Earnings call transcript: DSV Panalpina Q1 2025 sees strong growth amid market turbulence

DSV Panalpina A/S reported a solid financial performance for the first quarter of 2025, with significant growth in gross profit and EBIT, despite challenging market conditions. The company’s stock surged by 9.7% following the announcement, reflecting investor confidence in its strategic acquisitions and operational improvements. According to InvestingPro data, DSV maintains a strong financial health score of 2.75 (rated as GOOD), with notably robust liquidity metrics. The acquisition of DB Schenker and the rebranding of its Contract Logistics division were highlighted as key drivers of growth.

Key Takeaways

• Gross profit increased by 6.2%, and EBIT rose by 4.8%.
• Strong cash flow of DKK 3.2 billion.
• Stock price surged 9.7% following earnings announcement.
• Completed acquisition of DB Schenker, enhancing market position.
• Updated full-year guidance to DKK 19,500-21,500 million.

Company Performance

DSV Panalpina demonstrated resilience in the first quarter of 2025, achieving growth despite flat global trade volumes and declining China-US trade lane volumes. The company’s strategic focus on value-added services and operational efficiency contributed to its robust performance. The acquisition of DB Schenker has bolstered its market share to 6.5%, enhancing its competitive position, particularly in the APAC region.

Financial Highlights

• Gross profit: Up 6.2% year-over-year.
• EBIT: Increased by 4.8% compared to the same period last year.
• Cash flow: Strong at DKK 3.2 billion.
• Updated full-year guidance: DKK 19,500-21,500 million.

Market Reaction

Following the earnings announcement, DSV Panalpina’s stock price jumped by 9.7%, reaching a level significantly above its last close of 1,288.5. This increase reflects positive investor sentiment driven by the company’s strong financial results and strategic initiatives. InvestingPro analysis indicates the stock has demonstrated remarkable momentum, with a year-to-date return of 277.46%. The stock’s movement aligns with broader market trends, as investors show confidence in companies with robust growth strategies and resilience in challenging environments. InvestingPro subscribers can access 8 additional key insights about DSV’s valuation and growth prospects through the platform’s comprehensive Pro Research Report.

Executive Commentary

Group CEO Jens Lund emphasized the integration of DB Schenker, stating, "We are now one team. It’s not DSV or Schenker, it’s DSV all along." CFO Michael highlighted the company’s ambition, saying, "We will be a top-performing company within the industry." These statements underscore DSV’s commitment to leveraging its acquisitions and operational strengths to drive future growth.

Risks and Challenges

• Global trade uncertainties: Flat trade volumes and tariff issues could impact future growth.
• Integration risks: Successfully integrating DB Schenker is crucial for realizing synergies.
• Market competition: Maintaining a competitive edge in a dynamic logistics industry.
• Economic pressures: Macroeconomic factors could affect demand for logistics services.
• Currency fluctuations: Potential impacts on financial performance due to exchange rate volatility.

In summary, DSV Panalpina’s strong first-quarter performance and strategic initiatives have positioned the company well for future growth, despite ongoing market challenges. The successful integration of DB Schenker and focus on value-added services are expected to drive continued success. InvestingPro data reveals the company’s strong financial foundation, with a current ratio of 3.83 and a 15-year track record of consecutive dividend increases, demonstrating consistent shareholder returns. For detailed analysis of DSV’s financial health, growth prospects, and peer comparison, investors can access the comprehensive Pro Research Report available on InvestingPro.

Full transcript - DSV Panalpina A/S (DSV) Q1 2025:

Carmen, Chorus Call Operator: Ladies and gentlemen, welcome to the DSV Investor Conference Call related to Q1 twenty twenty five and completion of the acquisition of Schenker. I’m Carmen, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast.

At this time, it’s my pleasure to hand over to Jens Lund, Group CEO. Please go ahead.

Jens Lund, Group CEO, DSV: Thank you very much and welcome everybody to this Q1 and closing call on Schenker. I would particularly like to welcome all the employees of DSV and certainly also our new colleagues from D. B. Schenker. Welcome on board as well.

We look very much forward to a combined journey together with you. And we have to remember going forward, everybody is a DSV employee. So with that said, I will quickly move on to the next slide. We will do the presentation as usual, where I’ll take some of the slides. Mikael will take some of them.

And then we will come back to the Q and A part. When it comes to forward looking statements, please refer to this page. It’s very important information. So please take a minute and review it. And I’ll then move on to the next slide where you can see our agenda.

It’s quite packed today. So we will try to keep the pace up so that we have the time for the Q and A part. So of course, moving into the highlights. I know it’s the April 30, and it’s actually not Q1, but I still believe that the highlight of the day is the closing of the Schenkel transaction. And we are all very excited, proud and pleased and all these emotions that we have in relation to a landmark transaction that means the world to DSV.

But it also means quite a lot for our country, Denmark as well. We will now have a leading player within our industry. And I think this is something that we can all be proud of. But it’s also a mammoth task we have ahead of us. So we’re also, of course, humbled by getting the chance to acquire the company, and we will do our best to ensure that the transaction and the business plan is followed as we normally do on transactions like this.

I would also like to extend a big thank you for all of the investors that have supported us with capital. It’s something that we have been very, very proud of, but also humbled by the support that we’ve got. So it makes all of us extra eager to deliver on the promise. You’ve furnished the capital, And now we have to deliver on the business plan. So you can rest assured that it means quite a lot for us.

Our Q1 results, this is actually what the foundation for our business is, is operational results. Without them, we don’t really have the capacity to do anything. We’ve had a solid Q1. We are very pleased with the outcome of the quarter. There’s been a lot of turbulence, as you know.

And we’ve still managed to produce a solid report and not least to produce also a very strong cash flow. And I’m quite sure Michael will say something about that because in case you haven’t noticed, it’s something that he’s very happy with as well. So right now, we see a GP up 6.2% and the EBIT up 4.8% on the quarter. So we now come into a situation, if you can remember, last year, we had some situations where the GP was declining. Now it’s actually growing again, which is really what we like to achieve.

So on these parameters, we are very pleased as well. I’d already mentioned the cash flow. So I’ll just also say that we’ve updated our guidance. We now have a revised guidance between DKK 19,500,000,000.0 and DKK 21,500,000,000.0 for the year. And of course, the triggering factor for the change is the Schenker transaction.

Mikael will, as I said, speak a little bit more about it in a short moment in time. But first, I’ll say something about the Air and Sea division. Here we see that the GP is up both on air freight and ocean freight. We will look a little bit about the reasons for that. A little bit on the next slides.

But as you can see, our conversion ratio is basically a little bit better than it was last year. And the margin is also more or less at the same level. I think one of the things that we have seen is that in these turbulent times, actually, the value add that we deliver in relation to the services, it’s actually increased. So we would normally look at our GP, what is freight related and what’s value added services. And we can see that basically, we produce more value added services than we did before.

And therefore, a larger proportion of our GP relates to value added services. I think our volume growth also will be explained on the next couple of slides, but we are basically trending in line with markets depending on one transaction that we will also explain on the airfreight side. So I think we see a solid conversion ratio. It’s still not where we want to be. But in this market where the volumes are not growing as fast and also where we’re preparing for the integration, I think we’re very happy with the outcome of the quarter.

Then if we look at the airfreight, you can see that the yield, it’s been increasing. And here, it’s important to note that we have basically three customers with that are quite low yielding that basically either we don’t work with anymore or that has shifted from air to ocean. These customers represent on an annual basis approximately 100,000 tonnes of airfreight. So if you adjust for basically a very low yield on these customers, then you would have to push the debt baseline a little bit up. And that would probably equate to something like DKK 300 if you take the comparable figures.

So therefore, the development into Q1 is also more natural if you then look at it, if you adjust the baseline for these figures. So I think that is what we can say on airfreight. It’s a flat volume, but adjusted for these, we would have grown 4%. And you just have to take that into consideration when you look at the baseline. If the explanation is a little bit complicated, you can always, of course, get an update from our excellent IR team.

They will be able to give you, what can I say, the numbers in detail as well? So with that said, we will quickly move to Ocean trade as well. And here, we can see we’ve more or less grown our volumes perhaps at the low end of the market, but we’re actually okay. Also on the Ocean side, we see that basically the value added services that we produce. So we do more of the customs formalities.

We do more gateway services in relation to LCL. We do more basically work when it comes to types of buyers consolidation, etcetera, etcetera. This is what we call the value added services. They actually increase as a part of basically the volume or the services that we render. And that’s the reason why the yield is trending upwards.

So also here, we feel quite comfortable with development, and it’s a very solid foundation for operation. Moving on to Road. You can remember that it’s been quite a tough period because of the European economy automotive sector, large countries in Europe having a difficult time. I think you can see that basically our gross margin seems now to have stabilized. Our conversion ratio has sort of plateaued and is perhaps moving a little bit in the right direction.

Let’s see in the next quarter as well how we are faring. But we are moving in the right direction. EBIT level also moving in the right direction again. So glad that we can see this development, but we are not out of the woods yet. There’s still a lot of hard work ahead of us.

And I think also here, we’ll come back to that. But with the combination of the networks together with Schenkel will, of course, help us to push basically the financial performance also in the right direction. So all in all, it’s I know the numbers are down, but if we compare to our peers, I think it certainly can stand the test of comparison with them. But then also, as you know, we’re not satisfied with our numbers in DSV. We always want to achieve something that is a little bit higher.

And that’s also the aspiration here. We have to generate a return on basically the capital we deploy. That’s sort of the aspiration we have. But very well done, I will say, to the Road division in difficult circumstances. If you take the Solutions, which is the last time we will call it that, we will actually call it Contract Logistics going forward.

It’s one of the things that Schenker have taught us that we should call the divisions basically what they do because otherwise we have to explain it to our customers all the time and all our other stakeholders. On Solutions, we are very pleased to see that we now start to generate more activity, more revenue. As you know, we’ve had a situation where we were at the fill rate a little bit too low on the warehouses. So perhaps at 82%, eighty three %. We’ve actually sold more volume now, and we are starting to utilize this capacity.

Normally, would expect that you could reach a You will never get to 100. Then the business, if you have the warehouses completely full, it will be inoperable. So here also a situation where we are confident with what we have in the pipeline and what has happened that we can now can drive the revenue forward, we can generate more GP. And then I’m quite sure that we will beat last year’s benchmark on EBIT as well fairly soon.

So all in all, moving in the right direction, also very positive on the Contract Logistics side. Yes. Then it’s over to you, Michael, actually, and you can take us through all the details, all the numbers. And here you go.

Michael, CFO, DSV: Thank you very much. In order to save some time, I think I’ll go through some highlights of the numbers. If we look at page 10 here, the highlights from our P and L. Jens already explained that we have grown on GP which drilled down to EBIT and of course also to net profit. So, it’s a good development.

EBIT is you will say of course driven by the GP and then we have had some cost inflation which goes a little bit in the other direction. If you look at the financial items, it’s you can say slightly cost now, but you have to bear in mind that this is the last quarter. We will have now the new financing structure in place with Schenker. So that will of course change for the next quarters. Currently our estimate is that our finance cost will be around SEK 2,000,000,000 to 2,500,000,000.0 on a yearly basis.

That is in DKK of course. Then if you look at a little bit about our EPS earnings per share. If you adjust for the capital increase, it was more or less on level with last year. And then we have a good base to improve from which we of course expect that we will improve that going forward. And then if I go to the next And I’m happy Jens that you also have noticed the cash flow actually.

It is something that we have been working on and has been to be honest with you guys struggled a little bit with. So it’s good to see that we have changed the direction now and actually have a quite positive cash flow of three adjusted free cash flow of DKK3.2 billion. And also you can have you can say changed the development in our net working capital. We are not satisfied with this. We still have a high net working capital.

But now at least we have improved and we will hopefully work hard to continue to improve that so we can get I would say, into a more normalized level of net working capital. Clearly now when we report next time, the Schenker numbers will be included. So we need to work a little bit on that one as well. Another thing that is worth mentioning is of course our NIBD net interest bearing debt, which was actually negative or positive cash deposits. That will of course also change dramatically.

We did a significant wire of a significant amount in euro this morning. So of course that will change as from tomorrow actually as from today. And the same goes for the gearing ratio, which would also change right now. Coming back to a little bit of how we see that. On the next slide we have this our new presentation our tagline winning as one indicating that now we are one team.

We are one company the DSV and Schenker. So it’s not them and us. It’s not DSV or Schenker. It’s DSV all along. And we are happy to have this picture that you can see on the screen right now.

It’s a combination of both some DSV colors and also some shaker colors. So that’s good and we want to win as one. I think we’ve heard a lot about the strategic rationale. And so that stands clearly. Of course, it has not changed since we communicated a little bit about it last time.

We will expand our global network. It has strong combination, strong global presence. And if you look at it to the right hand side of this, you can see the split both on division, but also on region. And I think what this of course apart from the fact that it’s already written here, it’s also worth mentioning that in APAC we see a strong presence and a strong for contract logistics from Schenker. So that has really contributed to our global network and also our global setup in CL which will be the benefit for our customers.

So we will be top performing company within the industry. So we’re very pleased with

Jens Lund, Group CEO, DSV: this.

Michael, CFO, DSV: Just a summary line by line and side by side. You can see and read the numbers yourself. I think a couple of things worth mentioning. We will be significantly larger in airfreight and in sea freight. And of course also in logistics and again coming back to where the regional presence is, it will then be an add on to our existing service offerings for our customers.

So we will create a strong player within the industry. I guess that there’s a lot of questions, so we will go through this rather quickly. There are some transaction details on this slide. You can read through yourself. I think it’s you can recognize many of the numbers from previous communications from us.

In terms of our financing and capital structure, I think it’s important to notice that we have successfully raised DKK75 billion, DKK 5 billion through equity and DKK 5,000,000,000 to bonds. And again like Jens mentioned, we are overwhelmed by the support from the investors and are of course very grateful for that both from the equity but also for the bond investors. The remaining part of the financing will be financed through the cash that we have at hand and then some expansion of our within our existing committed credit facilities. Our target is still to get below our gearing ratio of two times in RBD to EBITDA before special items. Of course, you can say for the first couple of reports we will be above that range, but we are committed to get back on the target that we have where we would like to have the ratio below two times.

Then we have also communicated in press releases, but just to remind you that we have done some management changes at the top layer of DSV. The current CEO of Schenker, Jochen Thewis, he will be nominated to the Board of Directors at an Extraordinary General meeting here in Q2. Helmut Zweighofer, the current CEO of Schenker’s Europe region will be the new CEO of our Road division. Schenker Road is a really, really large organization in Europe. So I think it’s a good choice and it’s a good setup that we will have here.

Same goes for Vishal Schama, current CEO of Schenker. APAC will be the group CCO of DSV heading up our commercial approach and our commercial development of course. Then Saskia Blachberger current CPO in Schenker’s Europe region will be the new Chief People Officer of DSV. I think it’s a strong management team that is now created and you can complement both DSV and Schenker. So I think it’s very strong setup that we will have also on a management level.

Then what many of you are very keen to hear about is the expected financial impact. I think it’s very important to notice that bear in mind that we get got the keys this morning. So it’s really, really new things that we are. Of course, we have tried to prepare best as possible as we always do by the way. Schenker will be included in our consolidated financial results as from tomorrow, May 1.

And currently our business case we always prepare a business case before we enter into these M and A transactions. Right now our estimates on the annual synergies is in the level of DKK 9,000,000,000 end of 20 20 8 where we expect the majority of the integration to be complete. We do not expect significant impact on the synergies in 2025. And we will give you further information when we have that in connection with our Q2 reporting. Synergies, as always, consist of the consolidations of operations, logistics facilities, back office functions, finance and IT infrastructure.

So it is more or less business as usual. When we do this M and A, of course, it’s a bigger size of business this time. And the business mix is a little bit you could say different. We also communicated previously that we would like to lift the operating margins within the business areas to a minimum of DSVs levels in 2028 based on a normalized EBIT baseline for Schenker of around DKK6 billion. If you add the DKK6 billion with the DKK9 billion you will see roughly DKK15 billion or DKK2 billion.

That will be the base in 2028. We expect that the transaction will be IPS accretive already in 2026. So that is also next year. That will be then. We have withdrawn our long term financial targets.

Now we need to get more familiar with the Schenker business in order for us to make the ambitious targets for the following five years. So that will be communicated when we have a little bit more knowledge about it. Then we will have transaction cost estimated of around DKK 11,000,000,000 that will be charged to the income statement whenever we do all the different integration work. It’s you can say normally we have said it’s roughly one to one slightly below or above depending on which side you look at it. Typically we say synergies is in line with the cost.

The last couple of transactions the cost has been slightly higher. And here is also slightly higher due to the composition of the industry and the presence in the countries as such. And then for this year, we expect around DKK2

Christian Nedericou, Analyst, UBS: billion to

Michael, CFO, DSV: DKK2.5 billion of restructuring here in 2025. Also of course dependent on the speed of the integration. Then a slide that you are most likely familiar with. I’m very happy now that we have another column to the far right hand side of this where we can now say that we have Schenker included And this is also reflecting our guidance that I will come back to shortly. For the next steps, now we’re of course pleased that we managed to close the transaction today, which is also I think given the size, I still believe it’s more or less a record again that we could get all the closing regulatory approvals and also conclude all the steps here in April.

Remember, promised you in Q2 and so we’re still in the early days of Q2. Then we will of course start work with the numbers in the business and the integration. And then when we come to second quarter, we will give a little bit more information when we have some more knowledge about of course about how the business is structured in the different divisions and also adoption of accounting policies and opening balance and all the boring for some finance stuff. But that is something that we need to do of course. We’ve also as Jens mentioned updated our outlook for 2025 mainly because now we have included Schenker.

You can see our previous guidance was DKK 15,500,000,000.0 to DKK 17,500,000,000.0. We now estimate that we will have an outlook of DKK 19,500,000,000.0 to DKK 21.5 One thing that you need to bear in mind, we have this time also shown a number of the estimated purchase price allocations. It’s we have not done that before, but it’s given the size of the transaction. It’s something that you need to be aware of when you put it into your models. Special items, I’ve already touched upon that.

It’s also clear that we have also noticed the uncertainty in the macro environment and also talked about tariffs impact and so forth. This is the outlook that we have reflecting how we see the world these days. And then of course it can change if something really dramatically changes. But this is how we see it right now. The volume is expected to be slightly lower than what we have said earlier.

However, the yield as Jens also alluded to a little bit is a little bit higher. So that’s also why we can maintain the guidance like we have done. In terms of the NIEM joint venture, significant financial contribution is expected in 2025 either. I remember I had one question once whether that could be negative. It cannot.

Way it structured is that it cannot be a negative contribution. Yes. And then back to some key takeaways that you can talk us through. Yes.

Jens Lund, Group CEO, DSV: Well, thank you very much, Mikael, for detailed rundown of all the things. It’s really helpful. And I just want to reiterate what can I say that we’ve basically now seen also return to solid growth in our A and C division? I think that’s something that we are very happy with. It’s our largest division.

I think also that we can deliver solid business case on synergies on the Schenker transaction as you can see here. I think we’re very proud of that as well. It will take us, what can I say, two levels on the Schenker business that we know from DSV? And then, of course, that we’ve upgraded our guidance. I think that’s also a very important message to send along.

And I think we can also see the market reaction on the street today that basically has taken out some uncertainty, which, of course, has been there, would we be able to close or how would the numbers look based on the recent sort of uncertainties that we see in the market, etcetera. But right now, we are proud to present the things we have on the slides today. And with that said, we are ready for a Q and A session. We have, I can say, approximately forty five minutes for that. So let’s get on with it and hear your interesting questions.

Carmen, Chorus Call Operator: Thank the line Thank The first question comes from the line of Dan Tovoyansen, Carnegie Investment Bank. Please go ahead.

Dan Tovoyansen, Analyst, Carnegie Investment Bank: Yes. Hello, everybody, and congrats with the closing here. First, a question on the synergies. How much you actually include here in 25,000,000,000 lift with these DKK4 billion relating to Schenker? And you allude to, Michael, a small number here included in ’twenty five.

Is it closer to DKK500 million than it is to DKK1 billion? Just to get an understanding of the base margin that you see in Schenker? And then, of course, where do you see you can lift this to? Is it DSV’s old target? Just to get an understanding of this 9,000,000,000 what goes into that calculation with the margin difference?

Some color on that. And then if I’m allowed, and second question, I would like to get, if possible, a split on the synergies where are the levers, where are the strongest contributions and maybe not in actual numbers, but maybe relatively distributed on FTEs, these IT infrastructure you mentioned and also maybe on facilities if possible? Thanks.

Michael, CFO, DSV: Yes. I will answer some of it and then we can take it from there. If I start with split on synergies, you have to bear in mind that we just have taken over the keys. So, we will not do a split these days. We will of course look at it and then get back to it.

I think it’s important to notice that this acquisition is a little bit different from what we have previously done. So the synergies is split over a broader area of what we have normally seen given that there’s a sizable business in Road and in Solution. That means that in terms of consolidations of warehouses and equipment and so forth is a bigger portion than what we have normally see. But we will not disclose any details further on that one right now. In terms of the phasing, it’s of course also something that we need to look into.

It’s a matter of coming you can say ahead as soon as we can obviously. But as we said, it is expected to be limited and that of course need to be seen in relation to the total EBIT that we will generate. So it can be around like you say maybe DKK500 million or something like that. I think that’s what we will be able to give you as a guidance right now. And then we have to be a little bit patient.

And then when we come to Q2, we can give a little bit more flavor on these things. It is something that we need to look into now and start to you could say drill down the business cases to the respective business areas.

Dan Tovoyansen, Analyst, Carnegie Investment Bank: And on the margin gap and the DKK9 billion, can you give some additional Yes.

Michael, CFO, DSV: As a guidance you can say the margin uplift, it’s like we have said we would like to raise you can say the Schenker business to the DSV margins. And as a guidance you can use full year 2024 per business area as such. Think that will be a good going into it. And then I think that will be the best way to do it right now.

Carmen, Chorus Call Operator: The next question comes from the line of Alex Erwin, Bernstein. Please go ahead.

Alex Erwin, Analyst, Bernstein: Hi, good morning gentlemen and congratulations on closing the deal. My first question is on your DKK 9,000,000,000 preliminary synergy estimate. Is this just cost improvement at DB Schenker? Does it also give credit for any cost improvement at legacy DSV? Does it give any credit for enhancements in service, kind of call that revenue synergy?

Kind of what’s in there would be helpful. The second question is on the IT integration to come, specifically on Road. Is dbSchenker’s infrastructure in your judgment better than what you currently have in the DSV business? And if so, how can we think about the upside in the replatforming of Road IT? Thank you.

Michael, CFO, DSV: Yeah. I think I can take the first one on the DKK9 billion and then Jens you can answer on the IT. DKK9 billion is you could say a business case as we have always done. And it’s not It’s on the total we don’t differ anymore on TSV and Schenker. So the SEK9 billion is of course in total for the combined business as such.

So you cannot say it’s one or the other. This is one entity now and this is the combined synergies that we will create.

Jens Lund, Group CEO, DSV: Yes. So as an example, if we take IT, basically as you said, Schenker would have a production system on the land side. It’s not a European platform, but it’s a platform that is rolled out in 14 countries, I believe it is, in Europe plus a couple of other places as well. So it’s a good foundation that they have. Of course, there’s a big advantage if you have all your, in particular, your Schenker calls it system freight, we call it group heads.

All these small shipments on one platform and basically you have a single file system, a single system for events, a single system basically for interacting with the customers on the booking side, etcetera. That has very positive implications on the productivity. And therefore, we also need to drive somewhat higher margins on that business going forward than we’ve seen historically. It’s actually also the case, for example, when we look at synergies that on the land side, since Schenker have a much stronger system for its setup, the backbone, for example, of that setup will be the DSV. And that’s the reason why Michael says that then we have, of course, calculated how much infrastructure can we eliminate.

And that will then be both Schenker and DSV infrastructure because in certain countries, we are stronger in DSV. And in certain countries, the Schenker setup is stronger than the DSV setup. So it’s a little bit of complicated. And I don’t think it makes a lot of sense because it will be the same division. So it’s like one company for both the employees, but also for the infrastructure.

And it’s all infrastructure within each division. And then we have to optimize it so that we can push the volume through the right sized infrastructure very efficiently. So I hope this sort of answers. And the margin on Land, of course, we don’t want to settle for the margins that we’ve made in TSV historically when we come to that. We have to produce a higher EBIT margin going forward given our position and the economies of scale.

That simply has to be the case with sort of the strength that we will have on that. And then you’re probably pretty soon going to ask what is the potential of this? Well, the potential is I wouldn’t put it in my plan. But I don’t see a reason why with the size that we have in Europe and the infrastructure we have in place that we couldn’t if we really excel to go to double digit. But I will probably put it somewhere in between the 5% and the 10% that we used to have and then the double digit number.

And that’s basically what good looks like. So it is a massive undertaking, but we think we have a good plan to execute on it.

Alex Erwin, Analyst, Bernstein: All right. Thank you for the color.

Carmen, Chorus Call Operator: The next question comes from Christian Nedericou, UBS. Please go ahead.

Christian Nedericou, Analyst, UBS: Hi. Thank you very much for taking my questions. Firstly, on Schenker, coming back to the phasing question earlier, could you give us some ballpark indication how much of the €9,000,000,000 of synergies can be achieved in 2026, ’20 ’20 ’7? And I guess in the context of fact that you integrated the customer overlap between Schenker and DSV, could you talk a bit more about that? And if you have some arguments that defend your previous targets, you would lose maximum 5% of Schenker revenues.

And on the stand alone business of DSV, I appreciate you mentioned earlier volumes a bit weaker, GP per unit better. I guess where we stand today if we look at the full year DSV stand alone EBIT? Will you feel comfortable to be in the higher end of the guidance of the 15.5%, seventeen point five % or in the lower end? Or how do things look as we stand today in the context of the tariff uncertainty?

Michael, CFO, DSV: I will take I think I noticed actually three questions. But I think I’ll try with two of them and Jens will take one with the customer overlap. I think in terms of the phasing, we need to revisit and drill down for the overall target that we have done in order for us to be more specific about the phasing. So I will lead back to my answer to Dantogo for 2025 of around let’s say DKK500 million. And then of course you need to see if we want to be at you can say the level in DSV margins in 2028 then you can use that as a steering guidance.

On the standalone part, think normally when we guide, we of course do some scenarios. And then we have a lower end and an upper end. Typically, I believe we would be in the middle of that guidance on a stand alone basis.

Jens Lund, Group CEO, DSV: Yes. And then I think basically on the customers when we look at that, I think on the customer side, our commercial approach and basically the framework that we have created should get us into a position where we quickly get in front of the customers and establish the baseline, what is the DSV volume, what’s the Schenker volume, how do we want to combine that, what does good look like, what’s the service catalog that we actually can present to the customer. But of course, there’s also an integration that has to happen at the back end so that the customers, they basically have one booking flow or one way of exchanging data or one account management setup, etcetera. So we have to change these things. And of course, in this process where we change that, we typically see that there is, what can I say, a slower development on the account, not necessarily that you lose volumes, but perhaps you’re not allocated volumes to the same extent?

So we have to get this behind us fairly quickly. Therefore, we’ve prepared for that. And I think we have a strong setup in place. If you look at the share of wallet discussion that you also alluded to, do we have a significant share of wallet so large that what can I say becomes a problem? I think globally, we will have a market share of 6.5%.

Of course, if we look at our top accounts, we would have a larger share of wallet. But this would typically be in the 10%, twenty % range with these customers. So not something that should create massive problems. And having said all that, I think that we still have the same aspiration that we hope that we can or the plan is it’s not a hope, that’s not a strategy. The plan is that we keep the churn below the 5%, And we feel confident that this is realistic with the planning that we’ve done.

Yes.

Christian Nedericou, Analyst, UBS: Thank you very much.

Carmen, Chorus Call Operator: We now have a question from the line of Ulrik Back, Danske Bank. Thank you. Please go ahead.

Ulrik Back, Analyst, Danske Bank: Yes. Good morning, Jens and Michael. Also a couple of questions from my side. First one is also on your guidance and keeping the underlying guidance unchanged. You mentioned that if unforeseen market changes happen, it may affect your financial results.

So keeping it unchanged, does that mean that what we’ve seen so far this year has not been sufficient to adjust the original guidance? And if so, what needs to happen for you to revisit the existing guidance? And in addition, for Schenker, you do not provide a range. It’s basically just adding €4,000,000,000 on top of the existing one. So what gives you the confidence given the uncertain markets that we are in that is not necessary?

Thank you.

Michael, CFO, DSV: Yeah. In terms of the guidance, of course, do some scenarios when we do it. And you’re right, if you look at Q1, has created some uncertainty. But our underlying business has done well. That’s also why we are comfortable with the guidance.

And then you say what would happen, of course, to a large extent, we will be able to cope within our flexible business model, our asset light model. We have shown over the years that we are really ready to adapt to the market environment. So of course, we will do that if needed in these circumstances as well. Right now, we have what we have seen so far in Q1 actually means that we will stick to our standalone guidance. I think it’s also important to notice we’ve had some questions about the tariffs and so forth.

I think it’s important to notice that we are not a China U. S. Company. We are a global company present in more than 90 countries. The total direct China U.

S. Trade lane for us is around 5% of our total trade lanes. So that’s also why I said that what we have right now of knowledge that we will stick to our guidance also on a standalone. But you never know what happens because some week there are some indications or information. Next week there are some other information.

So it’s a little bit difficult to see which scenario should be built. So we believe and we are comfortable with the guidance that we have given so far. And then of course if things changes dramatically then we need to take it from there.

Ulrik Back, Analyst, Danske Bank: Thank you.

Carmen, Chorus Call Operator: The next question comes from Jars Eindorf from Nordea. Please go ahead.

Jars Eindorf, Analyst, Nordea: Yes, good morning. Thank you for taking my questions. The first one is on the net financials. Michael, you mentioned around 02/2005. I just want to get this correct.

Is this including lease impact from Schenga?

Michael, CFO, DSV: No. This is only the interest.

Jars Eindorf, Analyst, Nordea: Okay. And can you give an indication about that as well?

Michael, CFO, DSV: For the leases? Yes. No, we need to look at it. Need to understand the lease portfolio they have in greater detail. So right now Lars, I cannot give you that number.

Remember, we have to revisit the entire balance sheet according to our principles. So it will be wrong for me to put out a number here.

Jars Eindorf, Analyst, Nordea: Understood. And then the second one is on net working capital. Schenker has been running with a quite a bit higher net working capital compared to what you have at least in the past couple of years. Is I I know this is early days still, but can you say anything about that? I mean, I know that you’ve been canceling your targets.

The aim is to bring it down, will assume, but to what levels?

Michael, CFO, DSV: I think long term, I cannot see why we should not have same level as we have. But again, we need to go in and look at the specific regions and the specific customers and so forth. But it would be our ambition to have same level as we have had for as a target for DSV of around 3%.

Dan Tovoyansen, Analyst, Carnegie Investment Bank: Okay. Thank you.

Carmen, Chorus Call Operator: The next question comes from Alexia Dugani from JPMorgan. Please go ahead.

Alexia Dugani, Analyst, JPMorgan: Yes, good morning and many congratulations on closing the deal today. And just firstly on Schenker, you are talking about normalized SEK6 billion of 2024 performance on the EBIT. What is the GP? And can you roughly split it by division on kind of on your basis just to help us modeling? And then secondly, on the cost that you have been carrying in DSV ahead of the deal closure, when do you expect that to follow as you integrate?

And can you give us an indication of magnitude? I think to recall, it could be triple digit DKK1 million. Thank you.

Michael, CFO, DSV: Yes. In terms of the Schenker normalized earnings, we cannot give you the split right now on neither on GP. We need to go in and as we have done also in previous acquisitions, we need to take the total Schenker business and then we will adapt it into our way of organizing ourselves in the different divisions and the business areas. And also we will have to use our way of doing the cost allocations. So it would look slightly different.

So we cannot do that split right now. In terms of GP, also have to bear in mind that they have a different policy of accounting for blue collar, white collars, which also need to be But

Jens Lund, Group CEO, DSV: if I was you and I would have to split on the divisions, would use the TSV norms for it because they would have to apply our policy basically for accounting. So for example, Schenker, they would account, let’s say, all the staff cost below GP, where we would actually transfer the blue collar staff to above GP because we believe it relates to the gross profit. Whether you have it insourced or outsourced, it doesn’t really matter. So that’s kind of a way that we do it. This is the reason why Michael says it is both, for example, goes on all the terminals in all three divisions.

Also the rental cost. We would typically book the rental cost that relates to the production above the GP, where, for example, Schenker would book below. So of course, we don’t know what the exact number will be, but we know that it’s not that dissimilar the activity from ours. So if you use that, you have a good starting point for your model.

Alexia Dugani, Analyst, JPMorgan: And the costs for integration of TSV standalone?

Michael, CFO, DSV: Yes. The cost ahead, as from now on, we don’t see it as DSV stand alone Nordschenker. We see it combined. And I think to get inspirations to how that will develop, We need to get closer to it. And in the meantime, we might look at some of the previous acquisitions, how the phasing have been.

But again, here, you need to bear in mind that it’s another mix of business where in the previous acquisitions, R and C has been quite a large chunk. Here, it’s a little bit more balanced. So it cannot necessarily be the same pace.

Jens Lund, Group CEO, DSV: We can guide a little bit on that as well. If you have a large R and C acquisition and back office things, that will normally take two years to achieve the synergies. If you have road, probably it takes three years to get the synergies because there’s more infrastructure involved. And if you take the contract logistics, there will be a little tail. So we normally say it should be done within four years.

But the bulk of it, of course, being done within the first three years. So you can get an in flight, and this is also what we have in our plan. But now we detail it because we get the business plan confirmed from the countries. This is what we do right now. And then we can give the exact numbers.

So you could use this as an assumption when you work for it.

Alexia Dugani, Analyst, JPMorgan: Thank you, Jens. And can I just ask as a follow-up? And you reiterate your previous view that before beyond year three, you can exceed the margins of the combined entity versus DSV before. Is that right?

Jens Lund, Group CEO, DSV: Yes. That’s what we have said, and I also believe that, that is achievable.

Michael, CFO, DSV: We wrote at least to the current margin. So that will, of course, be our aspiration.

Carmen, Chorus Call Operator: The next question comes from Jakob Slachs, Volfer Research. Please go ahead.

Jakob Slachs, Analyst, Volfer Research: Hey, thanks for your time. Good morning. So least in its report, Schenker had a higher CapEx intensity relative to legacy DSV. Do you expect this to normalize lower as well? And does the deal change the cash conversion profile of the combined business?

Jens Lund, Group CEO, DSV: I think if we basically start to produce basically all the volumes in Schenker in the same way and sort of with the same way of looking at capital allocation, then I think it’s going to be fairly similar. They would have a little bit more land business that is a little bit more asset heavy. So it might be skewed a little bit higher than DSV, but nothing material If you look at the business and how it’s organized, then basically we think we can use the model that we normally apply in DSV.

Jakob Slachs, Analyst, Volfer Research: That’s helpful. Thanks. And then I think you gave U. S.-China trade exposure. Do you have U.

S. Trade exposure more broadly as of the combined business? And what changes have you seen customers make to date as a result of the tariffs?

Jens Lund, Group CEO, DSV: I think the trade exposure to The U. S. Is, of course, probably from all the countries. I would probably think somewhere in the region, 25%, thirty % or something like this. So it’s a significant market if you count Europe and, of course, Latin America, all the other countries in the Asia Pacific area.

So it is something it’s not so that this trade will then come to a pause. There’s still a lot of trade, of course, But let’s, for argument’s sake, say that this then declines, what do I know, 10%, fifteen %, of course, that would then impact our numbers with a percentage of a percentage. We also have to remember that if you have had big crisis, and there may be a big crisis coming up in The U. S. With a ton of inflation and a consumer that seems to be having a very low confidence level right now in The U.

S, then I think there’s going to be a scenario where the economy might contract a little bit in The U. S. When that has happened, typically, the global volumes when we’ve been in a situation like this, Sometimes, they have gone down 3%, four % or something like that. It’s not more that we’re talking about. And then with our asset light business model, we have to adjust.

Of course, we’re also going to feel it. But typically, we can figure out basically to adjust our infrastructure so that it fits the situation. But that’s then in the crisis scenario. Hopefully, they strike some deals and get back to injecting some confidence into the consumer. But time will tell how that all pans out.

Carmen, Chorus Call Operator: We now have a question from the line of Muneeba Kahyani of from Bank of America. Please go ahead.

Jens Lund, Group CEO, DSV0: Thank you for taking my questions. So firstly, just on Schengard. You have included that EUR 4,000,000,000 contribution this year and you said it’s kind of EUR 6,000,000,000 underlying in 2024. So that’s basically you’re saying kind of you’re thinking a flattish EBIT performance for Schenker this year. Am I right in that?

And if you could give some color on how Schenker’s performance has been so far in 1Q, that would be helpful. And then second question is around just on the market side, like what drop have you seen on those China to U. S. Volumes? And have you seen those offset by other regions?

And on the yields as well, Jens, you talked about kind of the value added services increasing, and we clearly see that in your first quarter performance. But is that a trend that has kind of more visible in April as with all the disruption?

Jens Lund, Group CEO, DSV: Yes. I think if you look at Schenker, it’s kind of like a flat development that we expect for them this year. They’ve actually had a pretty good start in certain areas and, of course, a little bit weaker start, let’s say, on the European land business, where you also see in some of our peers. They’re still in the black on the land business, so it’s not as deeply underwater as some of our peers apparently have been. So I think it’s okay.

It’s solid. Of course, the volumes in our land operation in Schenker probably down something like 5%. And if you run then a large operation that depends on infrastructure, it means something. And so they have adjusted the cost, but it’s always like you’re running a little bit behind. But I think they have done fairly well on that, and we are pleased with the starting point on Contract Logistics.

They have actually been doing better than it was. On airfreight, they have been suffering quite a bit. And on the Ocean side, I think they have done fairly well. Also here now, we’ve heard that let’s see the numbers. There’s many anecdotes, but at least they are confident about the April production.

Then on the China U. S. Volumes, I think, that specific trade lane, we’re probably talking about something in excess of 25% that we’re down on this one specifically. I’d heard numbers also that were higher than that from somebody, but it’s probably in that area that we are talking about. And of course, there are more bookings in other areas, But sometimes, you have to redirect those volumes.

It might take a month or two before you really move this volume. What the customers do right now is that when they have cargo that is produced, either it stays in China. So containerized in China, people, they wait to ship it because they can’t afford to take it into The U. S. With tariffs that are somewhat higher than 100.

Of course, it makes it impossible for a wholesaler or retailer or manufacturer to absorb such increases. So this is the reason why sometimes they are also in bonded areas in The U. S. Store, and then they will import them once the regime is in place. So we all hope, of course, in particular, on behalf of these customers that the situation gets settled.

It’s not very good environment to run a business in if you don’t know the outcome, what can I say, of your resource allocation? So right now, they have put a lot of orders in, and they don’t really know the financial outcome of them and the price of the volume they have ordered. Of course, it’s also fluctuating a lot. And I think we see now many examples of industries that already now start to take the consequences of this. And of course, we will then move the volume, whether it’s out of Indonesia, Vietnam, Thailand, Malaysia or cross border to The U.

S. We actually have significant operations in all areas. So we can certainly serve our customers on that.

Jens Lund, Group CEO, DSV0: That’s super helpful. And the yields?

Jens Lund, Group CEO, DSV: The yields, I think, of course, we’ve worked, as you know, quite a bit on our service catalog offering. So some of it is due to that. But in a situation where you have fluctuations in the supply chain and all this volatility, of course, sometimes they may also request certain services from us that are more of a one off character. But over the years, I think we have a long track record of increasing what we call vast value added services into basically our GP per unit. And I think we’re also tracking this much more internally also because we received quite a lot of feedback from you on this that the investment community rightfully so was concerned that it was just freight markup and we couldn’t really hold on to it.

We’re so happy that when we delve into the numbers that actually we have solid, what can I say, contribution from value added services?

Michael, CFO, DSV: Yes.

Jens Lund, Group CEO, DSV0: The

Carmen, Chorus Call Operator: next question comes from Sreedhar Ekblom from Morgan Stanley.

Jens Lund, Group CEO, DSV1: Thanks very much. Just a question on the degearing profile post the Schenker acquisition. Obviously, lot of that degearing will come from the realization of synergies and improvement of margin of the Schenker asset. But can you talk to the benefits that you could see more quickly around working capital, around sort of sale and leaseback agreements on the Contract Logistics assets, sort of we get from a pathway of three to 2x? Does it take three years or does it happen quicker?

And then can you just talk to what you would need to be seeing from a leverage perspective in order to think about reinstating buybacks? Thank you.

Michael, CFO, DSV: In terms of gearing, it’s of course depend on how much cash we can generate from the normal operations and then also for you can say the flexibility like you just mentioned in sale and leaseback, but that’s we need to go into details and see the asset base that we have acquired and how it’s constructed as well. So it’s difficult to draw a straight line as to how fast it will go, but we do expect that it will be shorter than three years for sure. So that is our aim of course. And we have also suspended the share buybacks and they will not be taken up again until we are in line with our capital allocation policy.

Jens Lund, Group CEO, DSV: But I think it’s Sorry,

Jens Lund, Group CEO, DSV1: just on the share yes, can I just ask on the share buybacks? So do we have to see you print 2x net debt to EBITDA for the buyback to be back in place? Or could there be a scenario where you have visibility that your gearing would get back to below your ambition within a sort of twelve month period and that you would be willing to reinstate the buyback earlier? The reason I ask is the business is clearly very cash generative and the gearing profile could be quite rapid once you get those synergies in place. So I just want to get a bit of visibility on if it’s like a hard stop.

I have to see 2x net debt to EBITDA before buyback is even part of the discussion or if you could do it earlier. No,

Jens Lund, Group CEO, DSV: we’ve been fairly firm on that. I think we’re very firm on that. We take the leverage down to basically where we we also have the bondholders as stakeholders. They’re very important also financing these things. And I think they definitely expect that we go below the two turns.

But of course, generating more EBIT on a 12 rolling basis, more EBITDA as a consequence of that, a lot of cash flow. I believe on some of the previous transactions, you can go back and have a look at them. I think some of them, we’ve started the share buyback sometime in year two, if I remember correctly. But you can rest assure on one thing, that is that our capital allocation policy stands firm. It’s done that ever since 02/2002 when I started in this company.

And I think it’s a significant part of the company’s success that if we don’t need the capital that we send it back to the investors. So on that foundation, of course, the company rests and we will keep it like this.

Michael, CFO, DSV: I fully agree, of course. You also need to bear in mind that we need to pay some restructuring. So even if Vicinity comes in and our EBIT increases, then of course, we also need to pay for some of the restructuring in the beginning. But as Jens mentioned, we will do our utmost to be back in a position where we can launch share buybacks again.

Jens Lund, Group CEO, DSV1: And just to confirm that cost on realizing the deal, that’s all a cash cost, that DKK 11,000,000,000, there’s no expected noncash write offs, etcetera, in that number?

Michael, CFO, DSV: No, it’s all cash. It will be cash eventually. There’s a

Jens Lund, Group CEO, DSV: tax shield on it when you calculate it.

Carmen, Chorus Call Operator: The next question comes from Marc Zak from Kepler Cheuvreux. Please go ahead.

Ulrik Back, Analyst, Danske Bank: Good morning. Thank you for taking my questions and congratulation on the closing of the deal. I’m sorry, I just need to circle back to synergies and the EBIT or normalized EBIT for Dibichenko. Do you expect to reach that €9,000,000,000 figure of synergies also in the case where you can’t really fully bring Dvishenko’s margins to these levels? Is there kind of maybe a bit of a wiggle room or disconnect?

Or is the €9,000,000,000 will be dependent on full uplift of Dvishanker’s margins? And then second question, also more on the macro profile. We have some of your peers talking about, obviously, China volumes down, but volumes from other Asian regions, volumes out of Europe making up for quite a significant portion of the lost China volume. Do you kind of see the same that global volumes are more or less stable for the last three weeks since we got all the trouble in the tariff side? Or do you have a different picture?

Michael, CFO, DSV: Yes. In terms of the synergies, we are comfortable that we can make the business case and that we will be able to raise the margins. That is our going in. We also as we write in some of the materials that we expect to be at least to the DSV margins. So that is by the cost synergies that we will be able to and optimizations, of course, that we will be able to achieve those.

Jens Lund, Group CEO, DSV: And when it comes to the volumes, of course, we also see bookings from other origins, as you mentioned. I think I would like to point out as well that I’ve seen some at least projections that there was in the beginning of the year an estimated growth in the market of 3%. Now it’s flat. Given that we’d had some growth in Q1, I guess, math doesn’t really stack up if it has to be flat at the end of the year. If there isn’t a little contraction there, I think that’s probably also the case.

But we will see how it pans out. A flat market under these circumstances this year is probably an okay outcome. And of course, we will get our share of that.

Ulrik Back, Analyst, Danske Bank: Thank you.

Carmen, Chorus Call Operator: The next question comes from Marco Limti from Barclays. Please go ahead.

Jens Lund, Group CEO, DSV2: Hi, good morning everyone. I’ve got two questions. So the first question, just a follow-up on your deleverage path. Are you able at this point in time to, let’s say, give a guidance on the possible amount coming from disposal of, let’s say, overlapping assets between DSV and Schenker Road and Contract Logistics Networks? But beyond the specific dollar amount, that is also part of the business case at all?

And the second question is on the underlying Schenker EBIT. So EBIT sorry, Schenker has reported more than €1,000,000,000 EBIT in 2023, about $100,000,002,024,000,000 and now you are guiding for underlying €800,000,000 If you could just give some color on why, yes, you think the underlying EBIT of Schenker is, let’s say, 20% lower compared to the reported number? Thank you.

Jens Lund, Group CEO, DSV: Yes. If you take the facilities, I think we sit in a situation where we’ll probably be able at least to reduce the asset base At least, it might be a little bit more than that. But there will definitely be, what can I say, some cash coming in from that? So we may find that the potential is higher, But this is what we have in our planning.

When it comes to the Schenker, I think Michael can say something to it as well. But I think it’s fair to say that when you have an auction process, you have, what can I say, a very aggressive way of reporting your numbers? Some people would perhaps refer to it as out of period income. And if we sit and basically do the calculation and there was a ticker fee, some numbers are adjusted in that calculation also certified by an auditor. So I think if we look at these numbers and also apply our accounting principles, then we arrive at this figure here, which, for the record, also is in line with the business case that we made three years ago on the acquisition of Schenker when it was the first time that we started our planning of this transaction.

So we’re very comfortable with what we’ve guided. And then, of course, it can be a little bit confusing if you don’t have the details. We have. So you can rest assured that we’ve done our diligence and know what the baseline is.

Carmen, Chorus Call Operator: We have our next question from the line of Michael Aspinall from Jefferies. Please go ahead.

Jens Lund, Group CEO, DSV3: Michael, just one for me. You’ve had clean teams that have been in Schenkel now for a while. Can you talk to what those teams have achieved and how it sets you up from here as you do get the keys?

Michael, CFO, DSV: Yes. I can do that. And then Jens, you can jump in or elaborate. It is something new that we have tried. Actually, I tried to set it up back in the days with the Jill acquisition, but we never really succeeded.

So we abandoned the idea because it simply took too long. But this transaction has been larger, so we were a little bit more better prepared. What the Clean team have done is that they have digged into the details of our of the commercial setup and the commercial customers in Schenkerberg mine when we do you can say these kind of things during the due diligence phase and during the regular approval phase, we are not allowed to share any commercial in any way or form. So that’s why we established the clean team. So they will be able to go in and look at the customer base.

They will be able to go in and do the customer segmentation and to look at how the performance is on a different business area. They can go in and do the segmentation again and the verticals split as we have in DSV. That means that when we have opened up the box, then we’re actually able to go in and adapt that setup immediately to the DSV setup. Previous acquisitions, we’ve used at least a month or two or even three months to get closer to it. Know Jens can elaborate on that one.

So that’s on the commercial side. So we can see the structure. We can see the customer base, how it’s segmented into both sides, but also verticals. So we have a much better grip on what it is that we take over. Secondly, for the cleansing, but that’s more like, you could say, cleaning up the data.

So the data will be aligned into the DSV way, especially around the master data in order to get that cleansed and cleaned. So it follows the DSV structure. It is something that can pave the way for faster integrations. So that is what we have used the clean team for. So we are better prepared than what we have ever been before on that note.

Jens Lund, Group CEO, DSV3: Okay. Thank you.

Carmen, Chorus Call Operator: We have our next question from the line of Arthur Tuzlova from Citi. Please go ahead.

Jens Lund, Group CEO, DSV4: Good morning, everyone. Thank you very much for taking my question. First one, so you mentioned in the release that there was some benefit on the seafreight side from selling based on higher freight rates than you actually had to pay to the container shipping lines. I just wondered how much this dynamic benefited you. And if you could say a little bit more about what the main additional services were that expanded and how much that also benefited you, that would also be useful.

The second question I had and sort of following on a bit from some of the previous questions. I know you don’t know everything about Schenker’s numbers, but based on what you have said, it sounds like you think the unit gross profit within Air and Sea is comparable with what DSV does. Is that the correct understanding? And if you look at your previous successful acquisitions, will you be able to just remind us whether the synergies have been based on unit gross profit going up or operating leverage or a combination of the two? Thank you.

Jens Lund, Group CEO, DSV: I think the vast, if we look at that, it’s probably increased sort of the level of value added we sell 10%, fifteen % or something like that. It typically would relate to us handling more of the customs formalities. It could be that we would do a lot of the documentation work running the CFS as the buyers’ consolidation. It can be the CFS means that we do a lot of LCL, so less than container low cargo. Actually, we have grown quite a bit on that.

We’ve also in sourced some of the operations on the LCL side. So we’ll use less co loaders. When you use co loaders, of course, a larger proportion of the value goes to them. And so on, it’s part of our strategy road map that we drive some of these initiatives forward. Also on the PEO management side, we are seeing a lot of interest as well.

So I would say these would be the main areas. When we buy companies, they typically have a lower yield than us. It can be down to many things. It can be that, for example, they have too heavy infrastructure costs. They don’t have enough volume through the gateways.

Perhaps they have too low utilization on the LCL they’re producing, etcetera, etcetera. So typically, we see that when we combine ourselves with other companies, actually, we get into situation where we are better off as a combined entity. I think the deals that Schenke would have on the procurement side, they are probably fairly similar to ours. And I don’t think that’s really where you see a significant difference. But we typically manage to basically, over time, to find a new normal.

It might be in this situation, it’s a little bit lower, combined one that we have. But it’s not so that we dilute our self. We typically get a little benefit from that. There’s not a lot of that in the business case, I would also say, because we would like to see that this is done by hard core cost savings. So either on the infrastructure, physical infrastructure, IT infrastructure or on the FTE side.

This is normally how we calculate the synergies. Yes. And I think the time is up now. So I would like to thank all you investors and analysts for listening in. I would also like to thank our employees, those of them that have listened in.

It’s based on your hard work that we are able to do a transaction like this. And we especially welcome the Schenker employees that are now here. You are now DSV employees actually. So we have to stop referring to you as Schenker employees, but also welcome to you. And I promise you that we won’t refer to you as Schenker employees on the next call.

And we look very much forward to executing on plan. The whole organization is eager to get going. And I’m quite sure with the service catalog that we will be able to present to our customers that they will be delighted with the very strong offering we have. Thank you very much from Hildehusen, and we look forward to catching up again. Take care.

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