DSV YTD

Market YTD

2018

2018

2018

2018

4%

2-3%

4%

2-3%

Market growth rates are based on own estimates.

With shipment growth of 4% in the first nine months of 2018 compared to the same period last year, Management estimates that the Road division has gained market share in most markets.

Divisional net revenue The division’s net revenue amounted to DKK 23,350 million for the first nine months of 2018 against DKK 22,831 million for the same period last year. In constant currencies, growth for the period was 4.5%. For Q3 2018, net revenue amounted to DKK 7,812 million against DKK 7,514 million for the same period last year, corresponding to a growth in constant currencies of 5.5%. The increase was attributable to the growth in number of shipments and higher average prices.

The division’s gross margin was 17.1% for the first nine months of 2018 compared to an underlying gross margin of 17.1% for the same period last year (when adjusted for property transactions in Q1-17). The gross margin for Q3 2018 was 17.6% compared to 17.0% for Q3 2017. The gross margin reached a satisfactory level in Q3 2018. The market, however, remains highly competitive and haulage capacity is tight in most markets.

EBIT before special items EBIT before special items was DKK 908 million for the first nine months of 2018 against DKK 970 million for the same period last year. A net gain of approx. DKK 125 million on property transactions positively impacted Q1 2017. For Q3 2018, EBIT before special items totalled DKK 345 million against DKK 311 million for the same period last year. The conversion ratio was 22.7% for the first nine months of 2018 against 24.1% for the same period last year. The operating margin was 3.9% against 4.2% for the same period last year. For Q3 2018, the conversion ratio was 25.1% against 24.3% for the same period last year. The operating margin was 4.4% compared to 4.1% for Q3 2017. The improvement was primarily driven by efficient operations.

Gross profit For the first nine months of 2018, gross profit totalled DKK 3,997 million against DKK 4,028 million for the same period last year. Gross profit in Q1 2017 was impacted by a net gain of approx. DKK 125 million on property transactions. Adjusted for this growth in the first nine months was 4.6% measured in constant currencies.

The Road division continues to focus on several IT and digitalisation projects. These include an upgrade of the Road transport management system, which is currently live in two pilot countries, and rollout of the online platform myDSV, which has now fully replaced DSV’s legacy e-services systems.

Net working capital For Q3 2018, gross profit amounted to DKK 1,373 million against DKK 1,279 million for the same period last year, corresponding to a growth in constant currencies of 8.8%. The growth was driven by both higher volumes and better pricing.

The Road division reported funds tied up in net working capital of DKK -473 million on 30 September 2018 against DKK 36 million on 30 September 2017.

GROWTH

(DKKm) Divisional net revenue Gross profit EBIT before special items

Q3 2017 7,514 1,279 311

Currency translation adjustments (108) (17) (2)

Divisional net revenue Gross profit EBIT before special items

YTD 2017 22,831 4,028 970

(476) (80) (16)

Page 11 of 20

Growth 406 111 36

Growth in constant currencies 5.5% 8.8% 11.7%

Q3 2018 7,812 1,373 345

995 49 (46)

4.5% 1.2% (4.8%)

YTD 2018 23,350 3,997 908

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

DSV Solutions Activities DSV Solutions specialises in contract logistics – logistics and warehousing solutions that support our customers’ entire supply chains. In addition to traditional warehousing and distribution services, the division’s service portfolio includes freight management, customs clearance, order management and ecommerce solutions. DSV Solutions reported EBIT before special items of DKK 486 million for the first nine months of 2018 against DKK 309 million for the same period of 2017.



For Q3 2018, EBIT before special items totalled DKK 184 million against DKK 115 million last year.

INCOME STATEMENT (DKKm)

Q3 2018

Q3 2017

YTD 2018

YTD 2017

3,417 2,659

2,757 2,111

9,376 7,178

8,348 6,341

Gross profit

758

646

2,198

2,007

Other external expenses Staff costs

235 283

204 264

696 847

660 847

EBITDA before special items

240

178

655

500

Divisional net revenue Direct costs

Amortisation and depreciation of intangibles, property, plant and equipment EBIT before special items

56

63

169

191

184

115

486

309

Q3 2018

Q3 2017

YTD 2018

YTD 2017

22.2 24.3 5.4

23.4 17.8 4.2

23.4 22.1 5.2

24.0 15.4 3.7

20,384

17,946

4,445 1,204 16.0

3,960 862 12.6

KEY OPERATING DATA Gross margin (%) Conversion ratio (%) Operating margin (%) Number of full-time employees on 30 September Total invested capital (DKKm) Net working capital (DKKm) ROIC before tax (%)

Page 12 of 20

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Market development The contract logistics market has grown by an estimated 3-4% in the first nine months of 2018. Warehouse utilisation is high in most regions, and there is high demand for new and efficient warehouses in the right strategic locations. As seen in previous years, growth is strong in the e-commerce sector, and we continue to see good momentum in other more conventional industries as well.

For Q3 2018, gross profit amounted to DKK 758 million against DKK 646 million for the same period last year, corresponding to a growth in constant currencies of 18.6%. The division’s gross margin was 23.4% for the first nine months of 2018 against 24.0% for the same period last year. The gross margin for Q3 2018 was 22.2% compared to 23.4% for Q3 2017.

EBIT before special items Measured by divisional net revenue, the division achieved a growth of 14.9% for the first nine months of 2018 with retail (incl. e-commerce) and automotive industries as the main growth drivers. To further boost the DSV’s capabilities within e-commerce, DSV acquired Dutch based S&H Product fulfilment B.V., which holds a leading position in multi-channel fulfilment in the Benelux region. The company employees approximately 120 people and continues as a stand-alone company under the name of DSV Multi-channel Fulfilment. The company was acquired in September 2018 and did not have any material impact on the activity or financial results in Q3 2018.

Divisional net revenue The division’s net revenue was DKK 9,376 million for the first nine months of 2018 against DKK 8,348 million for the same period of 2017. In constant currencies, growth for the period was 14.9%. For Q3 2018, net revenue amounted to DKK 3,417 million against DKK 2,757 million for the same period last year, corresponding to a growth in constant currencies of 25.0%. The growth has been boosted by the addition of new warehouse capacity and replacement of existing, smaller and less efficient sites.

EBIT before special items was DKK 486 million for the first nine months of 2018 against DKK 309 million for the same period of 2017. In constant currencies, growth came to 58.3%. For Q3 2018, EBIT before special items totalled DKK 184 million against DKK 115 million for the same period last year. In constant currencies, growth came to 61.4%. Growth was mainly driven by a strong performance in the EMEA region. The conversion ratio was 22.1% for the first nine months of 2018 against 15.4% for the same period last year. The division's operating margin was 5.2% for the first nine months of 2018 against 3.7% for the same period last year. For Q3 2018, the conversion ratio was 24.3% against 17.8% for the same period last year. The operating margin was 5.4% compared to 4.2% for Q3 2017. The improvement in margins was driven by higher gross profit and improved productivity and profitability in several locations. The division continues to focus on increasing productivity via automation of warehouses, development of larger and more efficient warehouses and roll-out of the divisions global warehouse management system.

Gross profit

Net working capital

Gross profit was DKK 2,198 million for the first nine months of 2018 against DKK 2,007 million for the same period of 2017. In constant currencies, growth for the period was 12.3%.

The division reported funds tied up in net working capital of DKK 1,204 million on 30 September 2018 against DKK 862 million on 30 September 2017.

GROWTH

(DKKm) Divisional net revenue Gross profit EBIT before special items

Q3 2017 2,757 646 115

Currency translation adjustments (24) (7) (1)

Divisional net revenue Gross profit EBIT before special items

YTD 2017 8,348 2,007 309

(188) (50) (2)

Page 13 of 20

Growth 684 119 70

Growth in constant currencies 25.0% 18.6% 61.4%

Q3 2018 3,417 758 184

1,216 241 179

14.9% 12.3% 58.3%

YTD 2018 9,376 2,198 486

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Interim financial statements Income statement (DKKm)

Q3 2018

Q3 2017

YTD 2018

YTD 2017

Net revenue Direct costs

20,237 15,765

18,735 14,621

58,108 45,066

55,882 43,331

Gross profit

4,472

4,114

13,042

12,551

Other external expenses Staff costs

769 2,004

722 1,889

2,260 6,114

2,342 5,961

Operating profit before amortisation, depreciation and special items

1,699

1,503

4,668

4,248

Amortisation and depreciation of intangibles, property, plant and equipment Operating profit before special items Special items, costs Financial items Profit before tax Tax on profit for the period Profit for the period

192

190

556

566

1,507

1,313

4,112

3,682

94

123 149

129

371 425

1,413

1,041

3,983

2,886

309

215

923

649

1,104

826

3,060

2,237

1,107 (3)

820 6

3,072 (12)

2,228 9

6.1 6.0

4.4 4.3

16.8 16.5

12.0 11.8

Profit for the period is attributable to: Shareholders of DSV A/S Non-controlling interests Earnings per share: Earnings per share of DKK 1 Diluted earnings per share of DKK 1 for the period

Statement of comprehensive income (DKKm)

Q3 2018

Q3 2017

YTD 2018

YTD 2017

1,104

826

3,060

2,237

(39) 19 (2) -

(219) (10) 2 2

(185) (1) (1) -

(484) 28 3 (5)

(1)

1 -

(15) -

(39) 10

(23)

(224)

(202)

(487)

Total comprehensive income

1,081

602

2,858

1,750

Total comprehensive income is attributable to: Shareholders of DSV A/S Non-controlling interests

1,083 (2)

593 9

2,864 (6)

1,738 12

Total

1,081

602

2,858

1,750

Profit for the period Items that will be reclassified to income statement when certain conditions are met: Currency translation adjustments, foreign enterprises Fair value adjustment relating to hedging instruments Fair value adjustment relating to hedging instruments transferred to financials Tax on items reclassified to income statement Items that will not be reclassified to income statement: Actuarial gains/(losses) Tax relating to items that will not be reclassified Other comprehensive income (OCI), net of tax

Page 14 of 20

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Cash flow statement (DKKm)

YTD 2018

YTD 2017

4,668

4,248

68 (70) (1,024) 37 (228) (675)

49 (172) 101 (314) 74 (339) (737)

Cash flow from operating activities

2,776

2,910

Purchase of intangible assets Purchase of property, plant and equipment Disposal of property, plant and equipment Acquisition and disposal of subsidiaries and activities Change in other financial assets

(332) (466) 630 (59) 23

(212) (454) 431 (8) 58

Cash flow from investing activities

(204)

(185)

Free cash flow

2,572

2,725

159 1

(2,340) (48)

Shareholders: Dividends distributed Purchase of treasury shares Sale of treasury shares Other transactions with shareholders

(380) (2,579) 366 13

(345) (735) 282 (7)

Cash flow from financing activities

(2,420)

(3,193)

152

(468)

1,348

1,714

152 (51)

(468) 84

1,449

1,330

Free cash flow Net acquisition of subsidiaries and activities Special items (restructuring costs)

2,572 59 -

2,725 8 314

Adjusted free cash flow

2,631

3,047

Operating profit before amortisation, depreciation and special items Adjustments: Share-based payments Change in provisions Change in working capital, etc. Special items Interest received Interest paid Corporation tax, paid

Proceeds from and repayment of short-term and long-term debt Other financial liabilities incurred

Cash flow for the period Cash and cash equivalents on 1 January 2018 Cash flow for the period Currency translation adjustments Cash and cash equivalents on 30 September The cash flow statement cannot be directly derived from the balance sheet and income statement. Statement of adjusted free cash flow

Page 15 of 20

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Balance sheet - Assets (DKKm)

30.09.2018

31.12.2017

30.09.2017

Intangible assets Property, plant and equipment Other receivables Deferred tax assets

16,687 2,395 235 1,067

16,573 2,431 257 965

16,547 2,640 260 1,034

Total non-current assets

20,384

20,226

20,481

Trade receivables Work in progress (services and inventories) Other receivables Cash and cash equivalents Assets held for sale

13,795 2,727 1,617 1,449 229

12,557 1,762 1,778 1,348 717

12,936 2,079 1,777 1,330 603

Total current assets

19,817

18,162

18,725

Total assets

40,201

38,388

39,206

30.09.2018

31.12.2017

30.09.2017

Share capital Reserves

188 15,139

190 14,645

190 14,334

DSV A/S shareholders' share of equity

15,327

14,835

14,524

(33)

(26)

(34)

15,294

14,809

14,490

Deferred tax liabilities Pensions and similar obligations Provisions Financial liabilities

187 1,125 658 6,200

82 1,124 706 6,491

168 1,496 688 7,253

Total non-current liabilities

8,170

8,403

9,605

Provisions Financial liabilities Trade payables Work in progress (services) Other payables Corporation tax

376 940 7,470 2,905 4,613 433

383 495 7,477 2,539 3,953 329

315 438 6,957 2,663 4,251 487

Total current liabilities

16,737

15,176

15,111

Total liabilities

24,907

23,579

24,716

Total equity and liabilities

40,201

38,388

39,206

Balance sheet – Equity and liabilities (DKKm)

Non-controlling interests Total equity

Page 16 of 20

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Statement of changes in equity – 1 January - 30 September 2018

Retained earnings

DSV A/S shareholders' share of equity

Noncontrolling interests

Total equity

Share capital

Share premium

Treasury share reserve

190

4,744

(6)

(35)

(508)

10,450

14,835

(26)

14,809

Profit for the period

-

-

-

-

-

3,072

3,072

(12)

3,060

Net exchange differences recognised in OCI

-

-

-

-

(191)

-

(191)

6

(185)

Fair value adjustments relating to hedging instruments

-

-

-

(1)

-

-

(1)

-

(1)

Fair value adjustments relating to hedging instruments transferred to financial expenses

-

-

-

(1)

-

-

(1)

-

(1)

Actuarial gains/(losses)

-

-

-

-

-

(15)

(15)

-

(15)

Tax on other comprehensive income

-

-

-

-

-

-

-

-

-

Other comprehensive income, net of tax

-

-

-

(2)

(191)

(15)

(208)

6

(202)

Total comprehensive income for the period

-

-

-

(2)

(191)

3,057

2,864

(6)

2,858

Share-based payments

-

-

-

-

-

68

68

-

68

Dividends distributed

-

-

-

-

-

(380)

(380)

(1)

(381)

Purchase of treasury shares

-

-

(5)

-

-

(2,574)

(2,579)

-

(2,579)

Sale of treasury shares

-

-

2

-

-

364

366

-

366

(2)

-

2

-

-

-

-

-

-

-

-

-

-

-

14

14

-

14

(DKKm) Equity on 1 January 2018

Hedging reserve

Translation reserve

Transactions with owners:

Capital reduction Dividends on treasury shares Tax on transactions with owners Total transactions with owners Equity on 30 September 2018

-

-

-

-

-

139

139

-

139

(2)

-

(1)

-

-

(2,369)

(2,372)

(1)

(2,373)

188

4,744

(7)

(37)

(699)

11,138

15,327

(33)

15,294

Noncontrolling interests

Total equity

Statement of changes in equity – 1 January - 30 September 2017

Hedging reserve

Translation reserve

Retained earnings

DSV A/S shareholders' share of equity

(79)

8,584

13,416

(38)

13,378

Share capital

Share premium

Treasury share reserve

190

4,744

(5)

(18)

Profit for the period

-

-

-

-

-

2,228

2,228

9

2,237

Net exchange differences recognised in OCI

-

-

-

-

(487)

-

(487)

3

(484)

Fair value adjustments relating to hedging instruments

-

-

-

28

-

-

28

-

28

Fair value adjustments relating to hedging instruments transferred to financial expenses

-

-

-

3

-

-

3

-

3

Actuarial gains/(losses)

-

-

-

-

-

(39)

(39)

-

(39)

Other adjustments

-

-

-

(47)

-

47

-

-

-

Tax on other comprehensive income

-

-

-

(5)

-

10

5

-

5

Other comprehensive income, net of tax

-

-

-

(21)

(487)

18

(490)

3

(487)

Total comprehensive income for the period

-

-

-

(21)

(487)

2,246

1,738

12

1,750

Share-based payments

-

-

-

-

-

49

49

-

49

Dividends distributed

-

-

-

-

-

(342)

(342)

(3)

(345)

Purchase of treasury shares

-

-

(1)

-

-

(734)

(735)

-

(735)

Sale of treasury shares

-

-

2

-

-

280

282

-

282

Addition/disposal of non-controlling interests

-

-

-

-

-

-

-

(14)

(14)

Dividends on treasury shares

-

-

-

-

-

7

7

-

7

Other adjustments

-

-

-

-

-

(4)

(4)

9

5

Tax on transactions with owners

-

-

-

-

-

113

113

-

113

(DKKm) Equity on 1 January 2017

Transactions with owners:

Total transactions with owners Equity on 30 September 2017

Page 17 of 20

-

-

1

-

-

(631)

(630)

(8)

(638)

190

4,744

(4)

(39)

(566)

10,199

14,524

(34)

14,490

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Notes 1 Accounting policies

2 Accounting estimates and judgements

The Interim Financial Report has been prepared in accordance with IAS 34 “Interim Financial Reporting” as adopted by the European Union and Danish disclosure requirements for listed companies.

In preparing the Interim Financial Statements, management makes various accounting estimates and judgements that affect the reported amounts and disclosures in the statements and in the notes to the financial statements. These estimates are based on professional judgement, historical data and other factors available to management. By their nature, estimates include a degree of uncertainty, and actual results may therefore deviate from the estimates on the reporting date. Estimates are continuously evaluated, and the effects of any changes are recognised in the relevant period.

Except as stated below, accounting policies applied in preparing the Interim Financial Report are consistent with those applied in preparing the 2017 Annual Report. The 2017 Annual Report provides a full description of Group accounting policies. Changes in accounting policies DSV A/S has implemented the latest International Financial Reporting Standards (IFRS) and amendments effective as of 1 January 2018 as adopted by the European Union. Implementation of the standards and amendments have not had any material impact on the Group’s Financial Statements and are likewise not expected to have any significant future impact. Of the new standards and amendments implemented the most significant are as follows: IFRS 9 Financial Instruments IFRS 9 introduces several changes to IAS 39 - including a new impairment framework, new rules for hedge accounting and new requirements and guidance on classifications and measurement of financial assets and liabilities. The standard has resulted in only minor changes to existing accounting practices, mainly affecting credit-loss and impairment models applied. The most significant change has been applied to impairment assessments of trade receivables as these are now considered based on IFRS 9’s expected creditloss model, where previously an incurred-loss model was applied. This revised approach has not resulted in any materially different impairment assessment of trade receivables compared to prior practices and as such has carried no retrospective adjustment to equity. Additionally, the new standard has not carried any significant changes to classifications of financial assets or financial liabilities.

3 New accounting regulations The IASB has issued a number of new standards and amendments not yet in effect or endorsed by the EU and therefore not relevant for the preparation of the 2018 Interim Financial Statements. The most significant of these is IFRS 16 Leases, which is also currently the only standard expected to have a significant impact on the DSV financial statements when implemented 1 January 2019. The standard broadens the criteria for recognition of lease assets and liabilities and will have a material impact on DSV’s financial statements, as off-balance operating leases will be capitalised and accounted for, in a way similar to our current finance lease accounting practices. The expected impact of implementing the standard on the DSV financial statements remains unchanged from the assessment disclosed in chapter 1 of the DSV Annual Report 2017.

IFRS 9 has been applied following the standard retrospective approach, with the practical expedients permitted under the standard and with no restatement of the comparison period. IFRS 15 Revenue from contracts with customers IFRS 15 introduces a new framework for revenue recognition and measurement. The standard has resulted in only minor changes to existing accounting practices, mainly relating to extended external reporting disclosure requirements. IFRS 15 has been applied following the modified retrospective approach with any cumulative effects recognised in retained earnings as of 1 January 2018 and with no restatement of the comparison period.

Page 18 of 20

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

4 Segment information

Air & Sea YTD 2018 YTD 2017

(DKKm)

Road YTD 2018 YTD 2017

Solutions YTD 2018 YTD 2017

Other activities, nonallocated items and eliminations YTD 2018 YTD 2017

Total YTD 2018 YTD 2017

Condensed income statement Divisional net revenue Intercompany revenue

27,134 (452)

26,387 (430)

23,350 (1,149)

22,831 (1,053)

9,376 (238)

8,348 (281)

1,759 (1,672)

1,590 (1,510)

61,619 (3,511)

59,156 (3,274)

Net revenue

26,682

25,957

22,201

21,778

9,138

8,067

87

80

58,108

55,882

Gross profit

6,891

6,532

3,997

4,028

2,198

2,007

(44)

(16)

13,042

12,551

Other external expenses Staff costs

1,381 2,649

1,373 2,638

979 2,012

935 2,015

696 847

660 847

(796) 606

(626) 461

2,260 6,114

2,342 5,961

65

85

98

108

169

191

224

182

556

566

2,796

2,436

908

970

486

309

(78)

(33)

4,112

3,682

21,760 24,657

21,184 25,569

15,964 9,840

16,083 9,516

8,159 6,895

6,699 6,710

(5,682) (16,485)

(4,760) (17,079)

40,201 24,907

39,206 24,716

Amortisation and depreciation of intangibles, property, plant and equipment Operating profit before special items Condensed balance sheet Total assets Total liabilities

5 Net revenue Net revenue comprises freight forwarding services, income from property projects and other related services delivered in the financial period as well as changes in the completion of services in progress.

short delivery time with the exception of sea services, which usually take longer due to the nature of the transport service delivered. Our major service deliveries – Air & Sea services, Road services and Solutions services – follow our divisional structure as presented in note 4 Segment information. Geographical segmentation of net revenue breaks down as follows:

Net revenue from freight forwarding services are recognised following the over-time recognition principle. Most freight forwarding services and related services are characterised by

EMEA Q3 2018 Q3 2017

(DKKm) Air & Sea services Road services Solutions services Divisional net revenue Non-allocated items and eliminations

Americas Q3 2018 Q3 2017

APAC Q3 2018 Q3 2017

4,780 7,108 2,667

4,595 6,878 2,122

2,580 704 492

2,251 636 408

2,265 258

2,198 227

9,625 7,812 3,417

9,044 7,514 2,757

14,555

13,595

3,776

3,295

2,523

2,425

20,854 (617)

19,315 (580)

20,237

18,735

Total net revenue

EMEA YTD 2018 YTD 2017

(DKKm)

Total Q3 2018 Q3 2017

Americas YTD 2018 YTD 2017

APAC YTD 2018 YTD 2017

Total YTD 2018 YTD 2017

Air & Sea services Road services Solutions services

13,754 21,352 7,275

13,347 20,868 6,440

7,078 1,998 1,391

6,631 1,963 1,251

6,302 710

6,409 657

27,134 23,350 9,376

26,387 22,831 8,348

Divisional net revenue Non-allocated items and eliminations

42,381

40,655

10,467

9,845

7,012

7,066

59,860 (1,752)

57,566 (1,684)

58,108

55,882

Total net revenue

Page 19 of 20

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018

Statement by the Board of Directors and the Executive Board The Board of Directors and the Executive Board have today considered and adopted the Interim Financial Report of DSV A/S for the ninemonth period ended on 30 September 2018. The Interim Financial Report, which has not been audited or reviewed by the company auditor, has been prepared in accordance with IAS 34 “Interim Financial Reporting” as adopted by the European Union and additional requirements in accordance with the Danish Financial Statements Act. Apart from the implementation of IFRS 9 and IFRS 15, the accounting policies remain unchanged from the 2017 Annual Report. In our opinion, the Interim Financial Statements give a true and fair view of the DSV Group's assets, equity, liabilities and financial position on 30 September 2018 and of the results of the Group's activities and the cash flow for the nine-month period ended on 30 September 2018. We also find that the management's commentary provides a fair statement of development in the activities and financial situation of the Group, financial results for the period, the general financial position of the Group and a description of the major risks and elements of uncertainty faced by the Group. Except as disclosed in the Interim Financial Report, no changes in the major risks and elements of uncertainty faced by the Group have occurred relative to the disclosures in the 2017 Annual Report. Hedehusene, 26 October 2018

Executive Board:

Jens Bjørn Andersen CEO

Jens H. Lund CFO

Board of Directors:

Kurt K. Larsen Chairman

Thomas Plenborg Deputy Chairman

Annette Sadolin

Birgit W. Nørgaard

Robert S. Kledal

Jørgen Møller

Page 20 of 20

INTERIM FINANCIAL REPORT – DSV COMPANY ANNOUNCEMENT NO. 720 – 26 OCTOBER 2018