Financial Targets

Financial Targets

DSV total Actual 2017 2020 Targets
Operating margin 6.5% 7.5%
Conversion ratio 29.4% 32.5%
ROIC 23.4% > 25.0%
Air & Sea Actual 2017 2020 Targets
Operating margin 9.2% 10.0%
Conversion ratio 37.4% 42.5%
Road Actual 2017 2020 Targets
Operating margin 3.9% 5.0%
Conversion ratio 22.7% 25.0%
Solutions Actual 2017 2020 Targets
Operating margin 4.3% 6.0%
Conversion ratio 18.1% 25.0%

The 2020 financial targets are updated for the Air & Sea division, as the division achieved its previous 2020 targets in 2017. The targets for the Group are updated to reflect this change.

For the Road and Solutions divisions, the financial targets are reiterated and expected to be achieved by 2020.

The targets are based on current IFRS standards.

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

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.

Large scale integrations may have a short-term impact on DSV’s ability to achieve organic growth.

The ROIC target is before tax and the minimum target of 25% applies to all divisions.

Capital structure and 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.

Our targeted financial gearing ratio is set at 1.0-1.5.

The ratio may exceed this range in periods with significant acquisitions, as was the case with the acquisition of UTi.

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.

In 2017, our free cash flow exceeded what was needed to bring our gearing ratio within the target range, and, consequently, share buybacks were initiated.

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 aims to ensure that the dividend per share develops in line with the consolidated earnings per share.

Proposed dividends for 2017 amount to DKK 2.0 per share (2016: DKK 1.8).