DSV Panalpina to cut 3,000 jobs despite 'satisfactory' Q1 results
DANISH-OWNED freight forwarder DSV Panalpina announced that more than 3,000 employees could lose their jobs as a result of business lost to the coronavirus outbreak
DANISH-OWNED freight forwarder DSV Panalpina announced that more than 3,000 employees could lose their jobs as a result of business lost to the coronavirus outbreak.
Chief executive Jens Bjorn Andersen said: 'This is not something we do lightly, but over 3,000 good, loyal employees will have to leave the company - if our activity levels go up we will add people, but when they go down it is necessary to adjust the cost base.'
He added that the company was 'aiming to reduce its cost base by 10 per cent' in response to the decline in volumes and revenues.
Fifty per cent of the cuts were expected in its air and sea freight forwarding division, 30 per cent from its road transport business and the remaining 20 per cent from its contract logistics arm, DSV Solutions, according to Mr Andersen.
The cuts would affect 'every region, every country', and CFO Jens Lund said that around 80 per cent of the job losses would be among white-collar staff.
The timing of the job losses would largely depend on local employment regulations, but Mr Andersen said: 'The most important thing is that we do this in a respectful manner, but it will need to be done this year so that next year we have the full-year effect.'
The company said the redundancies were expected to cost it around DKK1 billion (US$145 million) as it aims to reduce its overall costs by DKK1.4 billion.
DSV Panalpina reported that first-quarter revenue grew 36.6 per cent year on year to DKK27.3 billion, while EBIT grew 7.6 per cent to DKK1.56 billion.
Mr Andersen said: 'When this year started, we were really looking forward to demonstrating the strength of the DSV Panalpina combination. The Covid-19 crisis has obviously changed the agenda and hit our markets in a severe way, but we have been able to continue the integration as planned.
'All things considered, we delivered satisfactory results in Q1, and our asset-light business model has shown its strength. The crisis will have a significant impact on activity levels in the coming months and we are taking the necessary steps to adapt, while supporting the supply chains of our customers and ensuring the safety and health of our employees,' he added.
The company booked just under 360,000 tonnes of air freight during the first quarter, compared with 170,000 tonnes in the same period last year; in sea freight it booked 575,800 TEU, compared with 360,000 TEU last year.