DSV Annual Report 2022

25 DSV Annual Report 2022 Financial and non-financial performance = III demand especially on the Asia-Europe and Trans-Pacific routes - this led to rapidly declining spot rates from the historical high rate levels we saw at the end of 2021. In 2022, we achieved sea freight volume growth of 7% (including M&A impact). Adjusted for the acquisition of GIL, the division's 2022 volumes were down by approximately 7%, which we estimate to be in line with the general market. The volume development compared to the market for both air and sea was impacted by our relatively high exposure to the Asia-Europe trade lane, which was among the weakest performing in 2022. Furthermore, our abili- ty to outgrow the market is normally limited during an integration year. Air freight (DKKm) Revenue Direct costs 2022 2021 90,591 71,988 70,846 57,795 18,603 13,051 20.5 Gross profit per unit (DKK) 11,941 18.4 1,557,972 1,510,833 8,638 Gross profit Gross margin (%) Volume (tonnes) Sea freight (DKKm) Revenue Direct costs Gross profit 83,840 67,819 16,021 61,055 50,337 10,718 Gross margin (%) 19.1 Volume (TEUS) 2,665,147 2,493,951 Gross profit per unit (DKK) 6,011 17.6 4,298 Strategic and operational highlights We successfully completed the integration of GIL in 2022, less than a year after the acquisition - thanks to the strong efforts from our teams worldwide. The inclusion of GIL has strengthened our Air & Sea network across most geographies, especially in the Middle East and APAC. With the integration of GIL, we also gained new competences, e.g., within the energy and the chemicals sectors. With the GIL integration behind us and general demand declining, our focus has shifted to adjusting our capacity and workforce and managing the impact of cost inflation on our business. This was a theme in the last part of 2022 and will continue to be high priority for us in 2023. In 2022, we continued to develop systems and service offerings to cus- tomers. Our workflows are already close to paperless, but we see poten- tial to use and further improve our systems, focusing on areas like digital customer integrations and booking data quality. This will help us provide better and faster supply chain visibility to customers - and increase our own productivity. Our air charter network provides tailor-made solutions to customers on specific routes. In 2022, we added new lanes to the network, e.g., from Singapore to Los Angeles. We operate the network with a clear fo- cus on flexibility so we can scale capacity up and down as demand chang- es. LCL (less than container load) in ocean freight is another business area where we increased our focus in 2022. We have gained a strong position within LCL in recent years, and we see good growth opportu- nities in this market. We saw increasing interest from customers for our Green Logistics services in 2022, especially around carbon footprint transparency and supply chain optimisation. The market for sustainable fuel is still relatively immature with volatile pricing and limited availability. We expect this will improve in the coming years, and it is highest priority for us to make sure that our customers have the option to choose lower-emission transports. Results DSV Air & Sea revenue was DKK 174,431 million in 2022 (2021: DKK 131,901 million), a growth of 26.1%. This revenue growth was driven by the addition of GIL business and high- er freight rates for both air and sea compared to 2021. Geographically, all regions contributed to the growth in revenue. Gross profit came to DKK 34,624 million for 2022 (2021: DKK 23,769 million), a growth of 38.5%. The increase was driven by the addition of GIL and high yields per unit for both air and sea freight compared to the same period last year. The extraordinary market conditions over the past years have had a positive impact on gross profit per TEU (sea freight) and per tonne (air freight). Our skilled forwarders, scale benefits and strong carrier relation- ships have enabled us to navigate the complex markets and offer trans- port solutions for our customers despite the challenges. With weaker demand, less congestion and lower freight rates, our gross profit yields started to decline in the second half of 2022. The division's gross margin was 19.8% for 2022 (2021: 18.0%). The in- crease was mainly due to the extraordinary markets as well as a change in product mix compared to 2021 - with growth within higher-margin activities like LCL and decline in lower-margin project business. This year, EBIT before special items was DKK 20,658 million (2021: DKK 12,768 million) an increase of 53.0%. The significant growth was driven by the inclusion of GIL, the general gross profit rise and our continued focus on productivity, achieving synergies and managing costs (operational excel- lence). All regions contributed to the EBIT growth in 2022. The conversion ratio came to 59.7%, compared to 53.7% last year. The con- version ratio was positively affected by extraordinary high gross profit yields. As yields normalise, we expect conversion ratio to decline. The improvement in 2022 was also driven by the GIL integration and the achieved synergies.

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