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DSV 2016 results show positive impact from UTi's integration

THE takeover of UTi by Denmark-headquartered logistics services provider DSV shows that the Danish company's air and sea forward division has benefited from the ongoing integration of the new acquisition.

DSV's air and sea forwarding division saw 2016 net revenue increase 48 per cent compared to the previous year as its gross profit surged 57.6 per cent.

The reason for the big jumps is clear: the addition of UTi to the DSV business, which has impacted the air and sea division the most, the London's Air Cargo News reported.

Behind the bare figures, DSV made clear that - initially - UTi's freight forwarding activities actually contributed a loss, but performance improved during the year thanks to what it says was 'an efficient integration and realisation of synergies'.

According to DSV, the global air freight market developed during 2016 'in line with our expectations and followed the underlying global GDP growth".

'Demand picked up at the end of the year, especially in air freight,' it observed. Indeed, the air freight market gained momentum throughout the year, DSV's statement outlines, with mid-single digit growth in the second half of the year, and exports from Asia representing the strongest market.

'The market was presumably boosted by certain one-off events in the second half of 2016: disrupted supply chains following the financial collapse of Hanjin and a high activity level, especially in Asia,' it continued.

The market was characterised by 'periods with overcapacity and intense competition, but also peaks with lack of capacity'. This resulted in highly volatile freight rates.

DSV's air freight volumes increased significantly ?by 85 per cent year on year, because of the UTi acquisition. Nevertheless, UTi confessed: 'We are unable to decisively conclude if air and sea has grown organically and gained market share in 2016.'

'While maintaining momentum in our integration efforts in 2016, we kept focus on running the business, leading to very satisfactory results in all divisions," said CEO Jens Bjorn Andersen.

'We expect to complete the integration of UTi and continue to take market share in 2017, creating earnings growth of 21-29 per cent,' he said.

In 2017, the main focus of the UTi integration process is to be in driving up productivity and optimising the organisation to current levels of business.

'UTi is the largest acquisition in the history of DSV" said Mr Andersen.