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UPDATE 1-DSV Panalpina cuts costs estimate; to buy back shares

(Adds details, share buy-back, CFO, analyst comments, share reaction)

COPENHAGEN, Oct 29 (Reuters) - Danish transport logistics firm DSV Panalpina said on Thursday costs this year would come in lower than expected thanks to rapid progress in integrating its purchase of Swiss-based Panalpina, and that it would resume buying back shares.

The company, which suspended a share buy-back programme in March, said it would start a new one of up to 6 billion Danish crowns ($953 million), corresponding to 5.22% of its current share capital.

The news came as the world’s fourth-biggest freight forwarding company reported third-quarter results that confirmed robust preliminary figures released earlier this month.

“In the third quarter of 2020, all three divisions delivered results above our expectations. Market conditions have been better than anticipated across most of our markets,” CEO Jens Bjoern Andersen said in a statement.

DSV shares were little changed at 0830 GMT. Sydbank analyst Mikkel Jensen said a new buy-back programme had been expected.

DSV, which competes with DHL Logistics, Kuehne & Nagel and DB Schenker, has mitigated lower volumes in a pandemic-hit freight industry by cutting costs, including laying off 3,000 staff. It has also been helped by higher yields per shipment.

DSV now expects annual costs and special items around 2.1 billion Danish crowns this year, down from an earlier estimate of 2.3 billion crowns.

The company said the integration of Panalpina was nearly complete.

Earlier this month, DSV hiked its full-year guidance for underlying earnings before interest and tax to more than 9.25 billion crowns, up from 8.2-8.7 billion.

Revenue in the Air and Sea division, the firm’s biggest, rose 34.8% in the third quarter, helped by the integration of Panalpina and higher air freight rates, which have soared during the pandemic.

Chief Financial Officer Jens Lund told Reuters those rates had fallen somewhat in the third quarter and expected a slight drop in the fourth quarter, depending on the development of the pandemic.

$1 = 6.2952 Danish crowns Reporting by Nikolaj Skydsgaard; editing by Jason Neely and Mark Potter