Scan Global Logistics plans for further acquisitions

COPENHAGEN : Fast-growing Scan Global Logistics said it is planning to make more acquisitions with a focus on growing in key markets.

Following the announcement of its full-year results, SGL said that its acquisition strategy had so far been based on accelerating its geographical presence. 

This strategy will continue in some larger markets but the company’s merger and acquisition (M&A) strategy will also be “targeted to achieve scale and volumes in key markets, especially in the larger economies”.

The forwarder said that it will pursue a targeted M&A strategy ensuring all key countries and markets required to service global customers are covered in terms of SGL presence.

“The industry remains fragmented, and SGL still sees significant room for consolidation, with SGL increasingly positioned as a company that is the acquirer of choice,” SGL said.

“M&A will also be used to build instant capabilities across the organisation within high-touch non-cyclical verticals such as pharma and healthcare, automotive, aid and relief, and government and defence.

“From a size perspective, there is expected to be larger M&As, but fewer M&As going forward considering SGL is entering into the last cycle of geographical expansion. M&A investments will increasingly be targeted in countries with robust underlying growth.”

The company is also targeting “extreme” organic growth, with double-digit improvements across all regions, transport modes and industries.

To help achieve organic growth, the company said it had made significant investments into sales supporting functions such as tender management, procurement, supply chain development and similar.

Meanwhile, the company also announced its full-year 2023 results, with revenues, air volumes and profits all declining.

The company’s revenues declined by 39.3% year on year to €2bn, earnings before interest and tax (ebit) were down 29.1% to €95m and it swung to a loss of €33m from a profit of €63m in 2022.

Airfreight volumes declined by 12% to 150,000 tonnes.

“The [revenue] decrease was primarily due to a challenging macro environment coupled with lower freight rates and lower air volumes,” SGL said. “Generally, in line with the company’s expectations.”

The company said that ebit performance was largely the result of an increase in special items and amortisation from acquisitions and IT costs. Special items were driven up by costs associated with the acquisition of the company by CVC at the start of 2023. 

The airfreight volume decline was driven by overall market conditions, the company said. SGL also pointed out that gross profit margin improved from 14.1% in 2022 to 23.2% in 2023