Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Access both platforms from your single Saxo account.
Automation will accelerate under tight labour markets
Peter Garnry
Chief Investment Strategist
Summary: Automation and robotics are key technologies for companies to offset the cost headwinds from inflation, tight labour markets and demographics in the years to come. In the case of DSV, one of the world's largest logistic companies, heavy investments in automation technology has enabled the company to slightly expand its operating margin and reducing its workforce while competitors have been forced to do the opposite. Automation and robotics as an investment theme is key for the long-term investor.
Key points in this equity note:
- DSV has invested €350mn on automation since 2018 and says it is key for survival in the global logistics industry. Numbers are showing that these investments are paying off relative to the competitors.
- AutoStore is one of DSV’s key automation and robotics suppliers expected to grow revenue by 21% this year while delivering an impressive 48% EBITDA margin.
- Inflation, tight labour markets and demographic headwinds will underpin strong incentives for companies to automate business processes in order to cut costs. Key portfolio theme for the long-term investor.
DSV invests heavily in logistics automation
DSV, which is one of the largest logistics companies in the world, was featured yesterday in the media saying that it had spent €350mn on automation technology since 2018 and that the company would invest even more. Automation is increasingly becoming a competitive advantage or key factor in staying ahead in the global logistics industry.
DSV’s relentless focus on automation is showing up in the numbers. Unlike to its two competitors DHL and Kuehne-+Nagel, DSV has managed to expand its operating margin in the first six months from the same period a year ago, and while many other logistics companies are increasing their global workforce, DSV has shrunk its workforce by 2.5%. DSV says it is necessary to invest heavily in automation in order to survive.
A key automation and robotics supplier for DSV is the Norwegian company AutoStore (AUTO:xosl) which is projected to report FY23 revenue of €705mn up 21% y/y and up from just €181mn in FY20. Not only is AutoStore growing fast it is also showing profitable growth with an attractive EBITDA margin of 48% and positive free cash flow generation.
Robotics and automation are key technologies to offset tight labour market
Labour markets remain tight as we wrote in yesterday’s equity note causing wage growth to be elevated and continue for longer underpinning inflationary dynamics. Demographic headwinds in many countries around the world will not help on tight labour markets. As a result, many companies deploying thousands of workers in their production will be forced to automate their processes.
Automation technologies have existed for more than 100 years with the Ford T assembly line breaking the production into 84 individual steps and optimization those for efficiency and cost. Automation technology has constantly evolved in the industrial sector and with computers automation processes have advanced even more and many digital processes are being automated on a regular basis with the help of machine learning and recent generative AI models. In recent years, automation of warehouse has become a key competitive factor in logistics and e-commerce, and this market is perceived to be huge in the years to come. Increasingly, automation of the services sector will accelerate with self-servicing technology.
As tight labour markets and demographics will continue to be an ongoing theme we are working on an official Saxo theme basket on automation which will select automation and robotics stocks from different segments (warehouse, digital, industry production etc.). This theme is key one for the long-term investor.
List of automation stocks
- Ocado
- AutoStore
- Rockwell Automation
- Intuitive Surgical
- ServiceNow
- Symbotic
- Novanta
- FANUC
List of automation and robotics ETFs
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)