Freight forwarder DSV to cut 3,000 jobs as virus slows global trade

COPENHAGEN (Reuters) - DSV Panalpina DSV.CO will cut 3,000 jobs to mitigate the negative impact of the new coronavirus on global trade, the world's fourth-largest freight forwarder said on Thursday, after beating first-quarter expectations.

The global freight industry has been hard-hit by uncertain demand and crews’ health concerns following the virus outbreak.

DSV’s shares rose 3.6% after it posted a 7.6% rise in first-quarter operating profit before special items to 1.57 billion Danish crowns ($229 million), beating the 1.42 billion forecast by analysts in a poll.

The pandemic negatively impacted the result by 250 million crowns, which according to Jefferies analysts, was smaller than expected.

It also launched a new 1.4 billion crowns ($204.2 million)cost cutting programme which will trigger restructuring costs of roughly 1 billion crowns this year, DSV said.

Most of the savings will come from cutting 3,000 jobs out of the Danish firm’s workforce of roughly 59,000, Chief Financial Officer Jens Lund told Reuters.

DSV, which is currently integrating its billion-dollar Panalpina acquisition, said the global sea freight market in the first quarter fell by 5-7% while air freight was down by 8-10%.

“We expect the market to bottom out in April and May but our life won’t be the same afterwards,” Lund said, adding that global air freight was down roughly 20% in April while sea freight had fallen by around 15%.

Last month, DSV suspended its share buyback programme and withdrew its 2020 outlook.

Its Swiss peer Kuehne und Nagel International KNIN.S this week reported a 24% fall in first-quarter core earnings as trade volumes declined due to the coronavirus pandemic.

Reporting by Stine Jacobsen; editing by Himani Sarkar and Jason Neely