Finansanalytikerforeningens Virksomhedsdag 7. juni Jens H. Lund, CFO

Transcription

1 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012 Jens H. Lund, CFO

2 Agenda Introduction to DSV High level SWOT analysis Cash flow highlights Net working capital Investing activities Capital structure Funding Operational leasing Q & A 2 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

3 DSV - Introduction DSV countries Global supplier of transport and logistics services Three divisions Air & Sea global network Road complete network in Europe Solutions contract logistics in Europe Asset light business model Transport services outsourced Own operations in more than 60 countries and an international network of agents 21,000 employees worldwide EBITA by Division (2011) Listed on NASDAQ OMX Copenhagen among the 10 most traded shares in Copenhagen current market cap ~ EUR 3.0bn ~ 60% foreign shareholders 100% free float of shares 34% 11% 55% Air & Sea Road Solutions 3 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

4 DSV Group - geographical footprint (% of group total 2011) DSV countries Americas Revenue 7% EBITA 13% Europe North/East Revenue 67% EBITA 61% Southern Europe* Revenue 18% EBITA 11% Asia/Pacific Revenue 8% EBITA 15% *) Southern Europe: France, Spain, Portugal, Italy, Greece 4 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

5 Top 15 Global freight forwarders (3 PLS) Based on 2011 revenue Billion USD 1. DHL Logistics (DE) Kuehne + Nagel (CF) DB Schenker (DE) Ceva Logistics (NL) 5. C.H. Robinson (US) 6. DSV (DK) 7. Panalpina (CF) 8. SNCF Geodis (FR) 9. Expeditors(US) 10. UPS (US) 11. Sinotrans (CN) 12. Dachser (DE) 13. Toll (AU) 14. Gefco (FR) 15. UTI (US) In Road DSV ranks as number 3 in Europe In Air & Sea DSV is in top 10 globally The market is fragmented and DSV s market share is ~ 2% both in Air & Sea and Road It is estimated that the top 15 companies control 35-40% of the total freight forwarding market Source: Journal of Commerce, 27 April Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

6 DSV Group - 20 years of evolution (Revenue, billion DKK) In 1992 DSV had 365 employees in 2011 headcount was 21,678rent Value/Base Value)^(1/number of years)]-1 6 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

7 Earnings per share Diluted adjusted earnings per share, DKK (12 months rolling) Quarterly development Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 CARG 18.4% +22.5% 7 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

8 Strengths and opportunities - Weaknesses and threats Risks related to price, integration and execution for future M&A Risk of pressure from asset owners (when capacity is tight) Strong M&A track record Asset Light and resilient business model High exposure to Europe and low exposure to emerging markets Strong market position and margins among best in the industry High focus on profitability and margins can put a damper on growth D Lack of scale in Air & Sea division Financial gearing is appreciated by many investors - but too agressive for some Active capital allocation High cash conversion High Growth Industry Cyclical industry and uncertain global and European macro 8 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

9 Cash flow highlights Million DKK Profit before tax 460 1,660 1,995 Cash flow from operating activities - before changes in NWC 717 1,671 2,047 Changes in net working capital 985 (8) (184) Cash flow from Operating activities 1,702 1,663 1,863 Cash flow from investing activities, excl. M&A (445) (97) 31 Adjusted free Cash flow 1,257 1,566 1,894 Net working capital in % of Revenue 0.4% 0.2% 0.0% Cash conversion ratio 121% 103% 113% 9 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

10 Cash Conversion Ratio Asset light business model and low net working capital is reflected in cash conversion ratio 2008 was impacted by high NWC in ABX Logistics this was normalised in % 100% 80% 60% 40% 20% 0% Cash conversion ratio Cash Conversion Ratio Free Cash flow adjusted for net financial items, tax, special items and acquisition/divestment of subsidiaries EBITA 10 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

11 Net working capital (NWC) High focus on NWC throughout the organisation Credit policy Monitoring of and targets for debtor / creditor days Weekly liquidity reporting Internal board meetings, etc. NWC around or below 1% of revenue is considered very satisfactory Different approach to NWC and credit management in acquired companies (ABX 2008) Large geographical differences Growth in Air & Sea and growth with large customers could cause increase in NWC Supply chain financing can be an attractive option % Million DKK % 2.5% 2.0% 1.5% 1.0% 0.5% NWC in % of revenue Managing NWC is like mowing the lawn % NWC NWC / revenue 11 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

12 Cash flow from investing activities The Asset-light strategy implies limited investments in assets in the form of trucks and facilities. And no investments in ships or aeroplanes! Investments and disposals (excl. goodwill) should be seen as a net amount. Disposal or sale and lease back transactions, in particular in connection with M&A, are part of the asset light strategy DSV has historically under-invested depreciations DKKm X 7.8 X 7.8 X 7.9 X 7.1 X 7.2 X 7.2 X 7.2 X 5.9 X 5.8 X X 8 X 7 X 6 X 5 X 4 X 3 X 2 X 1 X 0 X Revenue / non current assets (ex. GW) Revenue/Assets (ex. GW) Depreciation ex. customer relations Depreciation and amortisation (average) Net CAPEX (ex. goodwill/acquisitions) Net. CAPEX (average) 12 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

13 Capital structure Overall target for the capital structure Manage cost of capital and secure financial flexibility to meet the strategic goals Financial gearing Current target range for financial gearing (NIBD/EBITDA) is x Target range is evaluated on a continuing basis Larger acquisitions can cause breach of target ranges for shorter periods 2006 *) **) Financial gearing - historical 2,5x 2.4x 3,6x 3.1x 2.2x 2.2x 2.2x (Q1) Target range x x x x x x x *) Adjusted for the acquisition of Frans Maas **) Adjusted for the acquisition of ABX LOGISTICS Share buy-backs and dividend Share buy-backs will be used to maintain the gearing ratio within the target range Dividend policy: increase dividend per share 25% per year but from a low starting point 13 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

14 Funding Currently all long term credit facilities are based on bank funding Syndicate of banks - loan documentation is based on pari passu principle Average duration of debt approx. 4 years Interest rate swaps are used to hedge interest rate risks Lessons learned in 2008 Consider equity financing in case of larger acquisitions and be careful with bridge financing Focus on average duration of the debt ensure sufficient time to react to changes Focus on the financial strenght of the banks Total facilities (million DKK) 5,770 6,076 6,958 Average duration, years Not drawn (million DKK) 372 1,282 1,273 Net financial expenses (million DKK) Average interest rate on long term loans 6.5% 5.6% 4.2% 14 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

15 Operational leasing Operational leasing is preferred to ensure flexibility even under potential new IFRS regulation. DKK million Operating lease obligations relating to land and buildings fall due: 0-1 year years 2,105 2,170 > 5 years 1,133 1,341 Total 4,029 4,394 Operating lease obligations relating to operating equipment fall 0-1 year years > 5 years 1 1 Total The following is recognised in the income statement: Operating leases related to property 1, Operating leases related to operating equipment Total 1,531 1,508 Extract from note 26 in 2012 annual report 15 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

16 Estimated effect if operational leasing is recognised in balance sheet Estimated effect on EBITDA, NIBD and financial gearing if operational gearing is recognised: DKK million Reported EBITDA 2,721 2,975 Operational leasing costs in P&L reversed 1,531 1,508 Adjusted EBITDA 4,252 4,483 Net interest bearing debt (NIBD) 5,872 6,585 Leasing obligations 4,682 5,102 Adjusted NIBD 10,554 11,687 Reported financial gearing Adjusted financial gearing Potential changes to IFRS will not have impact on DSV s cooperation with the banks. The loan agreements allow for changes for reason of consistency. 16 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

17 Operational leasing be aware when estimating leasing liability The use of a standard multible can easily overstate leasing obligations: Operating leases related to operating equipment Total 1,531 1,508 Calculated leasing obligation, based on "leasing costs x 7" Property 7,168 6,958 Equipment 3,549 3,598 Total 10,717 10,556 Actual obligation Property 4,029 4,394 Equipment Total 4,682 5,102 Overstatement Property 3,139 2,564 Equipment 2,896 2,890 Total 6,035 5, Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

18 Q&A 18 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

19 Appendix

20 Long term financial targets DSV Air & Sea Road Solutions Transport volum e Growth above market EBITA margin 7% 7-8% 5% 7% Gross profit conversion ratio 30% 35% 25% 25% ROIC (pre tax) 25% 25% 25% 20% Current Status DSV Air & Sea Road Solutions Volume growth EBITA margin 5.6% 7.2% 3.7% 5.6% Conversion ratio 24.7% 33.1% 19.5% 18.7% ROIC (pre tax) 19.7% 20.9% 21.5% 14.4% 20 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

21 Asset Light a resilient business model EBITA (mdkk) EBITA margin Gross Profit conversion ratio ,1% 24,4% 22,1% 22,1% 23,7% 21,8% 19,2% 19,1% 23,6% 24,7% 4,4% 4,9% 4,7% 4,9% 4,7% 5,4% 5,2% 4,7% 5,2% 5,6% ,2% 72,2% 62,2% 52,2% 42,2% 32,2% 22,2% 12,2% 2,2% 21 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

22 Outlook 2012 DKK million Actual 2011 Outlook 2012 Growth % Gross profit 9,819 10,000-10, % Operating profit before special items 2,426 2,500-2, % Special items Net financial expenses Effective tax rate 27.4% 27.0% Adjusted free cash flow 1,894 1,600-1,800 The development in global and European economy in 2012 is uncertain and this also creates uncertainty when it comes to transport volume. The above outlook is based on the following assumptions for market growth in Market growth - transport volume Actual 2011 Expected 2012 Air - 1 % 0 % Sea 5-6 % 4-5 % Road 2-3 % 1-2 % Solutions 2-3 % 1-2 % It is the target to gain market share on all markets where DSV operates 22 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012

23 Disclaimer This document contains forward-looking statements which involve risks and uncertainties. These statements may be identified by such words as 'may', 'plans', 'expects', 'believes' and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions. Various factors could cause actual future results, performance or events to differ materially from those described in these statements. No obligation to update any forward-looking statements is assumed. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments. The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. The information in this presentation is subject to change without notice, it may be incomplete or condensed, and it may not contain all material information concerning the DSV Group. DSV A/S nor its respective affiliates shall have any liability whatsoever for any loss whatsoever arising from any use of this document, or otherwise arising in connection with this document. 23 Finansanalytikerforeningens Virksomhedsdag 7. juni 2012