* Q2 underlying op profit 701 mln DKK vs forecast 707 mln
* Sees 2014 profit 2.55-2.70 bln DKK vs 2.5-2.7 bln before
* To buy back another 400 mln DKK of shares
* Shares climb over 3 percent
(Adds analysts, share price, CEO comments)
COPENHAGEN, July 30 Danish freight forwarder DSV
nudged up its 2014 profit forecast after a strong rise
in second-quarter volumes and announced another share buyback
programme, sending its stock over 3 percent higher in early
Second-quarter operating profit before special items was 701
million Danish crowns ($126 million), up from 680 million in the
same period last year, though below a mean forecast for 707
million in a Reuters poll of analysts..
The world's six-largest freight forwarder said sea-freight
volumes measured in twenty-foot equivalent units rose 9 percent
year-on-year in the first half, while air freight in tonnes was
up 11 percent.
It said it now expects 2014 operating profit before special
items in a range of 2.55-2.70 billion crowns up from a previous
forecast of between 2.50 and 2.70 billion.
"The growth within air transportation is stronger than I had
expected. They have taken more market share ... and their
margins are less squeezed by competitive pressure than we saw at
Kuehne & Nagel and Panalpina," said Nykredit analyst Ricky
Rasmussen, referring to DSV's rivals.
Air and sea freight contribute 42 percent of DSV's revenues.
Nevertheless, converting volume growth into profit remains tough
in a competitive market, Sydbank analyst Jacob Pedersen.
"Revenue will grow, but not in the same level as the 10
percentage volume growth might indicate," he said.
DSV said it would launch another buyback worth 400 million
crowns in August after conducting a similar buyback in April.
"We convert 100 percent of our earnings to cash. The
priority usage of the cash is M&A but since we haven't done any
M&A, we do the buyback," DSV Chief Executive Jens Bjorn Andersen
"What investors can expect is that we keep the leverage of
the company around two times of EBITDA (earnings before
interest, tax, depreciation and amortisation)," he said.
Andersen said DSV's business in Russia constitutes just a
percent of the company's total business so he expected little
impact from the ongoing turmoil in eastern Ukraine, which the
West says Russia is stoking.
Shares in DSV are down 3.2 percent this year underperforming
Swiss logistic firm Kuehne & Nagel which is up 4.3
percent, but performing better than its smaller rival Panalpina
which is down 15.9 percent year to date.
($1 = 5.5617 Danish Crowns)
(Reporting by Teis Jensen, Sabina Zawadzki and Annabella
Nielsen; editing by Sabina Zawadzki)