July 31, 2020 / 8:53 AM / 15 days ago

UPDATE 2-Freight-forwarder DSV Panalpina beats estimates, reinstates guidance

* Full-year core profit guidance back at $1.31 bln-$1.39 bln

* Higher yields offset lost market share due to acquisition

* Second-quarter performance ahead of peers, says Jefferies (Adds CEO interview, share reaction)

By Nikolaj Skydsgaard

COPENHAGEN, July 31 (Reuters) - Shares in Danish freight-forwarder DSV Panalpina rose more than 4% on Friday after the firm beat profit estimates and reinstated its formerly suspended guidance, despite having lost market share in the second quarter.

The world’s fourth largest freight forwarder has weathered a global slump in trade volumes by cutting costs, including laying off 3,000 staff, and quickly adapting its business to the pandemic-hit world economy.

“The uncertainty remains higher than normal, but based on a strong first half of 2020 we are now able to reinstate guidance for the full year,” Chief Executive Jens Bjoern Andersen said in a statement.

For the year, DSV said it expected an operating profit before special items in the range of 8.2 billion to 8.7 billion Danish crowns ($1.31 billion-$1.39 billion).

DSV, which specializes in complex transportation logistics, owns very few larger assets - no ships, planes or warehouses. This makes it easier to quickly adjust capacity.

“We have seen once again that our business model of being asset light, which allows us to adjust our costs almost on a daily basis, has worked,” Andersen told Reuters.

The firm’s Air & Sea division, its largest, took a huge boost from the firm’s billion-dollar Panalpina acquisition last year. DSV said the integration of Panalpina was “progressing slightly ahead of plan”.

DSV benefitted from Panalpina’s freight plane network, which provided a competitive edge during the pandemic, when countries desperately needed protective equipment, Andersen said.

But the integration also cost DSV market share within air and sea freight in the second quarter, he said, which was partly compensated by higher yields per unit.

Second-quarter operating profit before special items rose 63% to 2.6 billion crowns, above an average of 2.36 billion crowns forecast by analysts in a poll compiled by DSV.

Jefferies analysts said the key driver for the results had been the Panalpina integration, a less severe volume slump, strong cost management and an “extraordinary market situation in air freight” caused by the COVID-19 pandemic.

$1 = 6.2743 Danish crowns Reporting by Nikolaj Skydsgaard; Editing by Shri Navaratnam and Edmund Blair

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