Hi Alex, You are missing a few key points. DSV's success has everything to do with its incredible corporate culture and religious focus on ROI. 2 things have changed. 1) The surprise departure of DSV's young CEO and 2) the (simultaneous) inexplicable announcement of the JV with the Saudi Arabian government to develop the logistics infrastructure and provide logistics support for the construction of NEOM - which is a deviation from DSV’s traditional asset-light business model and will require upfront investment (in warehouses, buildings, transport infrastructure) and is an inherently more capital-intensive approach. This is why the stock has derated...is it really the same DSV as the past? Will they really not overpay for DB Schenker? Why did the great CEO quit? William
Hi William, thank you very much for your comment. You raise two extremely important questions that I ought to have addressed in my piece. I will reflect further before completing my investment decision.
The former CEO Andersen was born in 1966, so I considered age c.58 as not a terrible red flag for retirement after a long stint - especially with the succession planning signal provided in 2021 with Jens Lund's role change. I see Andersen is now chairing STARK the building materials distributor, which should be a more hands-off role, consistent with a desire to slow down.
I did read about the NEOM joint venture, which has not yet received final approval. I see it is guided to be long-dated, with a c.$1bn total likely investment by DSV, and any major P&L impacts emerging only after some years of ramp up.
I am not sure how worried shareholders should be about this. If the DSV success has stemmed from the strong culture and ROI focus, which Lund and Ebbe have been part of, then couldn't we trust their judgement in having spotted a value-creating opportunity here? Or to invert it, what exactly is the conspiracy theory -- why would they approach this investment with bad intentions?
I note that back in 2009, they tried to buy control of the vessel-owning DFDS ferry business, and were thwarted only by antitrust authorities. This would have been an equally opportunistic move that would also have departed from the asset-light blueprint. So one could argue that an opportunistic NEOM investment is consistent with past DSV decisions made also under Andersen's tenure.
Here is the full llist of senior management departures: : CEO (Jens Andersen) (58yrs), head of the Air & Sea division (Carsten Trolle) (58yrs), Group Chief Commercial Officer (Rene Falch Olesen) (60 years).
Thanks William. We can add Keith Pienaar to the list, who was DSV's CEO Africa and member of Executive Committee until he was poached by AP Moeller Capital to lead their Vector Logistics business from February 2024.
Personally, I remain unsure how much significance to read into such a generational change of leadership. In isolation it doesn't look too unusual. Whereas if I had other reasons to worry already, then this turnover might seem like a further cause for concern.
Excellent and very useful deep dive on the freight forwarders industry. Thanks for sharing.
Hi Alex, You are missing a few key points. DSV's success has everything to do with its incredible corporate culture and religious focus on ROI. 2 things have changed. 1) The surprise departure of DSV's young CEO and 2) the (simultaneous) inexplicable announcement of the JV with the Saudi Arabian government to develop the logistics infrastructure and provide logistics support for the construction of NEOM - which is a deviation from DSV’s traditional asset-light business model and will require upfront investment (in warehouses, buildings, transport infrastructure) and is an inherently more capital-intensive approach. This is why the stock has derated...is it really the same DSV as the past? Will they really not overpay for DB Schenker? Why did the great CEO quit? William
Hi William, thank you very much for your comment. You raise two extremely important questions that I ought to have addressed in my piece. I will reflect further before completing my investment decision.
The former CEO Andersen was born in 1966, so I considered age c.58 as not a terrible red flag for retirement after a long stint - especially with the succession planning signal provided in 2021 with Jens Lund's role change. I see Andersen is now chairing STARK the building materials distributor, which should be a more hands-off role, consistent with a desire to slow down.
I did read about the NEOM joint venture, which has not yet received final approval. I see it is guided to be long-dated, with a c.$1bn total likely investment by DSV, and any major P&L impacts emerging only after some years of ramp up.
I am not sure how worried shareholders should be about this. If the DSV success has stemmed from the strong culture and ROI focus, which Lund and Ebbe have been part of, then couldn't we trust their judgement in having spotted a value-creating opportunity here? Or to invert it, what exactly is the conspiracy theory -- why would they approach this investment with bad intentions?
I note that back in 2009, they tried to buy control of the vessel-owning DFDS ferry business, and were thwarted only by antitrust authorities. This would have been an equally opportunistic move that would also have departed from the asset-light blueprint. So one could argue that an opportunistic NEOM investment is consistent with past DSV decisions made also under Andersen's tenure.
58 is not old! There were lots of odd things around his departure I won't post here...
Here is the full llist of senior management departures: : CEO (Jens Andersen) (58yrs), head of the Air & Sea division (Carsten Trolle) (58yrs), Group Chief Commercial Officer (Rene Falch Olesen) (60 years).
Thanks William. We can add Keith Pienaar to the list, who was DSV's CEO Africa and member of Executive Committee until he was poached by AP Moeller Capital to lead their Vector Logistics business from February 2024.
Personally, I remain unsure how much significance to read into such a generational change of leadership. In isolation it doesn't look too unusual. Whereas if I had other reasons to worry already, then this turnover might seem like a further cause for concern.
This is really well and fairly presented.