Asian and north European markets and tight cost control helped Danish freight forwarder DSV offset weak trading conditions in southern Europe to produce stronger than expected second quarter core profits.

The global supplier of transport and logistics services stuck to its earnings guidance for the full year but downgraded its expectations for market volume growth because of the weak economic backdrop.

"We have adjusted our expectations for the markets (in 2012) downwards, but we have compensated for that by raising the profit we get per ton (of cargo) and per transported container," Chief Executive Jens Bjorn Andersen told Reuters.

The economic downturn in Europe has resulted in declining market volume growth in freight, making life difficult for freight companies. Swiss rival Panalpina also cut its expectation for full-year market volume growth in air and sea freight on Tuesday, after second-quarter operating profits were halved compared with the same period the year before.

Earlier this month, Kuehne & Nagel had posted an 8 percent fall in second-quarter net profit.

In most of southern Europe, DSV's road division had declining freight volumes, but northern and eastern Europe had more positive trends. Air and sea freight in Asia and South America were growth markets, it said.

Share Buyback

DSV exceeded analysts' forecasts with its 5.9 percent rise in second-quarter core profits but revenues fell short of expectations.

"Revenue disappoints a little but they more than make up for it with an improvement in earnings," said Alm. Brand Markets analyst Jesper Christensen.

"Today's numbers confirm that the company can maintain earnings in a declining market through very tight cost control," Christensen said.

DSV's core earnings rose to 687 million Danish crowns ($113.06 million) in April-June from 649 million in the second quarter last year, exceeding analysts' average estimate of a rise to 663 million in a Reuters poll.

Group revenue rose to 11.37 billion crowns from 11.09 billion in the same quarter last year, below an average estimate of a rise to 11.52 billion in the poll.

DSV said it still expected 2012 earnings before interest, tax and amortisation (EBITA) to be in a range of 2.5 billion to 2.7 billion crowns.

But DSV now expects zero growth in freight volumes in road transport this year - instead of 1-2 percent seen previously - and negative 3-4 percent in air freight instead of zero growth.

Sea freight volumes would grow by 3-4 percent this year instead of an earlier forecast of 4-5 percent.

The Air & Sea division accounts for 40 percent of group revenue while Road accounts for 49 percent.

The company said it would launch a new share buyback worth 300 million crowns. Andersen said total share buybacks in 2012 would be between 1.5 billion and 2.0 billion crowns. (Reuters)