DSV A/S

Thank you very much. It's Jens Bjorn Andersen here.

Welcome to the Q1 2022 conference call here from Hedehusene. Super good day for us and for our company, and we look forward to sharing the performance of the last three months with you this morning.

After you've taken a look on our brand-new facility on the front page in Dallas in the U.S., would kindly advise you to read the forward-looking statements on Page 2. And after you have done that, you will see on Page 3, the agenda for this morning.

I think it is pretty similar to what we have been going through in the past. With no further ado, I'll skip to the highlights of the quarter on Page Number 4.

We have seen performance of DSV in Q1 2022, like we have never seen before. We've seen a performance that we had not even dreamed about seeing only a few months ago.

And also, much better performance than what we expected when the year started. We have seen a very, very strong -- very good momentum from Q4 carrying on into 2022, even accelerating across all of the three divisions.

And of course now when we have achieved an EBIT result in the quarter, which is pretty much equivalent to the annual result of DSV in 2019 of DKK 6.5 billion, we feel it applies also to address the guidance for the full year. And we have increased that this morning to now saying that we will aim for an EBIT result of between DKK 21 billion and DKK 23 billion.

As always, it goes without saying that we would rather end in the upper range rather than the lower part of that range. Michael will come back to it later, but it's a really privilege to be able to see also that the cash flow has continued to be very strong in the quarter, which has given room for a new buyback.

Very, very consistent, like we normally would see. Bought a buyback in the coming period of DKK 6 billion, which we have also announced this morning.

On a less positive note, we are, of course, like all of you following the Ukraine, Russia crisis very, very closely. And that has generated even further disruption in global supply chains.

We -- I actually in the process of terminating our business in Russia, seeing if we can find a solution with our local management so we can exit the Russia operations once for all. It is not easy to do.

Its on a very set background, but we feel that it's the right thing. So whether -- in a not too distant future, we will probably be without Russia in the DSV network.

The exit from Russia has no material direct financial impact on our earnings as still less than 1% of turnover and earnings. And what needs to be provided for in terms of closing down the activities have already been taken care of, so to say, in Q1 in the numbers that we have reported this morning.

Let's jump to page 5. Just might be the last update you get on the Agility GIL integration.

It's one of the best acquisitions we have ever done. Very positive impact on our earnings.

You might see on bullet point number 1 that we have put in a new wording where we say that the financial contribution will now be where we say at least $3 billion to the total profits of DSV. Integration is going well.

The company and the countries have done a fantastic job once again, unbelievable to integrate such a large, company with thousands and thousands of people across the organization and the network, that's why it's true placing now, so early into the integration to be able to say that all major countries have been on boarded to our DSV platform. I think this is even faster than we have anticipated and faster than what we have seen in the past, and with a few minor exceptions, we do expect that the total integration program will have been finalized during Q3 this year.

A little few household numbers, as you probably seen the transaction and integration costs was about DKK 400 million in Q1, meaning that we still have about DKK 600 million to book for the rest of the year. But once again, we're super pleased with all the new colleagues, all the new capabilities and the skills that we have now from the acquisition of Agility.

Let's move to page number 6 and let's just -- I was about to say observe the numbers for a few seconds, they basically speak for themselves. Absolutely superstar, stellar performance from the division.

I can only repeat what we've said before. An extraordinarily strong performance and everybody working in Air and Sea in DSV can be really, truly proud of the performance that you guys and girls have put in the recent period.

Of course, we see a big tick up in the revenue driven by, of course, the addition of geo, but of course also driven by a continuation of the increase in the rate levels. But what is maybe more important is that we also see tremendous growth in the TP, both for Air and Sea.

And we have still continuing, which we'll never go out of fashion in DSV worked on the productivity of the division. Meaning that we have achieved growth in EBIT, surpassing 100%.

And that is absolutely fantastic. Taking us now to new record in terms of conversion ratio of 60%.

We are very proud of that. We're very happy about that.

It's a fantastic performance. The markets are still characterized by disruptions in the supply chain s most recently by the lock down in Shanghai.

And we do not believe that we will see a very big change in the disruption even if we get to the later part of this year. It's not unlikely that the whole of 2022 will be characterized by these challenges that we have been facing at the beginning of the year.

Page 7, airfreight we -- we've taken market share. We've grown faster than the markets.

Not a lot, but we have grown 2% organically in the quarter and we do estimate that the market is flat. Including Jill, we've seen growth of 22%.

And you can see, of course, the yield -- the GP per unit has grown from kr9,200 to 11,400, which is it -- it was unexpected that we saw this big increase in yields, but we are, of course, pleased to see that. We've seen some negative impacts due to the closure of the airspace over Russia.

And we've also seen that certain proportion of the capacity has been taking out, as we cannot use Russian -owned air crafts at this moment in time. Very strong performance, we're very happy.

It seems like it's stable situation right now, we see great benefits of our own, enhanced capabilities in terms of the chatter network and we expect that the performance will continue to be very strong. Sea freight.

Let's also here start with the market and with volumes. We see that relatively weak market in Q1 in terms of volume, market is down in terms of TEU somewhere between 5% and 10%.

We are down volume-wise as 7. So I guess we can say that we are having a development in line with the market.

We're not growing faster, but we're not losing market share either. And remember, we are still in the middle of the integration phase.

Normally we would actually expect us to have somewhat weaker development than what we're seeing on the market. And it's not likely that this week development will change right now as we're still seeing negative impacts from the lockdown in China.

But of course there will be a lot of buildup demand once we will see reopening in the Shanghai area. Also here, a very good development going from [Indiscernible] numbers 5,000 DKK puts Yuzu 6000, 409 to 5, 9 to be accurate.

And this is somewhat also higher than what we had both expected ourselves and also indicated to the markets. I might as well just talk a little bit about it right now.

For Air and Sea, I'm sure that a lot of you will ask us about the yields. What are they going to be this month and what are they going to be for this quarter and for this year and for the next coming years.

I hope you will appreciate that it is associated with a great deal of uncertainty for us to guide you in respect of a single number that you have to put into your spreadsheets. It's not unlikely that we are -- we have probably come to the conclusion that we probably have been slightly too conservative in the guidance we gave you, in terms of trying to direct you, in terms of an absolute yield number, but if it's going to be [Indiscernible] going forward, it's just very, very difficult for us to say.

It's not unlikely that we can capture and retain a little bit more of the new and higher yield, even as the markets normalize going forward, but we can probably come back to that [Indiscernible] rate. Very nice.

I met a lot of the country hits of the Road division here in the building today. Fantastic to see them back after COVID lockdowns, celebrating also fantastic results.

They can stand the challenge also to anybody in the market or competitors. Rock-solid, very fantastic, very good results.

Growing earnings by 23%, very, very good. Also, stemming from a nice development in the gross profits.

Some of you have asked about the margin, the gross margin. It is inflated by the high revenue.

Cost are going up for Road haulage, so don't be too concerned, that the gross margin is down. As long as the gross profit in absolute terms and also consequently the EBITDA is up, nothing to be concerned about.

We, as you know, have very few KPIs to measure the market, and our developments up against the market but it is our very, very firm, very clear ambition that we have taken market share. We are gaining a lot of new customers, and we have taken market share in the Road division.

This is also what is driving the good development. It seems like the capabilities we have or the fine tuning and the professionalism that we have now in terms of the product that we're offering also as a part of the Roadway Forward project is something which are also attracting customers.

We have also -- we have access to capacity right now, which is good to be able to establish and we do hear certain anecdotes but that is not always the case in the market. So the fact that we can actually supply shippers with capacity, of course, actually also for air and sea, but also here for road is something which we will -- which will probably be beneficial for us also going forward.

The last slide before I hand over to Michael is page number 10. Also here, just take a moment to observe the earnings growth.

I think this breaks most of what we have seen in the past. Earnings growth are close to 200%.

Maybe Q1 was not the best quarter a year ago, but nevertheless, very strong performance in the quarter. The whole consolidation of our infrastructure, the building of the logistics campuses that we're doing around the world is now also being reflected in the numbers.

Here you can say access to capacity, we have our own facilities. This is the result of a very long term strategy that we have had in the company.

And it's a true privilege to be able to see the very strong development of the division. Here we've tried to illustrate that in the conversion ratio and the EBIT margin crafts also the addition of Agility.

It's very clear that you can see that also reflected in the overall numbers of the company. It has been an extraordinarily strong quarter.

So just a word of piece of advice. Be careful not to kind of multiply this EBIT result by fall.

We cannot promise that that will be the result of going forward for the division. But we are adamant that we will continue to see a satisfactory and the good development also in the coming quarters.

But we just have to together a couple of more quarters on our belt, but very good performance. Also a lot of people, during COVID lockdown have performed a fantastic operation coming to our warehouses throughout the world and performing a high service to the clients that we have in the division.

So well done also to everybody in the solutions division. You can read all the bullet points.

I'm not going to go through them each and everyone of them, but you can read them yourself to the right hand side of the slide. So with little over 15 minutes already passed of the presentation, I will pass on the board to you, Michael.

Please, take it away.

Thank you very much. And I will go through Slide 11 with the P&L for Q1 2022.

One thing of course is that need to be aware of is that deal is not included in comparative figures, so that's an impact. And then also the matters that didn't [Indiscernible] elaborated on the previous purchase is impacted here in the P&L.

The revenue growth, almost 78% compared to last year's quarter, is due to the GIL, obviously and then also to the freight rates. We see a strong performance for our gross profit in absolute terms and numbers.

So that is very satisfied for us to see that and we're also able, with the productivity, I think as Bjorn also mentioned, to convert that into EBIT, giving us an EBIT result of more than doubling what it was compared to same period last year. The conversion ratio then sits at a record breaking number here, 50% for the group as a whole.

Also, a nice increase in there. If I look at the number of employees, it has also increased.

We -- when we acquired the GIL, there were 17,000 employees. So you can see that that has been included and then we have also added some growth.

So that's the number of -- explain the number of employees. So all in all, if you then add it all together and convert that into our earnings per share at 12 months diluted, we have seen also here an significant increase in nearly 80%, giving an earnings per share of 60.5 DKK per share.

So that's a nice number for us and as you are aware, we track that very thoroughly. Then if I skip to the next page, that is the cash flow.

We have also seen a significant increase here in the cash flow. It's always nice to see that we are able to convert our P&L into some cash.

That's also what it's all about. I know I also said this before, that the networking capital is increasing.

It is due to the fact with the high freight rates and also the growth, obviously. And I've said it before as well, that we do not see any signs on overdue in our receivables.

We track that also very narrowly to make sure that we get the cash collected so we can continue the strong cash conversion that we see. We have our cash flow from investing activities has been impacted a little bit by the properties disposals.

I think in the last couple of quarters we mentioned that we have tied up a little bit in our net working capital and that should be -- if we don't now and that's impact. It's not a significant number, but it's --it's obviously impacting the number.

Our gearing ratio now sits at 1.2. That's also, you can say, a little bit below what we have expected maybe.

And they're also giving us the opportunities to increase the share buyback that I will come back to in a minute. We have this quarter issued a new 600 million corporate bond of -- with duration of eight years.

So that also adds nice to our portfolio of bonds and our tip maturity table. It looks fine.

We have given our GIL acquisition. We have, of course, had more EBITDA and hence also more tip.

So we're close to 30 billion in DKK in interest benefit. But again, it's clearly within our range for that.

If I skip to the next page, as mentioned, we have seen nice results for Q1 and also converted into cash, giving us the opportunity to start a new share buyback program today with the amount of 6 billion DKK running into close to when we announced Q2 in the 25th of July 2022. We have in Q1 had a share buyback program which was concluded three weeks ago.

You can see that here in the table as well. I think one thing that you should bear in mind here that we have decreased or reduced our share capital.

We did that in connection with the AGM and now it's also registered in Danish Chamber of Commerce. So on our new share capital is 234 million.

So when we calculate the earnings per share, we have, of course included this as well. The share buyback now, if you look Q1 2022 for the three-month period, there, it's roughly 1.6 billion DKK that we have acquired per month.

It has -- if you look at the numbers now for the next quarter, it will be close to 2 billion DKK on a monthly basis that we buy back share. So it's a significant portion that we buy back.

The next slide is a little bit about our outlook. I think Bjorn has also mentioned some of it.

Based on the performance that we have seen and the expectations for the remainder of the year, we have increased the guidance now to -- in the range of $21 billion to $23 billion DKK. It's -- we do -- it's based on the strong Q1 and we have also the expectations for the last couple of quarters.

We do expect some normalization in the second half of the year, and that is tailored into this updated outlook. And I think it's -- you can also see here that, I think a lot of others expect that the global economic growth will be a little bit less than what we have anticipated earlier on due to the things that Jens Bjorn mentioned, with the crisis that we see.

It's also clear that the uncertainty or the visibility for the remaining part of the years is -- for the remaining part of the quarters is, the uncertainty has increased and the visibility has decreased. So I think that's -- and we expect the tax rate to be in the range of 23%.

This year, it's obviously impacted by the integration like always. But we expect that we will come back to around 23%.

And for the special items, the integration cost, I think Jens also mentioned that we still miss to expense $600 million. Obviously, we will not expense them if we do not use them, but that's what we expect right now.

So I think that's it from my side. We go to the Q&A session.

Yes. Thank you very much.

Three questions from my side. First of all, guys, could you make some comments in terms of how the relationship with the carriers is at the current market state?

You'd see them out there on sort of [Indiscernible] the ones that also focus on logistics. And do you find the negotiations in general, but a more challenging with the carriers?

My second question is on the [Indiscernible] side also, you mentioned, so what demand that can you be a little bit more particular exactly what you see in terms of the lower demand is within some specific areas. I know that truly yesterday you said that service related good [Indiscernible] they're doing quite well.

My final question is on the conversion rate. Well done on getting that above the 50%.

And obviously, your well-placed for the long term targets. Can you just explain to me, are there any dynamics here assuming that a rate starts to go down that would put the Europe conversion rate on the price up?

Thank you very much.

I'll start on some of these and before Fleming here, and the room gets to set, please also have a look at Page 15 in our presentation, talking about it's not every day it happens, that's the reason we want you to focus on it. The Capital Markets Day at DSV on the 31st of May.

You're more than welcome to participate if you wish to. In terms of the carriers, we have a good relationship with most carriers.

We are finding solutions; we are growing with them. We get space allocation.

We find deals when we need to find it. We show flexibility, they show flexibility.

It's businesses as usual. We use most carriers in the world still in our program.

And then there are some, of course, that are more vocal about going into our area. And I think it's sometimes gets blown a little bit out of proportion, it's not like we are in fierce competition with anybody, with any of the carriers.

There have always been certain areas. There's always, As we know, 50% of our volumes have always been carried by the ocean carriers.

We have taken market share. Maybe they've taken a little bit of share recently.

But as it looks right now, we actually feel that it's not changing the dynamics for freight forwarders like these. Then it's a little bit about the ocean markets, it's difficult to say that, of course we all know that estimates for global GDP growth have been reduced a little bit.

Still, believing that we will see maybe in the line in the region of 3% growth this year, which is not necessarily bad. You know, the market we said was down 6% to 8% in the quarter, most significantly, it was the transpacific which was also very strong a year ago.

We have to be very careful when we mentioned month-by-month and quarter-by-quarter. Now comparing, also remembering, trying to remember all the time what happened a year ago.

some quarters and months were very strong last year and also the opposite Kuhn is company we respect. So we can concur with what they said yesterday also.

It is a mixed picture. Some industry software from lack of Microchip's, from lack of components.

And others are maybe also suffering a little bit from lack of demand. For instance, maybe some retail and fashion customers on the conversion side, it would be so nice to go out and say that this level will not change even if rates go down.

We will try to offset some of the pain if we see slower growth by continuing to work on our productivity in the company that can offset some of it. But I guess it is likely that if rates and yields go down, consequently, also conversion ratio will go down and for the time being, we stick with the long-term financial targets that we have.

But as of course also fair to say, that should things change we would of course also feel the need to readdress the targets. But at this moment in time, they are what they are.

Great. Thank you very much for getting back.

Thank you.

Yes. Thanks for taking the question.

I have two, please. The first one is one Air unit margins.

Just want to understand the strength we've seen in Q1, was that quite statistically driven by the Russia -Ukraine situation on the major Europe blame or was the strength more broad during the quarter? And the second question is whether there has been mix changes in your volume towards high-margin areas.

You mentioned LCL, for example. Did those mix changes have to necessarily reverse as freight rates eventually come back down or can some of those mix improvements be more permanent?

Thank you.

The last question first this is more prominent. You might have a point, but not necessarily on airfreight.

I don't know if that question was related to airfreight, but on ocean, it's actually a relevant point that you raised that the LCL product is doing really well. So this, we have seen some mix changes which could have a permanent positive impact on the yields.

We cannot quantify exactly what that would be. But that could help us retain some of the high yields that we're having right now.

It's not what is happening on airfreight, but on airfreight, it's more a matter of us once you say -- it's not really related to the Russia-Ukraine situation, what we have seen on airfreight. I think it's a continuation -- it's the product of the continuation of the development of the Air Charter Network, for instance, where we are still fine-tuning that system that we were so pleased to inherit from Panalpina, those capabilities.

We have expanded our service offerings through our own network with fixed departures, owned capacity. And we have gotten more and more used to also maneuvering in this environment and we have been able to strike some good deals where we offer strong service product to customers.

So it's more that that has driven the yields in the airfreight and not so much the Ukrainian -Russia situation.

Yeah. Understood.

Thank you very much.

Hi. Good morning.

Just to touch base back on Ukrainian Chinese lockdown, can you please -- what's your assessment on the loss of capacity and how is it different for trade lanes? And second question, could -- on M&A, if you were to acquire another company, the size of Agility, let's say same for earnings [Indiscernible], before [Indiscernible] is completely integrated, would it threaten the integration?

And even in general, what's the risk that you see integrating two mid-sized forward at the same time? I think I'll stick with two questions.

Thank you.

Talk about the M&A part, maybe the first year or more than welcome to.

If we take the loss on capacity, I think that we see that the different areas where we've lost capacity it's in the airfreight market. Obviously, it takes longer time to fly from China to [Indiscernible] here, there has been rumors in the market that it's off to 15% that has been taken out.

That's put predominantly in the freight market because many of the passenger carriers would go through the Middle East, so that would have the same routing. If we take on Road, I think it's something that is also a little bit underestimated.

They actually furnished a lot of drivers to the whole disk capacity. And here there has been speculation that it could be 5%.

Some even say a little bit higher than 5% of the capacity of that has come out. So there's certainly some impact on the situation in Ukraine that is much larger than the impact of what can I say, the lack of volume in the country itself.

It has a spillover effect on all the markets as well. So I think that's a little bit on the capacity side.

If we take the M&A side, I think it's clear that we have to complete the GIL integration. We almost [Indiscernible] already touched upon it in his introduction.

And I think that we're doing fairly well. So if we were to look at a similar size of transaction I think there would be nothing that would prevent us from having a little bit there.

It does take some time from the initial discussions would start anyway until we would be able to close the transaction and start integration. The organization might sometimes need a little breather.

The GIL integration will be done faster than anything we've ever seen before and we're very happy about that but we also know that it puts the organization under pressure. So we will have to strike a balance on that, but you can rest assured that if something moves in the market we will be part of it.

I think that's the feedback on the second question.

Thank you.

Yes. Thank you.

And congrats again with strong results here. I have a couple of questions.

We'll take them one at a time. I'm still trying to get my head around the solutions part and the very strong development we see here.

Bjorn, you said we cannot multiply Q1 by 4. Why not?

Q1 is typically, as I see it, the season weak quarter. Has something changed fundamentally here?

So that's one part of it. And the other part is, can you give some wording on why this higher level, is it a few contracts that you've gotten rid off or you have improved that has interest?

More to get a feeling of how we should see coming quarter. So that is question number 1.

We take great care about many things in the comment about a particular solution, so maybe you can answer that question.

I'll try to give it a shot. I think, Dan, if you look at solutions in general, we'll probably run at a capacity utilization just shy of 95%.

Typically, we've been running at 87% - 88%. So that of course means that we get, what can I say, more rental income and we would have to say in cost base.

When we then have the warehouses full but they're not, what can I say, flooded. If we get that on slide and the productivity, it also comes up.

So we will have a little bit higher productivity. Then we have a little bit of situation like we are a semi carrier on this because we have some lease agreements on these premises and the market rates have come up, so that probably also has an impact on what we're doing.

Then I would say the seasonality might change a little bit with the addition of GIL, as well. We've seen that at least, we don't know the business that well yet, because we haven't been running it for a whole year.

But we see that it's been quite busy in the, what can we call it, cold period in that part of the world, we will probably consider some of that sort of been doing really, really well and impacting our numbers. That's also why we highlighted it.

Then I think the whole campus situation that we have been working on, it really pays off that we consolidate the volumes and we can do the resource planning in a good way. And then the last thing that we've really also done is we've added a lot of automation into our warehouses so that we get a higher productivity.

So if you add all these things up -- and I would actually mention one thing more. I don't know if you can recall it, but years back we talked about a leader list where we implement new customers and have some, what can I say, financial negative impact of that in the beginning that's been reduced dramatically.

So if you have an engine and it's firing on all cylinders, I think that's what we can say that Solutions are doing right now and of course we would do our best to try to keep it at that level. But it could also be that it would plateau a little bit lower than that.

Having said all this, I think that at a certain point in time given the results that we produce in the solutions division, we will have to have a discussion about the targets for that division as well. But I think right now we will just focus on the operation and then a little bit later, once this has stabilized, we will figure out what we should think about it in the longer run.

Okay. [Indiscernible] yes, thanks a lot.

And then back to [Indiscernible], it's easy to see -- to be fully share and to see the progression, but if you were to turn this around, where do you see [Indiscernible] the [Indiscernible] and what would take this down? Is it just a matter of we're entering some [Indiscernible] volume starts decline or is it freeing up capacity coming back into the market in reduced rates?

And how should we think of the timing obvious? So that's Number 2, thanks.

[Indiscernible] scenarios, negative scenarios about this, that and the other happening, and as [Indiscernible], we have been too conservative in the past. It's good that we have been conservative and not the other way around, having to come out and explain a weaker performance, but more positive performance.

Of course, we do rely on growth in volumes. Volumes traditionally, this is as good as me or even better, have grown traditionally in line with world GDP.

It seems like world GDP will grow faster now this year, than what it did in 2019. So it's not like it's going in reverse or anything.

We don't know what will happen next year, of course. That difference [Indiscernible] among macro specialist about that.

But of course, if volumes were to deteriorate, there is a lot of over capacity coming in, that would not be very beneficial for the sea freight market. And then the big question is yields.

Where will they go? As I said, they will -- we will be not estimating that yields will go back to anywhere near where they were before.

They will find a place between where they are now and what they used to be. And where that exactly is, it's just impossible to say.

Actually, I do believe that airfreight yields will be not sustainable on current levels, but that they will be, because more structural things in our company has happened on airfreight maybe than sea freight. So we could probably see a more positive development going forward in terms of yields not dropping as much on air, maybe than what they do want to see.

I know you touched upon it here a bit because I was curious about everybody knows and reckons that the GDP will still grow but maybe at a lower pace. So how is that linked to global trade?

And then how will forwarders grow? You usually say the containers, modern least and probably also MR can grow with a premium to GDP.

And in that market, how will forwarders grow? Will you continue to be able to take share?

So we can add 1 to 2 percent points to your growth with a GDP growth of 2% to 3%, is that realistic?

We've always said that you should expect us. We know we lean out when we say this, we are fragmented industry.

We know that we have strong competitors. Some of them we respect, others not so much.

But nevertheless, we feel that as one of the largest in the world, we should outgrow the market outside of M&A and integration periods. If we can uptake markets here, I mean, it's a little bit of a problem.

You will know this by analyzing the development of DSV over the last in many, many, many years. We have never been the company who have outgrown in terms of volume the market the most.

Where we have outgrown is on the absolute GP growth. And we are committed to continue to do that and we should have this multiple effect on the GDP growth of the world also and we will continue to work on the conversion also.

We have so many plans that can improve the productivity of our company with through investments in IT and process optimization and digitalization. So there are a lot of room for us to be able to grow our earnings, everything else equals.

That's it for me.

Current situation in U.S. Hello, can you hear me?

Yes. Loud and clear.

Perfect. My first question is around the current situation in China and what you're seeing there in terms of trucking goods to the ports both on air and ocean.

And have you seen any improvement in trucking given the government was talking about easing some of the restrictions? And how do you see volumes from China as the restrictions are eased?

Do you expect a surge in volumes and could that be further disruptive to the market and tighten the market or a gradual improvement? So that's the first question.

Secondly, we've seen trucking rates in the U.S. have declined and capacity availability has increased.

Just wanted to know how you are seeing that market, and if you have seen any indication of a slowing demand in the U.S. And then thirdly, on Agility GIL contribution now expected to be at least $3 billion, what's driving this?

Is it the market conditions or the fact that the GIL operations have turned out to be better than you expected? Thank you.

The Gil. I will explain a little bit why we have changed the world and to at least $3 billion, and then I'll try to come back on some of the other questions.

Yes. Thank you.

Obviously we have been clever along the way with implementing the Gil activity and It looks really good for us. We have added significant volume on our solutions business in the Middle East section.

And that has turned out to be a little bit more profitable from what we anticipated. So -- so that's one of for both the areas, and then there is the normal growth in the year, quiet business as well.

So that's why we -- we say at least $3 billion DKK in long term impact from the GIL acquisition. When look at the trucking and capable or the trucking market in China has been deeply negatively affected by the lockdown.

We have seen certain, I guess, the most important production areas are on a test so to say being reopened recently. So we're slowly seeing an improvement in the situation, but it's still far too early to say exactly what will happen.

Spoken to our people in the region and they are actually expecting, as you mentioned reported a surge in volumes that would be a lot of -- that's a lot of build up demand which will come. This is also what we've seen in previous lock downs in China and we can take some lessons from previous experiences.

So though even somebody who raised the point that warehousing capacity would come under pressure in the destination areas once all this volume came back into the system. I don't share that concern.

As such I think the flow will be constant to the warehouses and to end consumers also. In the U.S.

it's -- I don't have information about any particular slowing of the activities that we are seeing is correct that we're not in kind of the same situation maybe as we were a year ago where it was really difficult so sometimes something without us knowing it, things are actually improving we're not noticing in because it's happening very gradually. But if you were to compare now with maybe 9 or 12 months ago, you probably right in saying that there's been, a little slowdown but nothing material for us.

I mean, the fact of the matter is that the EBIT contribution of DSV wrote U.S. is significantly above what was a year ago, in Q1 2022.

Thank you. I got actually three questions here.

So firstly, on the Roadway Forward, can you give -- because you mentioned that it's progressing as per the timeline, as per the plan. Can you give any color on how much of the volumes are actually on boarded onto this platform within the Road Network and how much of the countries that have also being on boarded?

That's one. Second one, on the Charter network, can you give any color on the load factor within your own charter capacity?

Are you call percent of your capacity on the East Coast trade lane? Just trying to get a sense, like all much room is left there in terms of further optimization of charter network.

And the third, one is don't use facts because you didn't flag that unwind of low margin volumes was a contributor to the yield performance. What is actually the exposure of those volumes in your mix?

And what will be the impact as we go into Q2? Thank you.

If we take the road for a forward, I think there's a couple of things in relation to that when we look at it. If you look at it from an operational point of view, we actually have, what can I say, redefined our group as product, which is the cornerstone or the LCL product enrolled.

And we've reinforced the way we produce it. We can do this on our existing production platform and then govern it based on that.

It's a little bit harder to govern if the system doesn't help you as much. Then the role-play forward is actually a system that will co-exist with this group of network and also produce it in a more efficient way where you need much less human interaction to do it.

Here, we run our POC set up and I think we also said that on the last call, that the next country coming up this summer is Poland, and then we will have the last country in the POC as Germany. Once these countries they are on the platform, it will be, what can I say, a completion of the POC, and then we will basically go into a full-blown rollout.

So it's still early days on the digital part of the flow. But right now, we're making good progress in relation to completing the POCs with success.

I think the charter network and capacity, given the lack of capacity you see in the market we, actually run the charter network was basically full capacity utilization but, that means that, on all the major lanes where there are volumes we would fly more or less with index on that. But sometimes if there's not, let's say if China is an export era and you go to Europe, you have planned in, this schedule that you don't have full utilization the other direction.

If that makes sense to you, it's a little bit counter intuitive, but that means that if we do certain number of round trips per week, the business case is based on that we are full in one direction all week and then it might be that we only fill it up 50%, 60%, 70% in the other direction, but it's very important that we get back to the origin where you pay, what can I say, for the predominant part of the journey on that plane. So I would say that we cannot really produce more on this, we get more capacity in at this moment in time.

Then you also talked a little bit about the yield impact and low-margin business. I think if we should say something about it, it's very hard to come up with something specific because it's dynamic, it happens all over.

You have a contract; it's priced perhaps a little bit below market. You confront the customer with -- the customer would like to seek another solution.

It's probably impacted us with 2%, 3% or something like this of our volumes, where this volume has been gone elsewhere. I think that's what I can say to that.

Thank you. Can I have actually ask a quick follow-up on the ruined forward.

How critical s the platform to grow like. Say, if you adopt quite and asset, we just have significant exposure to overland

You can say, in order to be able to do what you've been doing on air and sea and really get the marginal conversion ratio up. So getting it higher than it is now, then it's crucial.

If it's to combine two operations, you can also do this. We have solutions in our stack that allows us to integrate with multiple platforms.

So it is possible, but you will have lower productivity and more human interaction. So it doesn't prevent us from growing, but the value you can get out of it is lower than if you have the real platform.

As I've said before, there's no enterprise solution, at least to my knowledge, on a European road business today. So nobody has a platform.

So the first one that we're getting, obviously will have a very unique situation with higher productivities and most peers and also with what can I say the capability to do rollups on the M&A sides and basically take advantage of the scalability. So that's card, we're trying to get and as it looks right now, we will get it.

And then we will be able to develop road quite nicely.

Got it. Thank you very much.

Thank you. And hello from Hong.

I'm here looking at this company, but familiar with the sector. If I may have 3 questions.

Maybe just a bit of clarification on your target with respect to agility of 3 billion going into 2023, it seems like 15-20% higher than 2022. Is it on a pro forma basis or this 3 billion number into consideration, some rollover of freight rate going into 2023?

That’s number 1. And secondly, to the question that has also been asked in different form with respect to expectation of accept demand summer because of volume loss out of China in probably April and to an extent in May.

Can you share some color on the inventory level at the retailers and particularly in Europe? And following Russia, Ukraine conflict, are you seeing cautiousness among the retailers leading up to the summer?

They would rather focal withdraw amounts from inventory, which I would imagine that already been probably pretty lean. And finally, in terms of acquisitions and what drives in terms of your air and sea, are you comfortable with the scale?

At what point you would think that incrementally synergies would diminish. And in terms of own cycle, shall we expect, the intensity will slow down at the peak of the cycle because the valuation multiple puppy would have gone.

Gone at a level where your implied IRR would be difficult to achieve. Thank you.

For the GIL impact there you have to bear in mind that this is a full year 2023 estimate the $3 billion, at least 3 billion DKK impact. And I think I touched upon it before, why we say at least, so I think that's hopefully should answer the question.

We've not had to full year impact in 2022. So we will complete it in FY '22 and then you will get the full year impact in FY '23.

I think that's -- we don't get more synergies in FY '23. It's just what we say is that we've got the $3 billion probably and a little bit more.

But we can't sit and quantify so we would like to close off what can I say this communication now. If you look at the inventory level in EU with the retailers, I think the situation is that many of the retailers they still need to stock up.

They're running on very low into inventory levels. I hear that the inventory levels are little bit higher in the U.S.

so it's little bit different. So right now there is a backlog of that needs to be shipped.

And of course, we expect to produce that at a certain point in time. Then you’re right about the consumer confidence given the war on Ukraine.

It's probably declined a little bit so we will see what the consumer will do. It's not only the war in Ukraine.

It's actually also the energy prices, stuff like that drives some different behavior. Right now, we haven't seen our volumes decline because of that but you never know what happens.

We also see at least certain governments pumping out money to make sure that they get reelected. So I think they're going to try to look after the people that really need us when it comes to that.

Then you asked about Air & Sea scale and when have we got to pick, to get an advantage out of doing M&A. If we look at it, the market is highly fragmented.

And I think we sit in the situation where we probably, what do I know of the global market? Have 3%, 4%, 5% depending on which area we're talking about and how you measure it.

And I think that's quite unusual that you are in a mature industry in a certain way, you have such what can I say? Low market share of the big players.

There's nothing that tells us on our infrastructure that as long as we can't scale, there's no economies of scale. So if we continue to scale, we're going to get benefits out of it.

And I think that's at least going to continue as long as I'm in the company. And I don't know how long that will be with that, it might even be a decade.

And I can only remember one thing that somebody that's not in the room said that they're all CEO [Indiscernible] licenses set way back. It's always been consolidating in this industry.

And it will continue consolidating as long as I live. That's the only thing I sort of can say to that.

And I think we will be a part of it as we've been for many years. So hopefully that answers your question.

And then just in terms of timing, is it down-cycle offers you a ton on that question versus now?

Just case. So let's assume that there is value for 100 if the seller wants all 100, he will keep the company.

We will get some value to our shareholders if we have to buy it, then you can have all kinds of arguments. Is it built on this part of the cycle or the other.

We will make a business case and have an individual opinion about the what can I say, value of asset that we're talking about. And if we can't meet then they will not be a transaction with us.

If you buy 2 expense, if you don't get the return and for us capital allocation, Michael has just talked about share buybacks also we experience, we just buy our own shares and that's a better return.

Lovely. Thank you so much, and have a lovely day.

Thank you. Thanks for listening in.

Thanks for all your questions. Very insightful questions, also.

We hope we have answered all of them. If not, please feel free to reach out.

We look forward to seeing a lot of you on the 31st of May, at the Capital Markets Day here in Copenhagen, we look very forward to that. I know the investor relations team are in the process of putting a very special and very interesting program together that you can all look forward to.

And that will not only be the three of us that you have heard speaking here today which will present, and I also have to once again extend a big thank you to all the brilliant, hard-working employees of DSV who has actually produced the numbers that you see. We talk a lot about IT and processes and digitalization but we are still a people's business.

It's the people of DSV who has made that -- this result happen. So thank you very, very much for that.

We could not have done it without you. And with that said, we will conclude and we will say goodbye and have a good day here from Hedehusene, Denmark.