Logistics company SDK Freja, which delivered record financials with great advancement on top and bottom lines, takes a more gloomy view of the current fiscal year due to several ”external factors.” However, the growth target remains the same, CEO tells WPO.
The newly merged SDK Freja, which has booked record financials with significant top- and bottom-line gains, takes a darker view of its growth prospects over the next year due to a number of ”external factors.”
After a record revenue post of more than DKK 6bn (USD 850m) and a pre-tax profit of DKK 244m, the large shipping and logistics company is now downgrading its profit expectations for the next 12 months.
This is clear from the annual report of SDK Freja, which is part of the USTC group owned by oil billionaire Torben Østergaard-Nielsen.
Earnings could plunge 35%
SDK Freja expects ”slightly lower” revenue and an operating profit that could dip somewhere between 25% and 35% in the current fiscal year /2023.
In more specific terms, earnings could fall by up to DKK 85m. SDK Freja does not put a figure on the potential decline in revenue.
SDK Freja became a reality when USTC-owned SDK acquired Freja in November 2020, taking the combined company into a new league in the logistics industry. The /2022 annual report is the first fully consolidated financial statement for the shipping and logistics company.
SDK Freja points out that several ”external factors” could depress revenue and earnings at the shipping and logistics company, which employs 1,350 people and operates in eight countries.
These include developments in the global freight market, ”the general structures of our markets”, macroeconomic developments and ”not least” the war in Ukraine, where Russia invaded the neighboring country at the end of February this year.
Why is SDK Freja /cautious about expectations for the new fiscal year?
With recent rising interest rates, increasing inflation and a war in Europe, it is difficult to imagine that economic growth would continue at the same high level
Søren Gran Hansen, CEO, SDK Freja
”The past year has been exceptional with a very high level of activity for all our activities. With recent rising interest rates, increasing inflation and a war in Europe, it is difficult to imagine that economic growth would continue at the same high level we have seen so far,” writes SDK Freja Chief Executive Søren Gran Hansen in an email to WPO.
”But of course, it is difficult to estimate when and by how much. We have not factored in the effects of potential new acquisitions in our /2023 forecasts.”
Competitors more optimistic
Competitors such as NTG and Scan Global Logistics are less gloomy in their expectations for their logistics businesses over the next 12 months.
NTG, for example, upgraded its 2022 earnings guidance in May after advancing in Q1 2022 and the full inclusion of its acquisition of US logistics company Aries Global Logistics.
Scan Global Logistics has also raised its result expectations for 2022 following a fiscal year with rising top and bottom lines.
We are ahead of our plan at this stage and therefore expect to achieve revenue at the upper end of the previously stated range
Søren Gran Hansen, CEO, SDK Freja
Scan Global estimates transport market growth in line with global GDP growth forecasts of 3% but itself expects to outperform market growth while continuing to make acquisitions.
SDK Freja is pursuing a growth strategy that will see the shipping and logistics company grow significantly by 2025, by which time it aims to achieve revenue of DKK 8-10bn. At the same time, SDK Freja’s profitability must be ”at the high end compared to the market.”
”We are ahead of our plan at this stage and therefore expect to achieve revenue at the upper end of the previously stated range. Based on this positive development, we also have the ambition that our profitability should be at the high end compared to the market,” Gran Hansen says.
