Financial Targets

Financial Targets

2020 TARGETS Previous 2020 Target IFRS 16 impact Revised 2020 Targets
DSV Panalpina Group total      
Operating margin 7.5% 0.0% - + 0.5% > 7.5%
Conversion ratio 32.5% -1.5% - - 2.5% > 20.0%
ROIC (before tax) > 25.0% -7.0% - - 8.5% > 20.0%
Air & Sea      
Operating margin 10.0% 0.0% - + 0.5% 10%
Conversion ratio 42.5% 0.0% - + 0.5% 42.5%
Operating margin 5.0% 0.0% - + 0.5% 5.0%
Conversion ratio 25.0% -1.0% - - 2.0% 22.5%
Operating margin 6.0% +1.0% - + 2.0% 7.0%
Conversion ratio 25.0% -2.5% - - 3.5% 22.5%

The 2020 financial targets are adjusted for the impact of the changed accounting policies following the implementing IFRS 16, but are otherwise unchanged from last year and are expected to be achieved by 2020.

The targets are based on the assumption of stable global economic developments during the period, with global annual GDP growth of approx. 3% (with regional differences) and freight market growth in line with GDP growth.

The main drivers for reaching the targets are above-market volume growth in all divisions. With growth in transport volumes and continuous focus on operational excellence, we see opportunities to improve productivity in all divisions.

Capital allocation

Our capital structure is designed to ensure:

  • Sufficient financial flexibility to meet the strategic objectives
  • A robust financial structure to maximise the return for our shareholders

After the implementeation of IFRS 16 our targeted financial gearing ratio is below 2.0xEBITDA (previously 1.0-1.5x). The ratio may exceed this range following significant acquisitions.
Our free cash flow allocation strategy is unchanged from previous years:

  • Repayment of net interest-bearing debt in periods when the financial gearing ratio is above target range.
  • Value-adding investments in the form of acquisitions or development of the existing business.
  • Distribution to the shareholders by means of share buybacks and dividends.

Share buybacks and dividend policy

Group Management continuously monitors whether the realized and expected capital structure meets the targets set.
Any adjustments to the capital structure are determined in connection with the release of quarterly financial reports and are made primarily through share buybacks.
DSV Panalpina aims to ensure that the dividend per share develops in line with the earnings per share. Proposed dividends for 2018 amount to DKK 2.25 per share, equivalent to an increase of 12.5% on 2017. Following the Panalpina transaction the Group will propose a dividend policy with a pay-out ratio of approximately 15% of net profit.