Freight forwarder DSV has raised its annual earnings outlook after benefiting from high freight rates, but said consumer demand and freight rates have slipped slightly over the past few months as economic uncertainty bites.
The shipping industry has seen earnings skyrocket as high consumer demand coupled along with pandemic-related supply chain bottlenecks and Russia's invasion of Ukraine have prompted a spike in freight rates.
But as soaring inflation causes consumers to grow wary of spending, demand for freight services has 'softened' in the past months with volumes of air and sea freight estimated to have declined in the first half, DSV said.
'A Quiet Slowdown'
"There is a quiet slowdown in especially air and sea volumes, but rates are still high, the supply chains are still difficult," DSV's chief operating officer Jens Lund told Reuters.
Freight rates are still four to five times higher than prior to the COVID-19 pandemic, Lund added.
DSV, the world's third-largest freight forwarder, reported earnings before interest and tax (EBIT) before special items of DKK 7.5 billion (€1.01 billion) for the second quarter, beating an average of DKK 6.5 billion (€870 million) forecast by analysts in a company poll.
It said it now expects earnings before interest and tax (EBIT) before special items for 2022 to be in the range of DKK 23 billion to DKK 25 billion (€3.1 billion to €3.4 billion), up from an earlier estimate of DKK 21 billion to DKK 23 billion (€2.8 billion to €3.1 billion).
Shares in the company, which traded up 0.5% at 07:45 GMT on 26 July, have fallen nearly 26% this year on uncertainty about the global economic outlook.
"DSV is a clear industry winner and they will continue their impressive growth in the future through organic growth and acquisitions," Jyske Bank said in a note.
DSV also launched a DKK 7 billion (€940 million) share buyback programme on Tuesday running from 26 July until 4 October.