Strong start to DSV-Schenker integration, to be completed in 2028

DSV has officially started the process of merging DB Schenker into its business. DSV had completed the acquisition of Schenker from Deutsche Bahn in April 2025. The company plans to complete most of this integration over the next three years and expects to save about DKK 9 billion (about USD 1.27billion) each year once the process is done by the end of 2028.

The integration has started off smoothly. DSV is beginning the process country by country. The first countries will begin this in the third quarter of 2025, starting with the air & sea division. One of the most important developments was DSV’s agreement with employee representatives in Germany. This agreement makes it possible for DSV to begin the integration in Germany during the second half of this year, helping reduce any uncertainty for both employees and customers.

Although the full cost savings will take time, DSV expects that some of the benefits, about DKK 0.5 to 0.6 billion will be visible in 2025 itself. However, this large integration is also expensive. DSV expects to spend a total of DKK 11 billion (about USD 1.53 billion) on the process, with about DKK 2 to 2.5 billion (about USD 3.9 million) of that being spent this year. These costs are being recorded as special items in the company’s financial reports.

According to DSV’s CEO Jens. H. Lund, the company is managing to meet its financial targets even while handling such a major integration. He said DSV continues to serve its customers well, even in a market that is very uncertain. He also added that this deal will bring strong benefits to customers and will help grow the company over the long term.

Schenker boosts DSV’s Q2 financial performance

In the April to June 2025 quarter, which is the second quarter of the year, DSV earned DKK 4.73 billion (about USD 745 million) in operating profit before special items. This includes a contribution of DKK 0.925 billion (about USD 1.5 million) from Schenker, even though Schenker had only been part of DSV for two months by then. DSV’s total gross profit for the quarter reached DKK 17.2 billion (USD 2.76 billion) with Schenker contributing DKK 6.41 billion (USD 1.03 billion) to that figure.

The company also reported strong cash flow. Adjusted free cash flow for the quarter was DKK 3.99 billion (USD 631 million). This helped DSV keep its debt under control, even after making such a large acquisition.

Although DSV’s own earnings without Schenker were slightly lower than last year, the company said that this was expected due to the weak global economy, trade tensions, and uncertainty in shipping routes, especially in the Red Sea region.

Despite all these challenges, DSV has kept its full-year profit target unchanged. The company still expects to earn between DKK 19.5 billion (about USD 3.05 billion) and DKK 21.5 billion (about USD 3.4 billion) in operating profit for 2025. DSV also believes that this acquisition will help improve its earnings per share by 2026.

Performance of each business division

The Air & Sea division performed the best out of all DSV’s business areas. In the second quarter, this division earned DKK 8.49 (about USD 1.31 billion.) billion in gross profit and DKK 3.46 billion (about USD 540 million) in operating profit before special items. Compared to last year, this was a strong increase. The growth was supported by higher volumes in sea freight and better profitability. Schenker’s contribution also helped, especially in areas like technology and aerospace.

At the same time, air freight volumes remained under pressure. This was mostly because of lower demand in the automotive and consumer goods sectors. DSV also cut out low-yielding air cargo from last year, which reduced volumes but helped improve profits.

The Road division did not perform as well. In the second quarter, it earned DKK 0.52 billion (about USD 81.4 million) in profit before special items, which was less than what it earned during the same time last year. Demand was weak in both Europe and the United States, and this affected results. Schenker’s USA Truck business, which was acquired earlier, also faced operational problems. However, Schenker still added DKK 0.13 billion(about USD 20 million) to this division’s earnings. DSV did manage to grow its market share in long-distance full-truckload services.

The Contract Logistics division had mixed results. It earned DKK 0.72 billion (about USD 111.6 million) in operating profit for the quarter. This was higher than last year, mainly due to Schenker’s contribution of DKK 0.34 billion(about USD 53 million). Without Schenker, this division would have seen weaker profits because of underused warehouse space and rising operating costs. Business activity was stronger in Asia and the Americas, but Europe remained a difficult market.

DSV said that in the coming months, it plans to merge Schenker’s physical warehouses, systems, and teams with its own. The company is also bringing everyone onto one digital platform to improve service quality and reduce costs.

Debt levels, cash flow, and future plans

Even though DSV spent a large amount of money to buy Schenker, the company is managing its finances carefully. By the end of June 2025, DSV’s total debt stood at DKK 93.3 billion making the company’s debt-to-profit ratio stay within safe levels, at 2.7 times. The company’s tax rate was slightly higher than usual, at 26.3% due to integration costs. DSV expects this to go back to around 24% in the future.

Looking ahead, DSV has a clear plan for the integration. It expects that 50% of the Schenker integration will be completed by the end of 2026. By the end of 2027, 75% will be done. The company is aiming to complete everything by 2028.

The savings from the merger will come from combining transport networks, sharing IT and financial systems, using warehouses better, and serving customers together with a single team. DSV believes this integration will help it grow both organically and through future mergers and acquisitions.