INTERIM FINANCIAL REPORT H1 2020

Company Announcement No. 836

31 July 2020

Selected key figures and ratios for the period 1 January - 30 June 2020 (DKKm)	Q2 2020	Q2 2019	YTD 2020	YTD 2019
Key figures and ratios
Revenue	28,782	20,079	56,091	40,058
Gross profit	7,386	5,285	14,070	10,399
Operating profit (EBIT) before special items	2,613	1,631	4,179	3,085
Special items, costs	515	19	1,026	19
Profit after tax	1,390	1,149	1,721	2,112

Adjusted earnings for the period	1,838	1,196	2,593	2,189
Adjusted free cash flow			3,356	1,802
Operating margin	9.1%	8.1%	7.5%	7.7%
Conversion ratio	35.4%	30.9%	29.7%	29.7%
Diluted adjusted earnings per share of DKK 1 for the last 12 months			20.8	23.5

Jens Bjørn Andersen, Group CEO: "Recent months have developed better than we anticipated when the COVID-19 crisis started, and we are pleased to report 63% growth in EBIT before special items for Q2 2020 and 37% growth for the first half of the year. Strong cost management and the continued successful integration of Panalpina have been important drivers for our results. COVID-19 has created an extraordinary market situation in air freight, and here we have been able to help our customers and have benefitted from the legacy Panalpina freighter network. The uncertainty remains higher than normal, but based on a strong first half of 2020 we are now able to reinstate guidance for the full year. We now expect EBIT before special items on level with the guidance we gave to the market before this crisis started."

Outlook for 2020

Based on the financial performance in the first half of 2020, guidance for full-year 2020 is reinstated as follows:

Operating profit before special items is expected to be in the range of DKK 8,200-8,700 million
Special items, costs for 2020 are expected in the level of DKK 2,300 million (previously DKK 2,500 million)
The effective tax rate is expected in the level of 25%

The guidance is based on assumptions of a gradual improvement of the global freight markets over the third and fourth quarters as markets reopen and with no material disruptions of global supply chains. We expect that transport volumes will remain below last year, but the negative run rate will lessen. Furthermore, we expect that the integration of Panalpina and implementation of cost saving initiatives will continue as planned.

Due to the COVID-19 situation, it must be stressed that the basic assumptions behind the guidance are more uncertain than normal.

Contacts

Investor Relations Flemming Ole Nielsen, tel. +45 43 20 33 92, [email protected] Frederikke Anna Linde, tel. +45 43 20 31 95, [email protected] Mads Kristian Hofmeister, tel. +45 43 20 33 88, [email protected]

Media Maiken Riise Andersen, tel. +45 43 20 30 74, [email protected]

Yours sincerely, DSV Panalpina A/S

DSV Panalpina A/S, Hovedgaden 630, 2640 Hedehusene, Denmark, tel. +45 43 20 30 40, CVR No. 58233528, www.dsv.com. DSV Panalpina Group

We provide and manage supply chain solutions for thousands of companies every day – from the small family run business to the large global corporation. Our reach is global, yet our presence is local and close to our customers. 55,000 employees in more than 80 countries work passionately to deliver great customer experiences and high-quality services. Read more at www.dsv.com

Financial highlights

	Q2 2020	Q2 2019	YTD 2020	YTD 2019
Results (DKKm)
Revenue	28,782	20,079	56,091	40,058
Gross profit	7,386	5,285	14,070	10,399
Operating profit before amortisation and depreciation (EBITDA) before special items	3,666	2,441	6,270	4,704
Operating profit (EBIT) before special items	2,613	1,631	4,179	3,085
Special items, costs	515	19	1,026	19
Net financial expenses	222	149	819	322
Profit for the period	1,390	1,149	1,721	2,112
Adjusted earnings for the period	1,838	1,196	2,593	2,189
Cash flows (DKKm)
Operating activities			4,373	3,517
Investing activities			(417)	(296)
Free cash flow			3,956	3,221
Adjusted free cash flow			3,356	1,802
Financing activities			(3,764)	(3,025)
Share buyback			(3,030)	(923)
Dividends distributed			(588)	(423)
Cash flow for the period			192	196
Financial position (DKKm)
DSV Panalpina A/S shareholders' share of equity			47,326	15,549
Non-controlling interests			(97)	(61)
Balance sheet total			95,013	49,721
Net working capital			3,367	2,012
Net interest-bearing debt			18,874	14,778
Invested capital			66,546	30,027
Gross investment in property, plant and equipment			383	389
Financial ratios (%)*
Gross margin	25.7	26.3	25.1	26.0
Operating margin	9.1	8.1	7.5	7.7
Conversion ratio	35.4	30.9	29.7	29.7
Effective tax rate	25.9	21.5	26.3	23.0
ROIC before tax**			16.0	20.1
Return on equity (ROE)			10.5	27.0
Solvency ratio			49.8	31.3
Gearing ratio**			1.6	1.6
Share ratios*
Earnings per share of DKK 1 for the last 12 months			14.8	23.2
Diluted adjusted earnings per share of DKK 1 for the last 12 months			20.8	23.5
Number of shares issued ('000)			230,000	186,000
Number of treasury shares ('000)			2,738	7,707
Average number of shares issued ('000) for the last 12 months			222,381	179,638
Average diluted number of shares ('000) for the last 12 months			225,623	182,062
Share price end of period (DKK)			809.8	644.6
Non-Financials
Number of full-time employees at 30 June			53,399	47,552

*For a definition of key figures and ratios, please refer to page 83 of the 2019 DSV Panalpina Annual Report.

**For the calculation of financial ratios for H1 2019, certain pro forma adjustments have been made, please refer to note 2.

Management's commentary

Operating profit before special items for H1 2020 increased by 36.5% to DKK 4,179 million. The COVID-19 crisis impacted activity levels across all divisions and geographies, but the decline in activity was compensated by improved profit per shipment, especially in air freight.

The ongoing Panalpina integration combined with the COVID-19 cost saving initiatives reduced the cost base. This led to strong earnings momentum, especially in the second quarter of 2020.

Adjusted free cash flow for H1 2020 came to DKK 3,356 million and increased by 86.2% compared to the same period last year.

FINANCIAL DEVELOPMENT 2019 - 2020

		Currency translation	Growth including
(DKKm)	Q2 2019	adjustments	M&A	Growth %*	Q2 2020
Revenue	20,079	(364)	9,067	46.0%	28,782
Gross profit	5,285	(99)	2,200	42.4%	7,386
EBIT before special items	1,631	(25)	1,007	62.7%	2,613

Gross margin (%)	26.3				25.7
Operating margin (%)	8.1				9.1
Conversion ratio (%)	30.9				35.4

		Currency translation	Growth including
(DKKm)	YTD 2019	adjustments	M&A	Growth %*	YTD 2020
Revenue	40,058	(352)	16,385	41.3%	56,091
Gross profit	10,399	(96)	3,767	36.6%	14,070
EBIT before special items	3,085	(24)	1,118	36.5%	4,179

Gross margin (%)	26.0				25.1
Operating margin (%)	7.7				7.5
Conversion ratio (%)	29.7				29.7

* Growth in constant currencies

COVID-19

The COVID-19 crisis continues to impact the global transport and logistics markets negatively, and in recent months we estimate that transport volumes have declined between 15% and 30%, depending on transport mode. The declines were most significant in March and April. Since early May, we have seen a gradual recovery, but activity remains below prepandemic levels in most markets.

All our business units have been able to operate through the lockdowns, supporting critical supply chains, and, so far, the financial impact from the crisis has been less severe than we anticipated when the crisis started. As lockdowns are now gradually easing in many countries, we continue to follow local public health procedures and guidelines to protect the health of employees and ensure safe and reliable operations.

Due to the increased credit risk on customers, we maintain our tight authorisation policies for approval of changes to payment terms and our close monitoring of trade receivables and overdue balances. In H1 2020, we have not had any material credit losses, and, as part of our normal credit policy, trade receivables are covered by credit insurance unless the customer is classified as a blue-chip company with low credit risk.

DSV Panalpina has a solid financial position and is ready to meet any challenges that may arise from the COVID-19 situation. At the end H1 2020, the Group had undrawn committed credit facilities of more than DKK 9 billion as well as cash and cash equivalents of DKK 2 billion.

Integration of Panalpina

The acquisition of Panalpina Welttransport (Holding) AG (Panalpina) was closed on 19 August 2019, as of which date Panalpina was included in the consolidated financial statements. The combination had a significant impact on the consolidated balance sheet and income statement for the Group in H1 2020 compared to the same period of 2019.

The operational and legal integration of Panalpina is progressing slightly ahead of plan, and more than 90% of the Panalpina volumes have been transferred to DSV's IT platforms.

The Panalpina acquisition has the largest impact on the Air & Sea division and only limited impact on Road and Solutions.

Due to the progress of the integration it is not possible to separate organic growth from acquired growth. Therefore, all growth numbers in this report include the impact from M&A.

Integration synergies and cost savings

In line with previous announcements, we expect to achieve annual cost synergies of around DKK 2,300 million from the Panalpina integration.

Furthermore, we have announced plans to reduce our capacity and cost base due to lower activity levels following COVID-19. With this initiative we expect to reduce the cost base by approximately DKK 1,400 million on an annual basis.

The total cost savings of DKK 3,700 million are expected to have full-year impact in 2021. Around DKK 100 million were realised in 2019, and we expect an additional around DKK 2,100 million to materialise in 2020 and the remaining DKK 1,500 million in 2021.

Total transaction, integration and restructuring costs are expected in the level of DKK 3,100 million (previously DKK 3,300 million). These costs will all be reported as special items.

Of the total DKK 3,100 million restructuring costs, etc., DKK 800 million materialised in 2019, and we expect that the remaining DKK 2,300 million will materialise in 2020 (DKK 1,026 million in H1 2020).

Results for the period

Revenue

For the first six months of 2020, revenue amounted to DKK 56,091 million against DKK 40,058 million last year. Revenue growth by division breaks down as follows:

			YTD
(DKKm)	Q2 2020	Growth*	2020	Growth*
Air & Sea	19,144	102.0%	35,818	89.4%
Road	6,987	(9.6%)	14,908	(5.7%)
Solutions	3,256	5.7%	6,697	9.1%
Group and
eliminations	(605)		(1,332)
Total	28,782	46.0%	56,091	41.3%
*) Growth including M&A and adjusted for exchange rate fluctuations (constant

currencies)

The growth was driven by the acquisition of Panalpina, especially in Air & Sea.

Activity levels during the period were impacted by the COVID-19 crisis, which led to a significant drop in freight volumes and order lines, most significantly during March and April.

The decline in activity was partly compensated by higher freight rates, especially in air freight.

Revenue by division, H1 2020

Gross profit

For the first six months of 2020, gross profit amounted to DKK 14,070 million against DKK 10,399 million last year. Gross profit growth by division breaks down as follows:

			YTD
(DKKm)	Q2 2020	Growth*	2020	Growth*
Air & Sea	4,663	87.6%	8,538	73.5%
Road	1,431	(5.5%)	2,966	(3.4%)
Solutions	1,271	10.2%	2,527	10.9%
Group and
eliminations	21		39
Total	7,386	42.4%	14,070	36.6%

*) Growth including M&A and adjusted for exchange rate fluctuations (constant currencies)

Similar to the development in revenue, the acquisition of Panalpina was the main reason for the increase in gross profit for H1 2020 in Air & Sea. The decline in transport volumes following the COVID-19 situation had a negative impact on gross profit; however, this was offset by an increase in gross profit per shipment, especially in air freight. The extraordinary high air freight yields in Q2 2020 are temporary, and we expect a gradual normalisation during the second half of 2020.

Gross profit by division, H1 2020

The consolidated gross margin was 25.1% for H1 2020, compared to 26.0% for H1 2019.

EBIT before special items

For the first six months of 2020, EBIT before special items amounted to DKK 4,179 million against DKK 3,085 million last year. EBIT growth by division breaks down as follows:

			YTD
(DKKm)	Q2 2020	Growth*	2020	Growth*
Air & Sea	2,112	96.5%	3,242	56.2%
Road	263	(22.2%)	522	(17.8%)
Solutions	234	0.0%	393	(7.5%)
Group and
eliminations	4		22
Total	2,613	62.7%	4,179	36.5%

*) Growth including M&A and adjusted for exchange rate fluctuations (constant currencies)

The growth in Air & Sea was driven by the Panalpina integration, cost synergies and COVID-19 savings. Furthermore, the division benefitted from the strong gross profit in air freight, especially during Q2 2020.

The decline in earnings for Road and Solutions was mainly a consequence of lower activity following COVID-19. The cost saving initiatives implemented during Q2 2020 did not compensate for the decline in gross profit.

Q2 2020 was positively impacted by certain temporary cost savings on travel costs, etc., of approximately DKK 150 million.

EBIT by division, H1 2020

Despite the COVID-19 crisis and the ongoing Panalpina integration, which initially has an adverse effect on the margins of the Group, the conversion ratio was 29.7% for H1 2020 and on level with last year (pre Panalpina integration). This is a significant achievement and illustrates that the integration is progressing as planned and that the higher-margin air and sea activities now represent a larger share of the Group EBIT.

For H1 2020, amortisation of customer relationships was DKK 103 million (H1 2019: DKK 10 million).

Special items, costs

Special items, costs totalled DKK 1,026 million for the first six months of 2020 (H1 2019: DKK 19 million) and are costs derived from the ongoing integration of Panalpina and the COVID-19 cost saving initiatives.

Financial items

Financial items totalled a net expense of DKK 819 million for H1 2020, compared to DKK 322 million for the same period last year. Exchange rate adjustments amounted to DKK 487 million

(H1 2019: income of DKK 4 million) and primarily relate to exchange rate adjustments on intercompany loans.

(DKKm)	YTD 2020	YTD 2019
Interest on lease liabilities	209	180
Other interest cost, net	114	137
Interest on pensions	9	9
Exchange rate adjustments	487	(4)
Financial expenses	819	322

Tax on profit for the period

The effective tax rate was 26.3% for H1 2020, compared to 23.0% for H1 2019. The effective tax rate is impacted by the ongoing integration of Panalpina and restructuring costs.

Profit for the period

Profit for the first six months of 2020 was DKK 1,721 million, compared to DKK 2,112 million for the same period of 2019. The decrease in profit for the period was driven by special items and higher net financial costs.

Diluted adjusted earnings per share

The 12-month figure to the end of June 2020 was DKK 20.8 per share, compared to DKK 23.5 for the same period last year, corresponding to a decrease of 11.5%.

The decline was due to the higher number of shares issued.

Cash flow

CASH FLOW STATEMENT

(DKKm)	YTD 2020	YTD 2019

Cash flow from operating activities Cash flow from investing activities	4,373 (417)	3,517 (296)

Free cash flow	3,956	3,221
Cash flow from financing activities	(3,764)	(3,025)

Cash flow for the period	192	196

Free cash flow	3,956	3,221
Repayment of lease liabilities (IFRS 16
impact reversed)	(1,564)	(1,301)
Special items (restructuring costs)	964	8
Adjusted free cash flow	3,356	1,802

Cash flow from operating activities was positively affected by higher EBIT before special items, but this effect was partly offset by integration costs incurred during H1 2020.

Cash flow from financing activities was impacted by proceeds from the issuance of new bonds of EUR 500 million (approx. DKK 3,730 million) in February 2020 for repayment of other loans, and distributions to shareholders of DKK 3,618 million.

Adjusted free cash flow for the period was DKK 3,356 million and significantly above DKK 1,802 million for the same period last year, reflecting the improved EBIT before special items.

Net working capital

On 30 June 2020, the Group's net working capital was DKK 3,367 million, compared to DKK 2,012 million on 30 June 2019. The increase is mainly due to the integration of Panalpina, which added scale and increased the relative exposure to Air & Sea activities, which normally involve a higher consumption of working capital.

Optimisation of net working capital remains a priority; however, we continue to see pressure on trade receivables, and this is likely to continue due to COVID-19.

Relative to full-year revenue, the net working capital amounted to 3.0% on 30 June 2020 (30 June 2019: 2.5%).

Capital structure and finances

DSV Panalpina A/S shareholders' share of equity

DSV Panalpina shareholders' share of equity was DKK 47,326 million on 30 June 2020 (DKK 49,430 million on 31 December 2019). The development was primarily due to distributions to shareholders in the form of share buyback and dividend. On 30 June 2020, the Company's portfolio of treasury shares was 2,737,577 shares. On 30 July 2020, the portfolio of treasury shares was 2,579,706 shares.

On 16 April 2020, the share capital was reduced to DKK 230 million through the cancellation of 5 million treasury shares of DKK 1.

The solvency ratio excluding non-controlling interests was 49.8% on 30 June 2020 (30 June 2019: 31.3%). The increase was primarily due to the capital increase in connection with the Panalpina transaction.

DEVELOPMENT IN EQUITY

	YTD	YTD
(DKKm)	2020	2019
Equity at 1 January	49,430	14,561
Impact of accounting policy change	-	(593)

Equity at 1 January	49,430	13,968
Profit for the period	1,713	2,124
Currency translation adjustments, foreign
enterprises	(1,347)	129
Allocated to shareholders	(3,618)	(1,346)
Sale of treasury shares	1,098	446
Other equity movements	50	228
Equity end of period	47,326	15,549

Net interest-bearing debt

Net interest-bearing debt amounted to DKK 18,874 million on 30 June 2020, compared to a total net interest-bearing debt of DKK 14,778 million on 30 June 2019.

The financial gearing ratio (NIBD/EBITDA) was 1.6x on 30 June 2020 and has gradually been reduced since the acquisition of Panalpina. Our target for the financial gearing ratio is unchanged, and we aim to keep the ratio below 2x.

The weighted average duration of the Company's bonds, committed loans and credit facilities was 5.4 years on 30 June 2020, compared to 2.8 years on 30 June 2019.

Invested capital and ROIC

The Group's invested capital including goodwill and customer relationships amounted to DKK 66,546 million on 30 June 2020, compared to DKK 30,027 million on 30 June 2019. The increase relates to goodwill following the inclusion of Panalpina.

Return on invested capital including goodwill and customer relationships was 16.0% for the 12-month period ended 30 June 2020, compared to 20.1% for the same period last year. The decline can be attributed to an increase in invested capital due to the Panalpina transaction.

Return on invested capital excluding goodwill and customer relationships was 49.4% for the 12-month period ended 30 June 2020, compared to 41.3% for the same period last year.

Outlook

On 16 March the financial guidance for 2020 was suspended due to the outbreak of COVID-19. Based on the financial performance in the first half of 2020 guidance for full-year 2020 is reinstated as follows:

Operating profit before special items is expected to be in the range of DKK 8,200-8,700 million
Special items, costs for 2020 are expected in the level of DKK 2,300 million (previously DKK 2,500 million)
The effective tax rate for 2020 is impacted by the integration of Panalpina and is expected in the level of 25%

We expect that the integration of Panalpina and implementation of cost saving initiatives will continue as planned.

The outlook for 2020 is based on the assumption that currency exchange rates, especially USD against DKK, will remain at the current level.

Due to the COVID-19 situation, it must be stressed that the basic assumptions behind the guidance are more uncertain than normal.

DSV Air & Sea

The Air & Sea division operates a global network specialising in transportation of cargo by air and sea. The division offers both conventional freight forwarding services and tailored project cargo solutions.

The division's performance in H1 2020 was positively impacted by the integration of Panalpina, which is progressing according to plan, but freight volumes were negatively impacted by the COVID-19 situation. The division achieved 73.5% growth in gross profit for the first six months. EBIT before special items was DKK 3,242 million for H1 2020 (2019: DKK 2,091 million). The strong performance, especially in the second quarter of 2020, was partly due to temporary high yields in air freight and high profitability of the air charter network. The profitability of the air freight activities is expected to normalise during the second half of the year.

Since the low point in April, the markets have gradually recovered, but total volumes remain below prepandemic levels.

INCOME STATEMENT

(DKKm)	Q2 2020	Q2 2019	YTD 2020	YTD 2019

Divisional revenue	19,144	9,682	35,818	19,093
Direct costs	14,481	7,153	27,280	14,140
Gross profit	4,663	2,529	8,538	4,953

Other external expenses	736	424	1,533	810
Staff costs	1,530	935	3,209	1,878
EBITDA before special items	2,397	1,170	3,796	2,265

Amortisation and depreciation	285	77	554	174
EBIT before special items	2,112	1,093	3,242	2,091

KEY FIGURES AND RATIOS

	Q2 2020	Q2 2019	YTD 2020	YTD 2019
Gross margin (%)	24.4	26.1	23.8	25.9
Operating margin (%)	11.0	11.3	9.1	11.0
Conversion ratio (%)	45.3	43.2	38.0	42.2
Number of full-time employees			18,723	12,103
Total invested capital (DKKm)			45,364	12,427
Net working capital (DKKm)			3,864	1,602
ROIC before tax (%)			19.6	32.3

Market development

Freight volume growth

	DSV Q2 2020	Market Q2 2020	DSV YTD 2020	Market YTD 2020
Sea freight – TEUs	31%	(15-20%)	45%	(10-15%)
Air freight – tonnes	69%	(25-30%)	90%	(15-20%)

Market growth rates are based on DSV estimates.

DSV's volume growth in H1 2020 was driven by the acquisition of Panalpina. The integration entails a gradual move of

Panalpina volumes to the DSV transport management system. By the end of Q2 2020, more than 90% of Panalpina's volumes had been transferred and we are no longer able to separate organic growth from acquired growth.

The air freight market was significantly impacted by the COVID-19 crisis during H1 2020. As most passenger planes were grounded, the belly-hold capacity has been missing and total available capacity has been reduced by more than 30%. The demand for air freight has also been negatively impacted by the crisis. However, a surge in the demand for certain higher yielding goods has led to significant lack of capacity and rate increases, most significantly for exports from China.

In the second half of Q2 2020, the air freight rates have partly fallen back. Still, capacity remains tight and, as activity levels in other industries pick up, the market remains challenging. Most air cargo is still moved on cargo planes, and charters of full cargo planes represent a large part of the market.

The sea freight market has also been impacted by COVID-19, but, compared to air, the sea freight market has been less volatile. Demand has been down by 15-20% across most industries, but efficient capacity management by the carriers (blanked sailings) has led to a situation of tight capacity and, as a consequence, freight rates remained resilient.

Geographically, activity levels in Asia have been least impacted by COVID-19, whereas Americas and Europe have been more severely impacted. The Asia-Europe and Trans-Atlantic trade lanes have been among the worst hit, and the division has a relatively high exposure to these trades.

Divisional revenue

The division's revenue amounted to DKK 35,818 million for the first six months of 2020, compared to DKK 19,093 million for the same period last year. In constant currencies, the growth in revenue for the first six months was 89.4%.

For Q2 2020, revenue amounted to DKK 19,144 million, compared to DKK 9,682 million for the same period last year, corresponding to a growth in constant currencies of 102.0%.

The increase in revenue was mainly attributable to the acquisition of Panalpina. However, the increase was offset by the negative volume impact from COVID-19.

As mentioned, the effect of reduced activity levels following COVID-19 in Q1 2020 was partly offset by record high air freight rates, especially on export volumes out of China.

Gross profit

Gross profit was DKK 8,538 million for H1 2020, compared to DKK 4,953 million for the same period in 2019. This corresponds to a growth in constant currencies of 73.5% for the period.

For Q2 2020, gross profit amounted to DKK 4,663 million, compared to DKK 2,529 million for the same period last year, which corresponds to a growth of 87.6%.

Similar to revenue, the growth in gross profit for H1 2020 was mainly driven by the acquisition of Panalpina.

The negative volume impact from COVID-19 was compensated by strong air freight yields (gross profit per shipment). This development can be partly attributed to a temporary improvement in the profitability of our air charter network and to a better activity mix with less perishables volumes.

The legacy Panalpina air charter network consists of long-term charters of air freight capacity. In the first part of 2020, DSV

Panalpina has increased the number of destinations in the air charter network. The network carries a minor proportion of the total volume of the division, but due to the rate development, particularly in the second quarter of 2020, the network had a positive impact on average yields for the quarter.

The reported gross profit per unit for sea freight (TEU) for H1 2020 declined compared to the same period last year, primarily because Panalpina had a different activity mix with lower average gross profit per TEU.

As the integration of Panalpina progresses, yields for both air and sea have gradually improved. This is due to scale benefits, optimised planning and better combinations of cargo.

The division's gross margin was 23.8% for H1 2020, compared to 25.9% last year. The decline is due mainly to the difference in activity mix between DSV and Panalpina and, secondly, a negative impact from pass-through revenue where higher air freight rates cause lower gross margin.

EBIT before special items

EBIT before special items was DKK 3,242 million for the first six months of 2020, compared to DKK 2,091 million for the same period last year. This corresponds to a growth for the period of 56.2%.

For Q2 2020, EBIT before special items was DKK 2,112 million, compared to DKK 1,093 million for the same period last year, which corresponds to a growth of 96.5%.

The positive development was mainly a result of the inclusion of Panalpina, the realisation of synergies and the impact from the COVID-19 cost savings.

Furthermore, the strong gross profit in air freight in Q2 2020 had a direct impact on EBIT before special items.

The conversion ratio was 38.0% for H1 2020 (H1 2019: 42.2%) and the operating margin was 9.1% (H1 2019: 11.0%).

For Q2 2020, the conversion ratio was 45.3% (Q2 2019: 43.2%) and the operating margin was 11.0% (Q2 2019: 11.3%).

The conversion ratio was initially negatively impacted by the acquisition of Panalpina. As the integration progresses and the synergies and cost savings are realised, margins are expected to increase.

For H1 2020, amortisation of customer relationships was DKK 89.2 million (H1 2019: DKK 5.6 million).

Net working capital

The Air & Sea division's net working capital came to DKK 3,864 million on 30 June 2020, compared to DKK 1,602 million on 30 June 2019. The increase is mainly due to the inclusion of Panalpina.