DFDS Stock

Ladies and gentlemen, welcome to the DFDS Q2 Report 2026 Conference Call. I'm Lorenzo, the Chorus Call operator.[Operator Instructions] The conference is being recorded.[Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Michael Hansen, CEO. Please go ahead, sir.

Thank you very much. Good morning, and welcome, everyone, to the DFDS Q2 call. I'm Michael Hansen, the CEO of DFDS. And today, I'm joined here by our CFO, Karen Boesen; and our Head of Investor Relations, Soren Nielsen. So today is my first conference call together with all of you in DFDS -- so just a brief introduction.

I've spent most of my career in international operationally complex B2B businesses, most recently as CEO of Hempel and before that, almost 20 years with the A.P. Moller - Maersk Group. Much of that work has been about transformation, performance improvement and making clear choices about where a company can create the most value. So my leadership style is quite straightforward: facts, transparency, accountability and then listening, but listening that leads to decisions and actions.

So I've been with DFDS for a little over a month now. Obviously, not long enough to have all the answers, but on the other hand, long enough to have some initial views. And I see a company with very strong assets, leading positions in important markets, strong customer relationships, great operational capabilities and a lot of talented people. At the same time, we have also very clear challenges around our performance, complexity, capital allocation and more fundamentally making sure that we are absolutely clear on where DFDS should compete and how we can be different for our customers.

So we need to do two things in parallel. We need to continue to improve our business and deliver on the areas that are within our control today. And we need to take a step back and make sure that we have the right long-term direction for DFDS.

We'll come back to both of these elements during the presentation this morning. If we turn to the next page, I'll just briefly take you through the agenda of the call. I'll just do a very brief intro now before elaborating a little bit more on the strategic review that we have communicated that we're commencing here in the middle of August. Karen will then take us through the Q2 performance, including the ESG numbers, after which I'll sum it up through our outlooks and priorities, and we'll open up for Q&A towards the end.

Going to the next page. So before we go into all the numbers, I just want to make a brief reflection on why I believe that DFDS truly matters. If we look across Europe, supply chains, they depend on reliability, factories, retailers, communities and millions of passengers rely on goods and travel arriving on time. And behind that, we have our 16,000 DFDS colleagues who keep Europe connected, north to south, east to west. So we don't just move freight or passengers, but we actually enable travel, trade and economic activity across the continent.

Thousands of companies rely on us to keep their operations running, and that responsibility is truly what defines who we are and why DFDS plays such an important role in the European logistics and mobility infrastructure. If we turn to Page 4 -- then it's also been very clear during my onboarding that one theme has been consistently coming up, ambiguity, a lack of one clear direction. And that raises some fundamental questions to all of us, who is DFDS?

Where should we invest? And how do we create competitive advantage? How do we best combine our ferry and logistics businesses and what kind of company do we really want to build over the next decade. That's not academic questions. They are questions that need to guide decisions on fleet renewal, our footprint, our technologies and not least our capital allocation. And without that clarity, it's really hard to make consistent choices. So that's why we have launched a strategy review. And the goal is not just to get a fancy document, but it's really about clarity for our business.

It's about having one ambition and one direction for DFDS. Clearer understanding of our customers, for our colleagues and for our investors as well about where we're heading. So we'll complete this review within the next 6 months, and it will include financial ambitions as well. In parallel with that, we will continue to drive the needed financial performance improvements through the already established programs.

Turning to Page 5. So with strategic clarity, it equally needs to be matched also with clarity in how we work together. And with 16,000 colleagues across Europe, we need shared expectations of what I call the nonnegotiables. Number one, safety. It is the #1 priority for this company across our vessels, our terminals, warehouses, trucks and offices.

Collaboration is the second one. We'll succeed across our boundaries and not within silos, right? With a mindset of high challenge, high support. Number three, ownership and discipline to make decisions, take responsibility, follow through and then operate with transparency and not least with integrity. Number fourth, our customers. Every role across DFDS somehow contributes to the customer experience, which is our foundation for future sustainable growth.

So we will succeed if we act as one company with a shared commitment, clear accountability and a collective success. So, with this brief introduction to myself and to the initial perspectives of DFDS, we'll now go into the Q2 results.

Turning to the next page. We'll start out on Page 7 with the Q2 safety performance. And I'm sad to report that we have had a fatality in May of 2026 involving a Dutch DFDS colleague, a truck driver who during unloading operation on board one of our ferries in Dunkirk. The circumstances leading to this tragic accident are still being investigated by the authorities and in close collaboration with DFDS.

Following the investigation's outcome, the learnings will naturally be integrated into our DFDS safety first program to prevent a similar accident in the future. Looking at the sea and land-based safety, there's no material changes to the LTIF compared to last year. As part of the strategy review, we will also revisit our targets for safety performance because we have to do much better. With that, I'll pass it over to Karen to take us through the numbers.

Thank you, Michael, and good morning to everyone. So, we delivered a Q2 in line with our plans, which is satisfying, and we are happy with that progress. It's a Q2 where both divisions delivered significant improvement year-on-year. Ferries improvements are supported by the lower net bunker costs and logistics demonstrated strong progress in the Boost projects. Unfortunately, our Q2 result is also impacted by a one-off of DKK 53 million. It's a one-off that relates to a litigation case that started back in 2015 and now has had a ruling in the opposite direction as the previous 2 rulings. So result impacting negatively by DKK 53 million, unfortunately.

Moving on to our turning point. They all progressed in Q2. We saw continued progress in our Mediterranean ferry business. Our ferry rates are sustained. Jersey performance improved versus last year. We saw logistics boost projects continue to deliver quarter-on-quarter impact, and we are on track to deliver our DKK 300 million cost program with over DKK 250 million delivered to date. Finally, TES is also progressing, but more needs to happen there.

Looking ahead, our earnings outlook and financial leverage improvements are on track as we will report in more detail in the coming slides. We do see a market that is at the risk of some downside with the high oil price levels that we see across the globe. Our fuel cost recovery is in focus across our network and to ensure a stable level there, we have hedged some of our oil price exposure in the second half of 2026 to reduce this uncertainty.

Moving into the results, starting with Page 9, our Q2 revenue. Our Q2 revenue growth was driven by fuel charges due to the elevated oil product prices, both in Ferry and Logistics, but both divisions also saw some small underlying revenue growth when you disregard the fuel surcharges. So a satisfying and improved growth in the revenue compared to our previous quarters where we have been more flat. Turning to Page 10 and a quick walk-through of the key elements in our Q2 income statement.

In addition to the 10% revenue growth of the quarter, we also delivered a 35% increase in the EBITDA level. Our EBITDA was up with more than DKK 300 million for the quarter. At the EBIT level, we have a quarter where we are up DKK 291 million to DKK 454 million EBIT for the quarter, which is more than double compared to last -- same quarter last year. If we look at our financial costs, we also saw a good improvement.

We saw a reduced interest expense in the quarter of DKK 24 million. And if you clean off the one-off DKK 9 million interest costs relating to the litigation case that I just mentioned, the reduction is actually DKK 33 million or 16% reduction in our interest cost.

This is both driven by lower absolute debt, but also lower interest cost levels. Turning to Page 11, we zoom in on the ferry activities. As already stated, we delivered a high year-on-year improvement with an EBIT of DKK 423 million for the quarter, up DKK 237 million compared to last year's Q2.

This is driven by lower net bunker cost expenses, but also an improvement in the business units, where the key highlights are, and we have listed them on the slide, strong passenger results from Channel, good freight rates and a Jersey improvement compared to same quarter last year.

Mediterranean with the capacity taken out, we see a utilization that is overall up. Our rail services, which is associated with the ferry services from Turkey to Europe, also improved. And although we do see some slowdown in the Turkish volumes overall.

Both North Sea and Baltic saw some positive volume and rate development, but we are also challenged by higher cost in those areas, which luckily not offset all the positive improvements we see. And finally, Strait of Gibraltar were more or less flat with fewer savings because of weather.

We also have provided the adjusted EBITDA, excluding the one-off items that I have mentioned, which, of course, underlines that the improvement on the underlying is higher than what we report in the actual accounts. Turning to Page 12 and looking at our logistics results for the quarter. We had a strong underlying business improvement in logistics this quarter. Our EBITDA is up 39% and EBIT is up DKK 52 million to DKK 85 million for the quarter, also here more than a doubling of the result same quarter last year. This is driven by strong performance recovery in both Nordic and Continent.

In Continent, the recovery from last year's foot-and-mouth disease is also contributing here. And the U.K. & Ireland business continues to deliver stable performance. Finally, our business unit TES, our Turkey & Europe South logistics improved on a like-for-like business -- basis, sorry. But due to the -- but we continue to have challenges that we will have to address in an even more rigorous way, and we'll come back to that later in the call.

Turning to Page 13, cash flow. We saw a strong cash flow generation for the quarter. This was driven by the better operating cash flow, the higher EBITDA, but also working capital where we both have seasonality impacts and we also have good impact from our working capital initiatives. The seasonality impact is mainly two parts. It's our buildup of prepayments from passengers up to the high summer season. And it's a mechanical thing around the ETS charges, which is cleared with the EU in Q3 every year.

Our investments for the quarter were DKK 316 million gross and DKK 247 million net when you take into account our asset sales of DKK 69 million. They were mainly related to ferry dockings and acquisition of transport equipment. In total, our adjusted free cash flow for the first half year of 2026 amounts to just over DKK 1 billion, which is a good result.

And turning to Page 14, looking at our financial leverage. With the reduction in net interest-bearing debt over the past 12 months of more than DKK 2 billion, our debt-to-equity ratio is now back at 50-50. And combined with the improved earnings levels, I'm happy to report that our leverage ratio in Q2 was down at 3.4, which is within our target range.

Finally, turning to Page 15, a word on our ESG results for the quarter. First, our emission intensity, which increased by the quarter, unfortunately. Our absolute emission levels remains at level with last year, but due to the fewer sailings over the quarter. So in absolute terms, that means that our intensity per sailing goes up.

In terms of e-truck fleet, we now have 151 electrical trucks in our fleet deployed around Europe, which adds to lower emissions, but also gives some -- provides some cost reductions where we are exempted from tolls -- road tolls. Finally, looking at our gender diversity, our overall rate of women remained stable, whereas we saw a good progress in women in non-office-based positions increased from 10% to 14%. And with that, I will hand back to you, Michael.

Thank you very much, Karen. So when we look at the outlook for 2026, you would have seen that we have increased the revenue outlook to now 3% to 5%, driven by the fuel surcharges, as you've just heard from Karen, that was previously otherwise on level with 2025.

When it comes to our EBIT outlook, then we have raised the lower end of the outlook to DKK 1.2 billion so that we now have a range of DKK 1.2 billion to DKK 1.4 billion for 2026. When it comes to our CapEx, it's left unchanged at DKK 1.7 billion. And then this acquisition CapEx, you would have seen in our reports that we have received the conditional clearance regarding the Naviera Armas in Strait of Gibraltar, which have got to do with the acquisition of their ferry operations. That dialogue is still going on with the competition authorities, and that also means that we have not included it in our CapEx or cash flow outlook.

Lastly, our adjusted free cash flow we have raised to DKK 500 million to around DKK 500 million. Previously, it was above DKK 250 million. If we turn to Page 18, then I'll summarize the key priorities for the rest of the year. Safety first. It does remain a key priority for all of us in DFDS to have an even safer work environment. Performance improvement in the near term, we are absolutely committed to making and continuing the performance improvements that are needed across our turning point actions, but also across the wider DFDS business.

The cash flow focus will continue, not least through working capital focus. And then we are committed to deliver on the green transition and DE&I targets as well. Last but not least, we will complete the strategy review, as I mentioned before, within 2026 as well. So ending these prepared messages, we are now ready to start the Q&A.

[Operator Instructions]

The first question comes from the line of Jakub Glinkowski from RBC.

Welcome, Michael, to the new role. A couple of questions from my side. Firstly, can you add any color at all on the bunker spread tailwind versus organic growth for H2 baked into the guidance?

Then on H2 demand, I think the release mentioned that Q3 started in line, but you also flagged oil price risk to demand. And with July freight volumes that we just had released 3% lower, should we think of this 3% lower as the run rate for H2 if the spreads stay where they are today? And then finally, perhaps on leverage and capital returns.

So you are at 3.4 x inside the midterm target. So what needs to happen for the dividend or the buyback to be back on the table?

Thank you, Jakub, for your questions. So in terms of -- that was a little bit difficult to hear in your first question, but what I heard was your question is around tailwind included -- potential tailwind in our business included in our guidance for the second half?

Yes, yes. I was just wondering if you could add any color on the split relating to the fuel tailwind versus the organic growth that you baked into the guidance for H2?

Yes. Thank you. I mean, obviously, there is an impact of both in our Q2. We see -- I mean, the recovery that we are seeing across our business in both divisions are continuing in the second half, and that has been within our expectations throughout the year.

Those are affirmed as we recheck our forecast over the summer. And then, of course, we see the higher oil price levels compared to what you could call at least what we had last year and the years before, which also will have some impact in our results of the second half. That was the first question.

Second question, the lower volumes that we came out with this morning for July. I don't necessarily -- we don't necessarily see that as something that will sustain throughout the rest of 2026.

In parts of Europe, July is a vacation month. And that means that freight volumes, at least in the Northern Europe part and the North Sea, which is a significant part of our business is impacted by vacation period. So I don't necessarily see it as -- I do not see it as representative for the full year.

Finally, coming back to the leverage, as I said, very pleased to be within the range of our target, which also corresponds to our external rating. And with that, we remain investment grade. In terms of timings of potential new dividends and buyback, that is obviously a conversation that we will have at the right time with our Board and ultimately has to be decided at that level. It's not something I have any news on in this call.

The next question comes from the line of Kristian Godiksen from SEB.

First of all, Michael, welcome on board. And then to the questions. Firstly, maybe could you elaborate a bit on the strategic view in terms of the degree, how comprehensive and open-minded that is? That will be the first question.

And then second question, just curious whether you've been in any dialogue or contact with any of the executives from Grimaldi. And then thirdly, obviously, there are some changes in the Board, whether you could put some comments on whether you know Smedegaard from previously or -- and maybe put some comments on the reason why Polaris is coming on to the Board. And then I have another question for you, but let me just wait with that. Sorry.

Yes. No, thank you very much, Kristian. So if we start out with the first, which was around the strategic review that we have now initiated, we go into it with a very open mind. That means that we will look through the entire portfolio, turn every stone, so to speak, and see what should be the building blocks to the future DFDS.

So that's a process that I don't want to kind of make any kind of preconceived ideas about other than saying that we go into it with a very open mind and really with the aim of creating the foundation of the future DFDS. So that was your first question. Second was about Grimaldi. No, I have not met up with the executives from there.

And number three was about the news regarding the Board of DFDS that was released yesterday. I have not previously worked together with Niels Smedegaard, so I haven't got any kind of previous work experience with him. And with regards to Polaris coming in or rather, I should say, Jan Johan Kuhl being nominated, then that's really a matter for the Lauritzen Foundation to answer that question since they are the one who have nominated him.

Okay. Then just a follow-up on the question previously. I was just wondering on the Polaris part, whether you could put a bit more, I guess, it's also because they buy a stake that would be. Do you know whether there's been any dialogue between Polaris and Lauritzen Foundation in that regard and how that stake came into play? I would just follow up on that. And then a follow-up on the bunker spread.

Just a bit unsure on what specifically you said, Karen, in terms of previously when you guided in connection with the Q1 results, you said that you expect -- you had included in your guidance a normalized spread level. And so I'm a bit uncertain on what you're saying now is that on a net-net basis, obviously, the spread especially has been higher in Q4. You're beginning to hedge some of it. And then obviously, you have some headwind from the fluctuation in the bunker prices. What is the net change compared to the previous assumptions in the guidance? Sorry?

Yes, I'll just take the first question and Karen will take the second. With regards to Lauritzen Foundation and Polaris, I can't comment on it. That's really a question again for the Lauritzen Foundation to answer. So I don't have more color to add to that. With regards to Bunker, Karen?

Yes. And fair enough, Kristian, I probably wasn't too clear on that. I'll try to be as clear as I can. We -- it is correct that when we went out with our increase -- first increase in guidance back in April, we also said that there was an inclusion of bunker spread improvement, so to speak, in our guidance, mainly for the first part of the year.

Obviously, at the moment, we see that sustained. And as mentioned both in our report and briefly by me in my voiceover of the slides is that we have gone out and hedged part of that for the second half to ensure stability in our earnings. So that gives us stability and contributing to allowing us to lift our lower level of our guidance up and also, therefore, the midpoint.

So we have included the effect both of the flowing part and the hedging part in our guidance for the year. Again, acknowledging that there is very high uncertainty on the levels just over the last 1.5 months, we have seen significant swings upwards again, whereas we've had -- they were downwards in June. And we anticipate in our planning that we will continue to see these swings in oil price levels also in the coming months. And have taken those swings and potential downsides into account as well.

Okay. So -- but I guess is it fair to say then that was helpful. But just -- I guess, obviously, that's one of the reasons why you raised the low end of the guidance, but I guess that would also be an argument why you should raise the high end of the guidance.

So you should lift the guidance range as is, I guess, on the top and the higher end of the range, you could argue that it's an underlying downgrade if you have included some tailwind from this spread, which is now included in the guidance? Or am I missing something?

I wouldn't use the word an underlying downgrade. But as I said, we see high uncertainty and both up and downside to the current oil price levels, which we have taken into account.

The next question comes from the line of Ulrik Bak from Danske Bank.

And also welcome from my side to you, Michael. First question also on the bunker spreads. You state that you have hedged some of your exposure for H2. Could you be a bit more specific so how much of your exposure has been hedged for H2? And also if you have hedged anything for 2027? That would be my first question.

Yes. Thank you. In terms of how much -- so there are -- I mean, there are routes or areas that are exposed to the spread between HFO and MGO. And then there are other routes where the surcharges is a clean MGO to MGO pass-through. So, the pass-throughs, which are contractual, completely industry standard, they affect our business units differently depending on whether, as I know a lot of you know, whether the vessels have scrubbers, right, and can save on other fuels.

So it does not apply to our entire fleet far from. Therefore, if you look at overall how much of our total bunker cost we have hedged for the remainder of the year, then you are below half. And if you look at it on where you have this, how shall I say, the spread exposure, then it's a little bit above half.

Understood. So, is that for H2? And what about 2027?

Yes. Looking into 2027, obviously, there are some -- we are looking into that, and we have started looking into locking in something for Q1.

But you cannot quantify whether that's...

No, that's too early at this point in time. I mean we have -- and this is -- we have commented on it this time because it is an impact to our second half, and it also gives us a reassuring and comfort in our guidance.

But it is actually not a new thing for us to do this. And we do that on rolling four quarters. But obviously, the further out you come in the four quarters, the lower the volume we have hedged. But it is something that we have done for several years.

That's very clear. So perhaps moving on to the Mediterranean ferries segment. So what is the latest update here? And how are the financials trending in this part of your business? You have increased your prices in Q1 and supposed to recover some of the losses you made last year. So is it trending in the right direction here in Q2?

Yes, it is indeed. So, what we see, first of all, if we look at the overall market, we see a migration from road to ferry, which is obviously important as well. The ferry as a segment is gaining traction relative to road. So, that's point number one. And point number two, we see that we continue to have -- hold on to our volumes regardless of the reduced capacity that we have in the Med, which obviously means that the underlying operational results are improving in the Med as well. We'll continue to work with that, you could say the calibration between price and volume and so -- but we're satisfied with the progress so far.

All right. Then on the TES turnaround, I think you've previously mentioned that you expect to be breakeven by 2027, but not this year. So in light of your comments about soft export volumes from Turkey to Europe and the soft economic environment in Turkey, is this business plan tracking according to your previously announced plan?

So when we look at TES for this year, we have guided that it will come out there, thereabouts relative to 2025. So on par with a very dissatisfying results in 2025. That also means that we continue to have a very intense focus on the operational turnaround in TES. That comes through significant cost reductions, better utilization of the assets, better utilization of our capacity, our efficiencies and so on.

But it's a longer journey, I have to say, it's a complex business. It's a big business. So we continue to have a lot of focus and resources deployed in turning it around. But for this year, we are guiding in line with 2025. Underlying, there are improvements when you disregard the PPAs that you remember from last year, but it is a significant operational improvement that is required in TES.

Okay. That's very clear. And then my final question. On net working capital, we saw another positive development in Q2, and that's despite the higher bunker prices and rates. So how should we think about that going into the second half of the year?

Thank you, Ulrik. As I mentioned and by seasonality, I mean it is a temporary thing over the summer, right? And that is both in terms of the seasonality in our passenger prepayments and also in this ETS, which this year is 100% of our emissions offset versus only 70% last year, right? So there's an increased volume of ETS as well.

Overall, that means that we have a quite significant change in our working capital position from Q2 to Q3. Obviously, I would assume your question also relates to the fact that we have delivered DKK 1 billion in adjusted free cash flow from first half and still guide around DKK 500 million for the full year. And that is driven by this reversal of the improved working capital.

Partly, of course, we still have a good working capital position due to the other initiatives we've done, but there is this -- if you look at net just movements, those two factors are impacting quite significantly.

And then also our investments in the second half will be -- we expect them to be at a level that is twice the level that they were in first half. So those two effects combined takes our adjusted free cash flow in the second half down to a lower level than where we end the first half.

The next question comes from the line of Lars Heindorff from Nordea.

The first one is on the Ferry division. You had a tough start on Jersey last year. So I just want to sort of get a sense of the earnings or EBIT delta here in the quarter, Q2 versus Q2 last year on the Jersey part, if you can help a little bit on that. That's the first one.

Yes. Thank you, Lars. Q2 last year was really our first year in operations in Jersey. I believe we started 28 March. So we had only 3 days of March and then Q2 was really our first quarter in operation last year, and that was affected by a significant amount of one-off costs. Both getting vessels compliant with U.S. regulations -- U.K., sorry, U.K. regulations overall and also getting crewing optimized and trained and so forth.

So in terms of quarter-on-quarter impacts from Jersey in itself, again, combined with -- as it is part of our full channel division, it's, of course, not a very significant number, but it is a double-digit millions improvement quarter-on-quarter.

Can you narrow that higher low double digits?

It's not a -- it's not high double digits, right? But it's not ....

Yes. Okay. And then also stay in that area, Hibernian Line started up, I can't recall was it 1st of June new route, which partly competes with some of your routes. So maybe just a few words on if there has been any impact there. I couldn't find any comments on it in the report.

Yes. So that's true. They started up, I think it was the 26th of June or something like that, a route between Ringaskiddy and France, Boulogne-sur-Mer, where they will have two vessels deployed, I believe. So, we see a smaller reduction in our volumes in our Dunkirk Ireland route, but it's not something that we see as a material impact on our business.

All right, clear. And then on the Mediterranean situation, I think if I recall correctly, that you have reduced capacity by close to 50% compared to end last year. You may correct me if I'm wrong, but just sort of a sense for the split now in terms of the ferry capacity between you and Grimaldi on the Turkish routes. And also if there are any more news about -- we've been discussing this for quite a while that Grimaldi may consider putting in yet another vessel.

Yes. So it's certainly not 50% we have reduced in capacity. We've taken 3 ships out of the rotation down there, but we have largely maintained our volume, which means that we have been able to drive our capacity utilization significantly up.

When we look at the shares as you're asking, then the market is divided into ferry and road, and it is 54% ferry, 46% road and out of which we have around 34% of the total market, including road, which then in turn leads that we are north of 60% in terms of the ferry capacity. So we are still by far, the largest operator in the area.

Okay. And comments on Grimaldi perhaps still considering putting in more vessels?

Yes, sorry. So they have -- they deployed 4 ships, as you'll remember, and there's been considerations as we understand it about a potential fifth vessel. And so I can't -- I don't know their operational plans. And so we focus on driving our own tonnage and optimizing our own utilization and pricing. Could it happen in the future?

Yes, but it also depends on whether they will get access to the necessary terminals. And so we don't know. Our focus area, quite honestly, is about improving our own performance.

Yes. Understandable. And regarding the own performance on TES, I know this is still early days and you haven't been here or you've been there for a month or so.

But maybe sort of any considerations about the share of own production in TES and also, I don't know if you can or will share how much the EBIT was for TES in the second quarter. I think the loss in the first quarter was around DKK 100 million. Is it more or less in line with that? Or is there any sort of quarter-on-quarter improvement in the EBIT into the second quarter for TES?

As I said before, TES is a significant turnaround. I think it's fair to say that the company that we acquired was in a worse state than we had anticipated. So that continues that work. You talked about our own production. I assume you're referring to the utilization on our own ferries and so.

So that's around 12% to 13% -- and then you talked about the EBIT improvement. So we have an underlying improvement in TES, which is a little bit disguised by the PPAs, as I said before, that were included last year and so -- but we do see underlying improvements, not least because of the cost reductions that we have done in the area.

Okay. And then two more short, one short, which is the which is the foot-and-mouth disease. Just to get a sense for the swing factor in logistics, to what extent the earnings -- the earnings impact from the foot-and-mouth last year? And what kind of sort of tailwind has that provided in the second quarter?

I mean it's embedded, Lars, in the recovery and the improvement you see overall. But again, we are probably -- if we stay on the same line, we are in the low double digits here.

Okay. And then last one, I don't know if you can answer that. But I'm just a little bit curious about the timing of the EGM. Now I think on the most normal circumstances, I mean, a change of the -- in the Board of Directors could have waited probably until the normal AGM, which will be next year. So, maybe I don't know if you can comment on this, the sense of urgency apparently why it should be an EGM and not sort of a normal AGM.

Yes. We communicated last night that at the request of the Lauritzen Foundation, we have called for an EGM on the 8th of September. So that has been their desire to make that proposed change at an EGM as opposed to waiting for the AGM in March of 2027. The reason behind it is really for them to answer.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Michael Hansen for any closing remarks.

Thank you very much, and thank you very much to everyone participating. On behalf of the DFDS team, we're super excited about the future. Company holds significant potential, but there's also challenges on the way ahead. And therefore, we have initiated the strategy review. We're excited about going into that. And as I said in the call, we will turn every stone and so with that, thank you very much for participating, and have a great weekend when you get to it.

Ladies and gentlemen, welcome to the DFDS Q1 Report 2026 Conference Call. I am Shari, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Mrs. Karen Boesen, CFO and Interim CEO. Please go ahead.

Thank you, and good morning, and welcome to the DFDS Q1 2026 conference call. I'm joined here by Soren Brondholt, our Head of the IR.

Earlier this year, we labeled 2026 a turning point for DFDS. And I'm pleased to report today that our Q1 result confirms that this is the case. We are turning around and making steady progress on transitioning DFDS to a higher level of financial performance. In addition, we are also making progress on improving our financial leverage. And as you may have seen this morning in the Q1 report, we have firmed up our full year expectation for the adjusted free cash flow as well.

So we'll now dive into a presentation of the numbers, and we'll start looking at Slide 3. As mentioned, we have communicated our 6 turning point actions that are pivotal to our recovery from the unsatisfactory 2025. The 6 turning points are: Mediterranean capacity reduction and pricing models, so a recovery from our BU Med situation; generally freight ferry pricing optimization; ramp-up and improvement of our Jersey result that we started last year; Logistics Boost projects continuing to improve with a full year impact; the cost program that was announced in November last year; and then our TES turnaround progression.

Other focus areas for the year are to stay the course on the green transition, and a continued focus on cash flow to improve our balance sheet with the debt reduction, noncore asset review and working capital improvement as the key actions in that respect.

We will now turn to Page 4. We summarize our first quarter of the year as delivering a solid improvement of the result compared to last year. We improved with DKK 150 million quarter-on-quarter last year. We obviously still have a long way to go to get back to where we want to be, but Q1 2026 is a good start. It was driven by solid improvements across our network. Ferry result improved in most business units and largest in the Mediterranean. Logistics result continued to improve and was mainly driven by continent recovering from the foot-and-mouth disease that hit us same quarter last year. And finally, we have non-allocated items that are hit negatively by CEO severance costs.

As mentioned, our turning point actions are progressing. 5 out of 6 are progressing better than performed jointly. We are on track with our cost reduction program and our test turnaround is progressing, but we would like to accelerate it.

If we look ahead, the world around us cannot be characterized as steady in any way, not in Q1 and not today. So obviously, market volatility is a key factor in how our future looks. We focus on being adaptable to changing in any customer demand or other market developments, and we focus on fuel cost recovery across our network, that being ferry, road or rail.

In the next couple of pages, I will take you through the results. Turning to Page 5. In Q1, we saw a slightly lower revenue than last year. That was driven by weather impacting our number of sailings and also a reduction in revenue following restructurings we, by choice, have made in 2025. So a group revenue down 2.5%. We are still maintaining that on the full year, we will be on level with 2025. The reasons for the lower revenue this quarter was driven in large part by the Passenger segment, where we had fewer sailings, rougher weather and generally just less income from that segment. Our freight ferry was slightly up 1% and mainly driven by good volumes in some parts of our network. And finally, our Logistics were down 5% following lower volumes, but in particular restructurings, some closing of traffic during 2025.

Turning to Page 6, looking at our income statement for the quarter. As mentioned, revenue slightly down. EBITDA up DKK 51 million or 7%, taking us to DKK 799 million for the quarter. Translating that into an EBIT of DKK 33 million, which is up DKK 150 million since last year. Last year, we had a net EBIT impact from insurance income following the total construction loss of Finlandia. That's what you see in the other income in 2025 and then offset by the write-down of DKK 83 million. The net impact of that was DKK 33 million. We also had other positive one-offs in Q1 2025 impacting our EBIT. Some were route changes made during the year, and we also had other things.

Finally, we have this year also the CEO severance cost of DKK 37 million included in this quarter. So overall, if you clean out for all these one-off items, we have in the blue box on the slide listed where the actual underlying improvements, how they look. And overall, our EBITDA increases in that when cleaned up for one-offs, DKK 227 million versus last year, and the EBIT increase is actually as large as DKK 262 million versus last year.

So again, quite a little bit of a complicated explanation, but it is to get into the real underlying improvements of our business that we are doing this adjustment -- these adjustments for illustration.

Turning to our Ferry division on Page 7. We had a very good quarter, obviously, as I've already mentioned, starting the recovery in some of the lost earnings that we have had over the past 2 years. Ferry EBITDA is up DKK 51 million. EBIT is up DKK 133 million to a result for the quarter of DKK 124 million. Most business units contributed to this improvement. So North Sea with volume, better rates; Mediterranean with capacity and cost reduction and new pricing model; channel with improved results; Baltic Sea with improved volume positive from entering the space charter that we have done with TC Line; and finally, we have Strait of Gibraltar contributing slightly negatively because of a lot of reductions due tough weather in Q1 in the Strait of Gibraltar.

So I just presented for the group results, we have also in Ferry division adjusted for the various one-offs and route changes to illustrate the full underlying improvement, which is an EBITDA up by DKK 190 million and an EBIT improvement of DKK 208 million.

Turning to logistics on Page 8. We also see a good start in the recovery from most business areas in logistics. Our EBITDA is up DKK 31 million or 16% despite a continued tough market in Europe. Our EBIT is up DKK 48 million, taking into -- taking it close to breakeven for the quarter for our business. And we remind you that Q1 is seasonality a low quarter for our logistics business.

Again, most business units contributed to this improvement. Nordic result improved on most locations some progress on our Boost projects and still a few challenges left in this business unit. Continent showed a very strong recovery following the foot-and-mouth disease last year. U.K. and Ireland had a good stable performance, whereas Scotland and North Ireland had some volume reductions. And our BU TES, the Turkey and Europe South had improvements in volumes, but a result and the performance overall on a like-for-like basis on par with what we saw in Q1 2025.

Our EBIT margin for the quarter, if you exclude the loss-making TES business unit, is up at 3%, still more to achieve, but again, a good step in the right direction.

Now turning to Page 7 -- Page 9, sorry, looking for cash flow at the quarter. Our cash -- Q1 cash flow -- adjusted free cash flow was DKK 300 million. That is 22% higher than last year, and it was driven by better operational performance, but also supported by improvements in working capital and tax.

And I -- you may recall that our Q1 2025 cash flow was positively impacted by the introduction of a DKK 900 million factoring program when you compare like-for-like. So therefore, also a significant improvement as there is no factoring impact in this quarter. We also in our cash flow for Q1 2025 had the insurance income from the total construction loss of the Finlandia Ferry.

Turning to CapEx. Our CapEx were in line with last year and is mainly -- this is mainly maintenance CapEx in ferry from the dry dock season that we have in Q1, where we take most ferries into dry dock.

Turning to Page 10 with an update on our capital structure and leverage ratio. Our capital structure is stable in Q1 2026 as opposed to 2025. And we also have seen a significant reduction over the past year in our net interest-bearing debt. That, combined with an improved earnings takes our leverage ratio below the 4.0 mark down to 3.9 for Q1 2026 last 12 months. Again, that is an achievement that we are -- that we have been looking forward to, and we expect that we will be able to stay below the 4.0 mark going forward.

That is the walk-through now of our financial highlights of the quarter, and I will now turn to ESG efforts on Page 12. Looking at safety first, our sea-based safety improved in Q1, and our lost time incident frequency was reduced to 2.3. Unfortunately, our land side safety deteriorated significantly in Q1, and we were all the way up to 6.1 in lost time incident frequency. This is due to mainly trips and falls on icy weather conditions and has to be a continued key focus areas for us. The increase in land-based safety is not acceptable nor satisfactory for us.

Another not so good performance was that we -- our CO2 emissions from our ferry fleet were up 2.9% compared to same quarter last year. This is partly due to rough weather that made us use more fuel doing the same amount of sailings, but also because the timing of when we use biofuel. And in Q1 2025, we had a usage of biofuel in. This will come later in 2026. So that is also making part of the reason for why we are up compared to same quarter in 2025. When we look at full year 2026, we are still targeting to have lower CO2 emissions overall from our ferry fleet than we had in 2025.

We deployed 2 more e-trucks in the Q1 2026, taking us to 149, and those were deployed on the Shetland Islands. Finally, we increased women's representation in management with 1 percentage point and with 2 percentage points if you look at non-office-based person.

With that, I will now turn to our outlook and priorities for the remainder of 2026. On this page, Page 14, we present our updated guidance that was communicated on the 14th of April. We still expect our revenue to be on level with 2025. We raised our EBIT outlook in mid-April to be between DKK 1 billion and DKK 1.4 billion in 2026.

CapEx is maintained at around DKK 1.7 billion, and that includes now a purchase of a ferry Stena Vinga that we have concluded the contract on and that will be -- we will take over officially in November. The ferry is already deployed on our Jersey route as a chartered ferry, but we will take over ownership, as mentioned in November.

Finally, we have changed and improved our adjusted free cash flow guidance from being above 0 to now being above DKK 250 million for the year.

Summing up and turning to Page 15. Our Q1 was a good and strong step in the right direction, but we still have much more to improve, and we remain focused on that. Our priorities remain to be focused on organic growth and monitor and be responsible to any changes in our market, delivering on our 6 turning points, continue our strong cash flow focus and working capital improvements, committed to our green transition and finally, also deliver on our diversity, equity and inclusion targets.

With that, I end our presentation on the call and now open up for questions.

[Operator Instructions] The first question comes from the line of Lars Heindorff, Nordea.

The first one is on the logistics business. It's very kind of you that you show, I think I can't recall the slide number, that's Slide 8 in the logistics. We can see the difference between the DFDS classic and the TES contribution, you give us the margins there. If my math doesn't sort of trick me too much, that implies that the TES contribution in the first quarter has been minus DKK 122 million. The similar number for last year was minus DKK 83 million in the first quarter. And then I know there are some PPA adjustments, which suggest probably around minus DKK 100 million. All else equal, this implies a deterioration of the EBIT in TES from Q1 last year to Q1 this year. I just wanted to hear if that is correct? And if I am correct, what is going on there?

I think there's probably an element of allocated group costs as well that were not there last year that makes the difference look worse than it is would be my expectation when you do the backward calculation from the percentage points that we have included there. I think we are -- if we are staying around the negative minus DKK 100 million, then that's around the result we see.

So the group cost impact from allocated group cost is around DKK 20 million?

Yes.

In the quarter.

No, Lars, the like-for-like result is DKK 100 million.

Yes. But if we [ indiscernible ]

Okay. So -- and then I assume that, that group cost that will be something similar in the coming quarters?

Yes. I mean it's a choice we make where we put the cost right. And -- but we did not have allocated group costs. We never do that the first year we have a new one in operation. We have that this year.

Okay. And then I'm just -- the reason I'm asking this question is you know that because I'm also -- I'm interested in the trajectory here going forward for TES because I mean, you've been indicating minus DKK 300 million for the full year. That means that you need to see quite substantial improvement in the coming quarters. If I recall correctly, seasonality, the quarters are fairly evenly distributed in terms of earnings over the year. So I mean, how -- what will we see in the coming quarters from TES?

I would say fairly is maybe a little bit too strong a word. I mean, Q1 and Q4 is typically lower quarters than Q2 and Q3 in logistics.

Okay. And then because then if I'm right, then including that allocated group cost, you get to the minus DKK 122 million that suggests with the gain that you have of DKK 21 million, then the DFDS classic part of the business makes DKK 94 million in EBIT in the first quarter. That's a very, very substantial improvement. But are there also any -- have you moved around these allocated costs from the group, which can distort that earnings improvement from DFDS classic?

I don't think -- no. I mean, yes, of course, you can say you have another business unit that you allocate it to. So overall, there will be a slight movement, but that's not what really moves the needle here, right? I think it's important to look at BU TES as a business unit in recovery. And obviously, we expect to improve over the quarters during 2026. So we are not going to be at the same level of earnings in Q4 as we are in Q1 as our recovery plans kicks in.

Okay. But you have already reduced headcount quite significantly.

Yes.

So are there more to come in terms of headcount reduction? Or where should the earnings improvement come from?

Our focus right now is not headcount reductions, but we will adjust when required, but it is much more on the asset utilization. It's on the winning volumes, of course, and then it's on working on a various sets of, how should I say, accountability and performance improvement measures.

Okay. And then on the ferry business, maybe just the status on what goes on in the Med in terms of capacity adjustments? Are you done with those, the pricing situation? And then last but not least, are we -- I mean, any update on how Grimaldi is acting out there? I mean, will we see more vessels coming in? Is that likely?

Yes. So overall, our situation in the Med is that we are back to being profitable. We have taken up capacity over the course of Q4. There were 2 ferries that were contractually chartered and ready for return. So we returned those and we sold 1 vessel. That means that we have lowered overall our cost down there. And with about the same volumes almost, we are operating at a much higher utilization rate. I think it's fair to say that our ferries are full, and that brings in the better results for the quarter for Med.

We are still the one with the most departures with the most vessels deployed. We offer a strong service to our customers, and we are content with the customers coming back as well. Obviously, there's still another player down there as well. I think it's too early to say that things have stabilized, but gradually, things find it level, but we focus on what we can focus on, and that's our own operation.

Whether Grimaldi will bring a fifth vessel or not is on my side, I can't say it's speculation.

And in terms of the pricing, have you -- I mean, the price adjustments, is that done? And how much can you indicate maybe a level of the reduction?

I can't indicate as such the level, but we have pricing -- we have our pricing model in place for 2026, which also gives us a stronger reliability on our projected income for the remainder of the year.

The next question comes from the line of Ruairi Cullinane, RBC Capital Markets.

First question is what earnings tailwind have you assumed from fuel spreads in full year '26 in your upgraded guidance? And then to what degree should we expect this tailwind reverses in full year '27 at current oil futures?

And then secondly, on leverage, I see the sort of leverage targets or expectations for full year '26 and full year '27 aren't changed, even given the upgraded earnings guidance. Why is that?

Thank you, Ruairi. I mean the way we look at the world right now is we know pretty much what would happen in Q2 when we talk bunker prices, but we have no idea what will happen in Q3 and Q4 because it's an extremely volatile situation right down in the Middle East. As I'm sure everyone on the call is familiar with, there is in the ferry freight contracts and across the industry, not only in DFDS, but across all players, there are these pass-through models in terms of the increases in bunker fuel costs. And they typically have a time lag of 1 month, some may have a longer time lag. So it takes a month to pass through. That means that with prices starting to elevate only around 1st of March and there on. We do not see any impact in Q1 of this, but there will be a sort of a delayed impact coming in Q2 from the elevated prices that we saw already in Q1 and also elevated bunker costs that we as a company had to bear. So there will be a positive impact due to the time lag in Q2.

I can't go into details of the magnitude. There are also underlying business improvements in Q2, which drove our guidance upwards for sure, back to the points that I just presented, in particular on our Mediterranean ferry business, but also other places, the recovery in Logistics in Continent and Nordic, that is going well as well. So that is the basis for our updated guidance back in mid-April.

Your question on leverage, where we are now at 3.9. And as I said, we expect to be below the 4.0 for the remainder of the year. Due to the high uncertainty about, how should I say, Q3 and Q4 in this highly volatile market with elevated oil prices that can or may not, we don't know, have impact on volumes. I can't be more specific in the leverage ratio projections for the remainder of the year. But -- so other than we aim to stay below the 4.0.

Okay. Great. Can I just perhaps clarify on the first question. I suppose your EBIT guidance was upgraded EUR 200 million to EUR 300 million. Would it be fair given the sort of phrasing of the release that the minority of that came from fuel spreads primarily your turnaround measures. Would that be a fair assumption?

Yes, it would be a fair assumption, absolutely that the majority is coming from underlying business improvement, yes.

[Operator Instructions] The next question comes from the line of Ulrik Bak, Danske Bank.

Just first one on the Mediterranean segment. So this new pricing structure and the capacity reduction seems to support your earnings in the Med, but you are still quite a bit below the level from before Grimaldi opened a competing ferry route. So are there further initiatives that you can bring you closer to that earnings level from before 2024? Or what factors will determine the earnings trajectory perhaps beyond 2026? That would be my first one.

I think it's fair to say that the situation in the Med is still impacted by the competitive situation down there. It would be too early to say that everything has stabilized. So that means that there is still a competition for volume, so to speak. As that matures further, we expect to be able to further, yes, both improve our volumes and our revenue from the area. So that would be the further improvement that we would see.

Yes. Obviously, if we get higher market prices overall, it would be a positive. But wouldn't there be an offsetting impact from road volumes that has been gained from -- by the ferry operators that could reverse and therefore, you wouldn't see the full impact from a higher underlying earnings or prices from the ferry industry. Some comments on that, please.

Yes. You are, of course, absolutely right that there is the risk of volumes shifting to road. However, I still think we are a bit away from that breakeven point in terms of road, we are still compared to previous times at lower prices -- so we believe there is still some room before that would shift over to road.

Okay. Then a question on one of the comments you made on one of your slides about the North Sea. You state that there is a positive volume and rate development. Can you please elaborate on the market and competitive development in the North Sea region, please?

Yes. I mean, obviously, the North Sea is a range of -- I mean, many routes, right? So trying to generalize, I mean, generally, the traffic between, how should I say, Nordics over to the U.K. are good, and we have strong volumes there. The competitive situations we see in what we call our business unit North Sea is more down on routes from the continent over to the U.K., but where we are also seeing a good pick up in volumes for ourselves, meaning that we are dealing with that competition in a good way. So generally, what we see for the North Sea this quarter is a quite stable development with some improved freight rates and no, how should I say, unpleasant surprises.

Okay. It's just over the past couple of quarters, you flagged that there has been increasing capacity from some of your competitors also in that region. So I'm just curious to -- yes, how that stacks up with the comments this quarter.

Yes. No, and that's a fair question. I think it's fair to say that, of course, as in many other places, there are more operators on some of the routes. However, the impact this quarter has seemed to be less.

Okay. Okay. Then my final question on your free cash flow for Q1, which was at DKK 300 million. But still, you only guide for above DKK 250 million for the full year. So given that you have the best quarters typically in Q2 and Q3, can you just help me bridge how you should end up at the DKK 250 million?

Yes. No, fair question. I mean it's mainly to do with the timing of our CapEx. As we have said, you've seen, we've had about DKK 300 million of CapEx this quarter only, right? And we have guided DKK 1.7 billion for the remainder of the year, meaning there will be a little bit of an uptick in CapEx.

We may also see some deterioration of other elements, for example, our bunker inventory, given the significantly elevated prices, we have -- just means that we have more tied up in inventory now. So that's the main reason why we stay at the level we do.

Right. And net working capital, how is that going to pan out for the coming quarters do you expect?

Yes. I mean the higher inventories due to higher bunker prices, not driven by volumes, but just generally, the value of the inventory goes up, right? So that is negatively impacting the working capital. We have done quite a lot of improvements to our working capital. And therefore, right now, we have not factored in any further improvements in this guidance forecast.

We have a follow-up question from Lars Heindorff.

So 2, one, is sort of more housekeeping question is the depreciation levels. If I look at it in ferry, depreciations are marginally down quarter-on-quarter. In logistics, they're down actually a little bit more. Any reason for this? Is this because of the sale of the ferry in Med? Or is this sort of the run rate we should expect for the rest of the year?

I think I would suggest that, Soren, takes that with you after the call.

Okay. And then a follow-up on some of the previous questions because when we spoke on the 14th of April in connection with the guidance upgrade, I clearly got the impression that the majority of the reason for the guidance upgrade was caused by the bunker fuel spread -- sorry, the bunker spread and less to do with the underlying operational improvements. That was not the answer you gave earlier, so I'm just a bit confused.

Yes. But I mean, I think there's also been almost a month gone since, and we've probably gotten more confidence in our underlying business in terms of how that is looking and then also have a greater view into -- a better view into the impact of bunker and ultimately, the [ BAF ] income that we will see. And hence, that's why we emphasize that there is also a significant element of improvement in our business that is part of our guidance upgrade.

There are no more questions at this time.

Thank you. Then just a few remarks to close this call. As mentioned, we remain focused to improve our financial performance for the rest of the year, and we have discussed now the elements that we have in play to continue to do that. And that, of course, includes delivering on our turning point actions. Further and as also mentioned several times, it's really a key priority for us to monitor the changes in the market that we may see changes in volumes and adapt accordingly. Thank you very much for joining this call and for your questions. We look forward to be speaking to you again soon. Thank you.

Ladies and gentlemen, welcome to the DFDS Full Year Report 2025 Conference Call. I am Margaret, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's my pleasure to hand over to Torben Carlsen, CEO. Please go ahead, sir.

Good morning, and welcome to DFDS' Q4 and Full Year 2025 Conference Call. I am, as usually joined here by Karen Boesen, our CFO; and Søren Brøndholt, our Head of IR. Our headline for the annual report is turning point ahead as our financial performance started to turn around in Q4 2025, and this was followed up by a solid January result. This is reassuring and the key theme for this call is to take a closer look at the actions implemented that will secure the 2026 progress and turning point. Also reassuring is the high level of customer loyalty we've seen throughout 2025. Our customer satisfaction scores are trending well above industry standards in both ferry and logistics.

So, with the turning points, with the customer loyalty, we have a strong foundation in our network and for our people to navigate DFDS through the challenges we've seen in '25 and to deliver a different level of financial performance in 2026. Let's start with a closer look at our turning points on Slide 3.

Headline turning point reached end of tough 2025, actions implemented for 2026 recovery. And it was indeed a tough 2025. Results were below expectations. Focus areas proved more challenging than expected. We experienced margin pressure across our network from a competitive low-growth market environment and the inflationary cost pressure post-COVID and war continued through '25. Our new concession routes start-up in Jersey was also slightly more challenging than expected.

So, on this background, we'll talk about our 2026 expectations, and we do call 2026 a turning point. The actions implemented during 2025 will underpin the change of level in 2026. And let me talk through some of those with the main impacts. Logistics boost projects, we saw a delay of the impact in '25, especially Q1 and Q2, but gained traction in Q3 and Q4, and we'll see the full year impact of these actions.

On freight ferry pricing general through the system, we have had strong focus during the last couple of months of '25 to get increases in place. And in the larger areas, Baltic, North Sea channel, we've seen more success with this than in the last couple of years. We have now ramped up the operation in Jersey. All agreements are in place, and we'll see the full year impact of this operation, including a full summer season, which will significantly improve our results compared to 2025.

In the Mediterranean, throughout 2025, we took various measures, but the real turning point was in September when we launched a new pricing model and at the same time, during Q4, redelivered some of our chartered-in vessels to significantly reduce cost while still being able to serve our customers. And then, of course, in November, we launched our cost reduction program that when it comes to the people part with 400 positions reduced was implemented during Q4.

Then there's a light blue square here with test turnaround progression. We have seen a lot of actions taken during '25 due to the backdrop of the Turkish economy, the Turkish foreign exchange ratio, the intransparency in the ferry market. The turnaround has been more challenging than expected. We will continue to see benefits or improvements in '26 due to some accounting that we can cover on a different time. It will not show in the P&L necessarily strongly, but cash flow-wise, there's another strong improvement versus '25. But all in all, 5 areas where the actions have been implemented, where the benefits are showing in Q4 and in January. And then one last area of focus as well, but where there's still hard work, of course, in front of us.

Turning to Page 5. Talking a little bit about Q4. Competitive market environment continued, flat markets in Northern Europe and a very soft U.K. Turkey headwind from inflation reduction policy. Good growth continued in Morocco, Tunisia, Egypt. Passenger volumes muted, but we managed to increase onboard spending to compensate partially for this. On the 3 focus areas, the logistics boost projects, continued progress as expected. You'll see that in some of the numbers from Karen in a minute. The Mediterranean adaptation worked, and we delivered a positive result in Q4 in the ferry business in the Mediterranean and test turnaround, continued focus on operations, organization and commercial development.

Q4 earnings, the Ferry division underlying results improved, driven by Mediterranean and Logistics division's underlying results similarly improved when adjusted for one-offs. Cash flow boosted strongly by working capital initiatives and a ferry sale, and we experienced or reported DKK 97 million one-off redundancy costs in connection with our cost savings program.

With this, I will, on Page 6, hand over to Karen for more details on the numbers.

Thank you, Torben, and good morning, everyone, on the call. I'm going to start with Q4 and then move on to full year numbers. So, looking at Page 6, we're looking at revenue in Q4 2025, where we are more or less flat with 1% up. However, organic growth was negative. It was minus 3%. This is driven by, as Torben mentioned, a slightly slower passenger market. We also have a reduction in logistics, which is driven by closure of certain activities in order to improve overall profitability of the area. And then obviously, we have the revenue increase coming from the Ekol acquisition, which has full quarterly effect in Q4 2025 from BU TES. However, slightly offset by the loss of the sale of the Oslo-Copenhagen Group. So overall, DKK 100 million in revenue, 1%.

Moving on to the next page, Page 7, our Q4 income statement, just highlighting a few numbers. an EBITDA of DKK 705 million, which is 5% down compared to same quarter last year, a significant or slightly increase in depreciations, mainly coming from the addition of BU TES. So, 9% up on depreciation, which takes us then to an EBIT of minus DKK 62 million, which is the quarterly EBIT reported today. And then we move further down in the P&L, you will see that our finance costs compared to same quarter last year was slightly lower and so was the interest cost. This is driven both by a lower debt, about DKK 1 billion, but DKK 1 billion less in debt and then also driven by lower floating rates.

Moving on to the next page, Page 8, where we are comparing the reported EBIT of minus DKK 62 million by the 2 divisions to the underlying actual performance, referring back to Torben's intro about how we see underlying improvements year-on-year in the 2 divisions. So, if we look at Ferry first, on the top right corner, we have the reported result of Ferry of DKK 50 million. Coming from last year, there's some reductions in the rest of the network, but you also see an underlying improvement in the Mediterranean of DKK 49 million in the quarter, which takes us overall to a level above the earnings of Q4 2024. Similarly, if we look at Logistics, reported earnings or EBIT of minus DKK 29 million versus minus DKK 30 million in the same quarter in 2024.

However, if we take out the one-offs and BU TES, then we see an underlying improvement of the like-for-like network of DKK 43 million. So again, here, an underlying improvement year-on-year when you compare like-for-like. So overall, these are the signs that indicates that we are reaching the turning point of our challenging performance.

Then moving on to full year 2025. Now looking at Slide 10. Here, we see an overall growth in revenue of 4%. This is slightly below or not -- it is below what we originally guided, but it is still in line with the latest guidance that we came with. It's 4% up due to the addition of BU TES, of course, and then subtracted with the sale of the Oslo Ferries and other adjustments. Organic growth again was negative, driven by freight ferry and also by logistics, same reasons as I explained for Q4.

So, moving on to the next slide, which is our full year income statement, Slide 11. Again, highlighting the growth in the revenue of 4%. The loss in the EBITDA of 16% down to an EBITDA of DKK 3.7 billion, a depreciation increase of 13%, again, with the addition of BU TES and then we also have the constructive loss of the Ferries in Landia in the beginning of the year and also here takes a write-down. It's offset by a larger income elsewhere in the P&L. Then taking us to the reported EBIT of DKK 520 million today, which is obviously significantly down compared to last year. Same issues on the financing cost, lower than last year, driven by debt reduction and lower floating rates, and then we have some FX losses that goes the other way. Overall, the profit after tax is a negative DKK 425 million for the year.

Turning to Slide 12, looking at the EBIT per division. Again, first, we compare, of course, to our previous performance, which is the disappointing picture that we knew we are there, but that's in line with the expectations, unfortunately. The route changes and so forth has also impacted overall our performance this year. Overall, Ferry is down with more than DKK 700 million to an EBIT of DKK 791 million. Logistics is down DKK 243 million to an EBIT of minus DKK 30 million. Again, this is driven by the BU TES, which we have already reported as loss-making. So, the existing business is offsetting that loss. So ultimately -- and then we have a slight change in the corporate cost, which is mainly due to the redundancy cost that we took in Q4. So that's the bridge from last year to this year's EBIT.

Turning to Slide 13, the cash flow. If we focus on the full year, then overall, a good operating cash flow compared to the decline in earnings that we have. We have operating CapEx of DKK 1.2 billion, offset by a net income from purchase and sale of ferries. We purchased 1 and sold 2. So that has an overall positive impact of DKK 246 million, taking the net CapEx to just below DKK 1 billion. A free cash flow of DKK 2.3 billion and then adjusted for acquisitions, we are then at an adjusted free cash flow of DKK 1.2 billion for the year. This is a lot driven by, as we have said also, by our working capital initiatives and obviously, of our also discipline in terms of CapEx spend in the year.

Turning to the last page in my section. We are then addressing our capital structure and the development in our capital structure, our debt ratio over the years. Overall, we end 2025 with an equity ratio of 36%. That is up 1% compared to 2024. We have -- what you call it a debt-to-equity ratio of 52% to 48%. That is also improved compared to 2024, where the debt was 55% to 45%. And then on our earnings to -- debt-to-earnings ratio, our net interest-bearing debt to EBITDA, we are ending the year at 4.1. This is a slight increase compared to 2024. However, as you will know, when you follow the quarters over the course of 2025, we have been higher over the quarters. And therefore, we are confident with at least reducing here by the end of the year, and we will reduce further into 2026.

The reduction is driven by a decrease in net interest-bearing debt of DKK 1.9 billion compared to 2024, which is partly offsetting the lower earnings in the year. We've also put a little box here showing our expectations for 2026, 2025 and the mid-term revision of our target range from 2.5 to 2.3, which we can come back to if necessary. With that, I will leave the word back to Torben.

So, moving to Green & Great Place to Work on Page 16. Our CO2 emissions were further reduced during 2025, trying to basically be quicker in the terminals and spend more time on the water and of course, investing in fuel reduction initiatives. We further increased the number of environmentally friendly equipment on the land side with trucks and trailers. Increased our solar energy production, increased women in management positions and made significant improvements on our both land side and sea-based safety when measured on lost time injury frequency. So very pleased with that. And ESG continues to be on the agenda of DFDS if anybody were in doubt.

Moving to Page 18 and 2026 focus areas -- sorry, 2025 focus areas. We had the 3 focus areas, logistics boost projects, adapting Mediterranean and turnaround of Turkey and Europe South. Logistics boost projects, we already mentioned in Q3, Q2, and especially in Q3 that the turning points were met, the focus worked. The adaptation in the Mediterranean, we have now seen in Q4, we are making money again in that area, and we'll see further significant improvements during '26. And then the one that is slightly delayed is the turnaround of the Turkey and Europe South business.

And if we deep dive a little bit into this, the logistics boost projects, we have talked about 8 projects that needed turnaround. Seven of those are now profitable and also do well on other metrics. We do have one domestic Danish business that still creates challenges, but with significant improvements versus '24, but not quite there yet. We continue with this model. We will not report necessarily externally as much in '26 about this. But a lot of actions have been taken to make our logistics business a more focused and less complex business, and we'll continue that work. And internally, the team that runs the Boost projects continue to monitor the different entities and move resources according to performance across our network.

Mediterranean adaptation showing results on Page 20. As you know, there was a new competitive situation from September '24 and markets continues to rebalance and adapt to the new situation. Of course, also taking into account that the Turkish economy is not as strong -- growing as strong as it has. What we have done is that on our own corridor, we reduced capacity by 3 ferries driven through this Mediterranean into a positive EBIT result in Q4, also helped by the new pricing model that was launched in September and that will take further traction in 2026.

The market was up by 2% -- 2.4% in '25, driven by especially the ferry market growth as the lower pricing picture converted trailers from road to ferry. For DFDS, there is -- the picture is road 49%. And then from the ferry market, we are about 2/3 of the market and competitors carry the remaining 1/3 of the volumes. And of course, the share of the competition on the Trieste market is larger than the overall competitive share of the market.

Moving to Page 21. Not a secret, and we've talked about it a while, the test turnaround progressing at a slower pace than targeted. We've done major network rightsizing. We've done major organizational changes and seen improvements from that. But of course, we need to continuously to make sure that the size of our fleet and organization matches the market. Good news is that we see much stronger commercial traction than previously with a more transparent ferry market reemerging, but also a more competitive offering in the market is securing that we now start gaining volume, whereas we previously were net loosing volumes. Martin Gade, who was both Head of the BU TES and part of the EMT is leaving DFDS and we have worked to find a replacement that soon will be announced externally.

Moving to Page 23 for outlook and priorities. The outlook of our EBIT reflects the turning point and the underlying turning points that will secure the improvement. On revenue, still a low growth network that we operate in, except for North Africa. So around level on the revenue side, a significant improvement of EBIT from the DKK 520 million that Karen went through to a range of DKK 800 million to DKK 1,100 million and the drivers are the ones I talked through before. RPM rate increases across the network. Mediterranean capacity reduction, Jersey full year impact on the ferry side. And then on logistics, full year impact from the logistics boost projects and progression on BU TES turnaround. And then, of course, the cost reduction program that impacts the full group that we launched in November and when it comes at least to the reduction of employees have implemented already.

The adjusted free cash flow that was DKK 1.2 billion in '25 will be above 0. And the difference to '25 is that on our working capital we launched a factoring program in '25 and that we cannot further increase. And we also had some sale of assets that kept our CapEx down. But a positive adjusted free cash flow despite an EBIT level of DKK 800 million to DKK 1100 million and CapEx of DKK 1,700 million.

So, priorities '26 and '24, continued organic growth focus and then deliver on these turning points that I've walked through. Strong focus on cash flow, both working capital and capital discipline. Karen is the master of both of those. And then the green transition, we are on track to deliver on our 2030 goals. And with the EU regulatory framework, this is also financially a rewarding thing to do. And then we are committed to continue to deliver on our diversity targets. With this, over for questions.

[Operator Instructions] The first question comes from Ulrik Bak from Danske Bank.

The first one is on your guidance and the different building blocks, how you get to the DKK 800 million to DKK 1.1 billion in EBIT for '26. So, this year, you report DKK 520 million, and you have a cost program, which should generate DKK 300 million, which should get us to the lower end of the guidance range. But then you also talk about the price increases that should also have a positive impact. But looking at the delta, then there will only be maximum of DKK 300 million positive delta from increasing prices in the Mediterranean region and the rest of the logistics business. So please elaborate on if there's anything I've missed in there and why guidance looks as it is?

Thank you for the question, Ulrik. I think we have these 5 primary blocks delivering, probably most of them triple-digit impact. If you take one like our savings program and say that's DKK 300 million already, then, of course, it doesn't look very ambitious. Reality is, of course, that part of that DKK 300 million is spent on inflationary pressure and other cost increases around the system. So, we think we have come up with an achievable range. It's -- our credibility is maybe a little low after last year where we did not deliver the promises.

So, we've spent a little time on this call to explain that the 5 elements are things that have already happened and where we can already see end of Q4 and also in January that the results are coming in. And then we have felt that this range is a prudent level. It is after all close to a doubling of our '25 results at least the upper end of the range. So, we are very comfortable with this range and very comfortable that we can deliver it also.

That's great. Then perhaps if we look a bit further, obviously, 2026 is supposed to be a transition year. So, 2027, we should see an additional uplift in earnings. If you can just again elaborate a bit on the building blocks because test, obviously, that should improve. But what about the rest of the business, again, back to the building blocks you also have for '26. How much more could we hope for 2027? If you can quantify, it would be great, but some wording would be also.

I think it's prudent here in February '26 to talk about '26. And then as we start delivering some quarterly results, we can start to speculate about what then the further uplift in '27 will be. There will be an uplift, obviously, that will be the ambition. We all know that BU TES is not where it needs to be and also the other areas, of course. But for now, I think let's focus on '26 and our ability to deliver on the range we've put out.

That's fair. And then my final question here is on the Ferry net development. If we go back to Q4 2024, you reported a negative EBIT impact from the increased competition in the region of DKK 225 million. Now this quarter, it's positive by DKK 49 million. So, if I add these 2 numbers up, I get to a minus DKK 175 million versus before Grimaldi entered the region. If I compare that number to what you reported in Q2 last year, then the negative impact from Grimaldi entering that was DKK 181 million. So that doesn't seem like a huge improvement in Q4 last year versus Q2 last year. So, and Q2 last year, that was before your price increases kicked in. So just some flavor on why didn't it improve even more in Q4 versus what you saw in Q2 before the price increases.

Maybe I'm getting slow, Ulrik, but that was a lot of comparison numbers. During Q4, what happened was that the September price increases or maybe I should say the price model was put in place. Some of the customers, some of the significant customers had commitments already for how '25 pricing should look. So, the full impact of that comes from Q1 '26, where maybe one customer is still on an old system but where the rest is now in this new system. Furthermore, it was during Q4, so in October and November that we redelivered the last 2 vessels. So, part of the improvement is also to match the demand with the supply in our system.

So, you didn't see the full impact in Q4. If that's what you're challenging, we fully agree. You will see further impact as we move forward. But I don't think I here without a calculator can comment on your comparison then to the Q2, but we can maybe take that offline or you can take that offline and we can dwell into it. But you are right. You've not seen the full impact in Q4 from these initiatives.

The next question comes from the line of Lars Heindorff from Nordea.

A follow-up on Ulrik. I won't mention as many numbers perhaps. But as Ulrik pointed out, last year, you think you communicated that you made a loss of around DKK 200 million to DKK 250 million in the fourth quarter in Mediterranean. And just to get it clear, the Slide 8 that you have, which is the bridge, is that an uplift of DKK 49 million? Or is the positive income of DKK 49 million in the fourth quarter? There's quite a big difference between those 2, if it's an uplift or actually a positive EBIT.

DKK 49 million is an uplift.

Okay. So, it's an uplift from minus DKK 250 million in Q4 last year.

No, no. You have these huge numbers that you float around. I don't recall the DKK 250 million. We had a significant negative impact Q4 '24 versus Q4 '23. We did not have a loss of DKK 250 million in Q4 '24.

What was the delta?

The delta. And I think the DKK 250 million sounds a little bit on the high end. But what we are saying now is with this uplift of DKK 49 million, Q4 is a positive result in the mid. So, we never lost DKK 200 million in a quarter in the mid. Okay. All right.

And then on, on logistics, if I can read your slides correctly, then TES had lost around DKK 275 million on a full year '25. And then, of course, you have these one-off items related here in the fourth quarter. I mean what, with that, these adjustments that you have made, I mean what should we expect for TES of an earnings uplift in '26?

We, as you can see in my slides, we have a slightly lighter blue on that one, on Page 3. And this is because the uplift that we are talking about in '26 versus '25 is primarily coming from the 5 other squares on Page 3. TES continues to be in a difficult spot. We will show underlying improvements in the operation of also more than a 3-digit number in millions. But accounting-wise, some PPA adjustments and other go against us. So, we will not see it in the EBIT side. You will see on the cash flow side, we are improving. And that's, of course, not satisfactory.

However, we have we have come up with a guidance for '26 that is very much based on delivering on things that we have already implemented. And that's why we are focusing on the full year impact of Boost, the full year impact of the actions in the biomed, the freight ferry pricing, the Jersey full year and the cost reduction program. It's things that we have already done. It's things that we can already see in December and particularly in January that are working. The TES is you can call it a strong point. It's a focus area, obviously, but we will not here be able to guarantee an EBIT improvement of any significance over what you referred to there.

And then just a housekeeping -- a few housekeeping questions on the CapEx guidance for '26. You write in the notes that it excludes ship tax. If it comes, if it's approved, how much will that be?

DKK 240 million.

Yes, yes, of course. And then one of my favorite subjects is on the CTU assumptions. I have to ask you because you're still assuming a 35% EBIT CAGR from '26 to 30% in the logistics. That's not significant down from what you assumed last year. And given the development that we have seen throughout last year, to me, it just comes across as being, and also now, Torben, you mentioned that we shouldn't expect to see any material improvement in TES. How can you assume an EBIT CAGR of 35% in your CTU for logistics over a 5-year period?

I think overall, Lars, it probably merits at some point, conversation also about your other assumptions in what you put out some weeks ago. But overall, we have other areas that improves a lot. As you know, we had a very challenging continent situation in 2025 with the foot and mouth disease and other issues with redundancy costs and so forth. So it is, there is other areas that drives -- when you come from a very low almost negative, right, then there's other areas that drives that growth. We have also done some -- close down of activities also in our Danish businesses, right?

So how should I then understand you have a comment on it on Page 14 in the annual report. I mean, how should I read that other than there is just massive uncertainty?

In terms of our -- are you talking about the impairment disclosures?

Yes, yes.

Yes. But I mean, there is -- we are being quite transparent about in our sensitivity analysis as well in the notes, right, that we are where we are in our impairment. We have a more conservative underlying business case we are applying for the logistics than we had last year. But obviously, also with the poor performance this year, the headroom is less, and this is why we are disclosing this the way we are.

But on a 5-year horizon, Lars, of course, TES is also contributing to this CAGR. Now you asked specifically about '26, right? But Lars, I think it's a good question. It's a fair question. We've obviously spent time with the auditors, with the business, and there is no impairment, and we are confident with the assumptions that have been applied to reach that conclusion. And then we'll just have to, I guess, take it from there as we move forward. Happy to have a more detailed discussion, of course, with you on a different time.

Yes. I'm sorry to go into the details. And just last one is on the credit ratings. If I recall it correctly, it's Scope and then S&P that you use in the dialogue.

Only Scope.

Only Scope, okay. Sorry. And there's the dialogue with those, I mean, they're fine with a 2-year period before you get below the 3.5x.

I mean, yes. So far, I mean, we are obviously in a not very frequent but regular dialogue with them. And obviously, with the release of our annual report today, we're going to have a new conversation with them. But so far, we are keeping a negative outlook but staying investment grade.

[Operator Instructions] The next question comes from the line of Jakub Glinkowski from RBC.

Perhaps a more general question. But obviously, we had January ferry volumes today as well. And I think it showed some constructive momentum, particularly on the passenger side, perhaps showing growth for the first time since February last year. So, I was sort of wondering if you could share any color with us what do you expect in terms of volume development over this quarter or this year?

Yes. We just announced the January volumes. Of course, in general, if you exclude North Africa, and to a certain extent, Turkey, where we see some recovery, of course, we are still in a low growth area with Baltics, North Sea channel and on the logistics side. But we have seen some signs of recovery with the, for example, the Swedish manufacturing sectors and Sweden has just historically proven to be quite a good first mover point of things recovering across Europe. And of course, we have a large Sweden exposure. So, the volumes that we see look okay. No strong growth, but at least compared to what we had expected, we are seeing the volumes coming.

Of course, the weather has been a little tough, which has meant also some cancellations and stuff. But looking through that, it looks okay. On the passenger side, it's -- 2025 was tough in many markets. We compensated by more onboard spending. And there, we also expect to see some uplift in 2026. But again, with the current economies, it's not going to be game changing. And that's why in the turning points, we focused a little bit on we're taking out cost, making sure we don't have too much capacity. And this is not just in the Med. This is, of course, also reducing sailings in other markets where we can do it. And then on getting pricing up for freight customers and working even harder on the onboard spend where we have some good momentum also on some of the routes where we haven't seen it before.

The next question is a follow-up question from Ulrik Bak from Danske Bank.

Just following up on the impairment testing. In 2024 annual report in the note, it says that if there is a decrease in the annual EBIT of 10.7% per annum between '26 and '29, that if it was above that, then you should do some -- a write-down of some sort. And I guess, 2025, the original guidance for logistics on EBIT was DKK 300 million. In 2026, it's DKK 50 million to DKK 250 million, which is a decline much higher than the 10%. Obviously, I know that there can be a rebound. But still, it seems -- yes, just some more comments because I also see that you have declined or changed the goodwill from logistics section to ferry, whether that has an impact on the way we look at the impairment testing.

Thank you, Ulrik. To answer your last question first, obviously, with moving more than DKK 1 billion from logistics CGU to the ferry freight CGU, there's obviously DKK 1 billion less on the balance sheet for the logistics CGU. So yes, that has an impact. This is done because the value of the Ekol acquisition, to a large extent, sits with both entities, right, to both divisions. So, this is to reflect that. So that means that obviously, the book value is less. Coming back to your other question, again, as Torben said, we have done our projections. I also mentioned they are more conservative than what we had last year. We have done our testing. We've discussed it with the auditors. We've discussed it with the Board, and the conclusion is that there is no impairment.

Understood. Then final question here is on your green CapEx levels. At the CMD back in 2023, you outlined a CapEx plan, which in some years should reach more than DKK 3 billion per year towards the end of the decade. Just some comments on whether these are still fair numbers to apply or if something has changed.

Well, if I can -- maybe Karen can come back on the numbers then. But I think we have obviously had to review our tonnage plan given our current performance. We've also grown wiser in terms of the green transformation, what is required and what can be handled in different ways. So, we are reworking this. There will still be CapEx, obviously, for new buildings, but it may look a little bit differently than -- or it will look differently than what you saw in '23. And this will also impact the levels. We can see that we can do some conversions instead of new buildings as one element. But I think we can be a little smarter and give a little more guidance when we get to Q1 or Q2 on this as we are also reworking this internally at the moment. Karen, I don't know if you want to add anything.

No, but that's exactly right. Obviously, due to the drop in earnings, we have to constantly look at our plan. And then as our normal planning cycle, we are then doing an overall update of our longer-term now in the coming quarters, and we'll discuss that with the Board and so forth before we can start saying anything new about it. But I mean, our tonnage plan -- replacement plan is, of course, something that we constantly look at. And that includes moving to more greener fuel in the vessels.

But what I hear is it's probably going to be less than DKK 3 billion in some of those years, if you say you can do it smarter and other ways.

Yes. I think we already mentioned that we have seen that, for example, on the channel that the electrification there is probably going to happen through conversion of existing vessels rather than new buildings. So, it will be lower volumes than what you have seen before -- lower value, sorry, than you've seen before.

The next question is a follow-up from Lars Heindorff from Nordea.

Sorry, staying with my favorite subject, which is goodwill. So, when you acquired Ekol, if I recall it correctly, out of the roughly DKK 1.8 billion that you paid for it, I think most of that was before, not all was goodwill. Back then, I think that you allocated around DKK 1.2 billion or DKK 1.1 billion to the ferry division and around DKK 600-ish million in the logistics upon the time of the acquisition. With the movement of goodwill from logistics into more goodwill into the ferry division, are there any goodwill left from Ekol in the logistics division?

That's the same.

It's the same. The transaction was not -- did not happen at year-end. It happened before Q1. That's why. That's what I'm referring back to.

Okay. Sorry.

We closed the year, goodwill was last year 2024, the goodwill -- all the goodwill from the Ekol acquisition set with logistics.

No, no. So, it's the same DKK 1.1 billion that we had disclosed before.

[Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Torben Carlsen for any closing remarks.

Thank you very much. And let me just wrap up. Thank you very much for good participation, good questions. Some of them we may have to, as mentioned, take offline for more details. We've tried to demonstrate that we believe we have actions in place that have already been taken that will produce the results that will support our 2026 guidance. And hopefully, we gave you further comfort around that during the call. So, thank you very much for joining the call, and thank you very much for your questions. Have a continued good day.

Ladies and gentlemen, welcome to the DFDS Q3 Report 2025 Conference Call. I am Hillie, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Torben Carlsen, CEO. Please go ahead.

Thank you very much. Good morning, and welcome to DFDS's Q3 2025 Conference Call. I am, as usual, joined here by Karen Boesen, our CFO; and Søren Brøndholt, our Head of Investor Relations.

It has been an eventful morning. On this call, we will focus on the Q3 report, the cost reduction program, and the assumptions behind the outlook change for 2025 that mainly relate to uncertainty about Q4. With regard to the Board's initiation of a search process to find my successor, we'll try to not make that a focus in today's call. I'm, of course, sad to be leaving DFDS. I have truly enjoyed every minute here. Let me emphasize also that I am still at DFDS. I'm staying until a successor is in place, fully committed, obviously, to my responsibilities and dedicated to support DFDS throughout the CEO changeover and also, of course, the initiation of our cost reduction program.

What's important is that we are staying on the transition course. We made further progress on the logistics boost projects in Q3. Our new Mediterranean price model raised rates in September. And our third focus areas, the Turkey and Europe South turnaround, progressed, but with less pace than expected also in Q3. But let's start with putting it all into perspective on Slide 3. There, you see our pathway to a higher level of financial performance. We launched as part of our first outlook for the year, 3 focus areas that we needed to resolve in 2025. Our logistics booth projects, 810 areas with challenges in our logistics network, adapting our Mediterranean ferry network to a new competitive situation, and then the turnaround of our newly acquired Tukee and Europe South business.

We are now with the challenges we've had in primarily the 2 latter focus areas, adding a cost reduction program to the effort. It will have a DKK 300 million impact in 2026. It will, unfortunately, mean a reduction of around 400 mainly office positions, assisted with a number of specific cost reductions that we are carrying through. To implement the program, we foresee one-off costs of around DKK 100 million during Q4.

Moving to Page 4, just a repetition of our overall strategy of moving together towards 2030, which is about, as you know, unlocking network value. A lot of that is about organic growth. Green transition is still there. During this quarter, we've signed off for the SBTi targets and now have 24 months to get a pathway approved, a pathway that is not too dissimilar to what we already have planned. And then, of course, a cash flow focus to bring our leverage down through debt reduction, non-core asset review, and specific net working capital initiatives.

Moving to Page 5, a little talk about the macro backdrop and market situation. Geopolitically, you are as informed about this as us, but still some turbulence, U.S., China seems to be a little more support for Ukraine and Europe in the war from waged by Russia. And the German spending, we are not seeing the impact yet. EUR 1,000 billion program, but we expect that to come late next year. So market growth is still very slow, and we expect that to continue in Q4. Luckily, the meat export ban following the foot and mouth disease have eased, and we are almost back to normal in terms of volumes. We see some oil spread increasing, also quite a volatile market, as I'm sure you all have noticed.

Competition-wise, then Turkey Europe market is volatile. We've seen intensified competition during Q3 on the Italian corridor. And we've seen attempt that now seem to succeed to start a route by a different competitive group from Turkey to France and Spain that will presumably impact us in Q4.

On the continent Road market, where we've talked a lot about oversupply, we see a move towards normalization of the balance between supply and demand, also helping in our general boost and turnaround of logistics performance in Europe. We have entered a space charter agreement with TT Line, which gives us a better balance between supply and demand in that market, but also access to new markets and higher frequencies for our customers. We've seen some additional freight ferry capacity in North Sea South, which obviously can have some spillover effects on our routes, primarily from Rotterdam to [ Phoenixstow ], which is also part of the Q4 uncertainty.

Moving to Page 6. staying the transition course, some September positives. The Q3 results are on level in the Ferry division. The Logistics division, excluding test, so the Türkiye and Europe South new network performed well above '24, in line with what we have previously communicated. The Test business was below expectation, primarily an extended seasonal dip affecting August caused this delay, but also some continued issues with rail performance and problems in accessing enough visas for our drivers.

In terms of cash flow, Karen will come back to that, but we have a negative adjusted cash flow for the quarter, but this is driven by the high season passenger reversal of prepayments and then a yearly ETS payment where we during the year, received the money from our customers. Three focus areas, logistics boost projects on track, further improvements coming in Q4. The new pricing model in the Mediterranean has been launched, and we see increasing rates per meter. The test turnaround continued progress, but not at the targeted pace. So a lowered Q4 outlook due to the uncertainties of primarily the 2 of the 3 focus areas. Rest of network looks stable. We are -- have implemented, will implement various asset sales in Q4 to strengthen the cash flow. And then as mentioned, we launched a cost reduction program that will not have a positive effect in Q4, but will accelerate the transition to improve performance for 2026.

With that, I will hand over to Karen. So please turn to Page 8.

Thank you, Torben, and good morning, everyone, on the call. Turning to our revenue first. We continue to see growth in our revenue, again, driven by inorganic additions. So the addition of our BU Test and organic growth was slightly negative when you clean out for the acquisition. Slightly positive story on our passenger revenue from the existing business channel and Baltic where we are slightly up. However, overall, a negative impact on the revenue by the loss of the TerifaTanjvill route and the Oslo Copenhagen route compared to last year.

Great Ferry, obviously down because of the situation in the Biomed and the competition there. However, some positive impact from our new route, the Jersey route, the Spain route, and the Egypt route. Overall, logistics on par, that overall takes us to the revenue of the quarter of DKK 8.3 billion. Turning to Page 9, the income statement. EBITDA down following the challenges we face, 7%. Depreciation up, which is all activity driven really by adding the UTS and other new activities, taking us to the EBIT of the DKK 532 million for the quarter. Finance costs slightly up driven by higher debt and some leasing interest payments that are higher. That is profit before tax then DKK 331 million, and a profit after tax of DKK 304 million.

Turning to Page 10, just putting the Q3 EBIT in context with previous years. Previous years, obviously not where we want to be and in line with our year this year, we are down compared to previous years. This is all coming in this instance here from Ferry with the situation that we have mainly in the B Med, but also some impact from route changes. That is exemplified on Page 11. If we turn to that, where we have the impact from the Ferry EBIT. Again, overall, the existing business is performing at level with last year, and we find that important to mark. We then have some route changes, which is really the loss of the also Copenhagen and the River Tantville, both routes that have their strongest season or have their strongest season in Q3. So therefore, the impact is strongest in this quarter. And then the Mediterranean challenges with the competitive situation down there. Those are the 2 things really impacting the Ferry results for the quarter.

And then turning to Page 12, we have a similar clarification on the logistics performance. Actually, we see an uptick for both Nordic and continent. So a DKK 48 million stronger position for those 2 entities compared to last year, again, that worth noting. And then U.K. and Ireland at level, then with the loss-making EU test that we have acquired, that drags it down again to the result for the Logistics division for the quarter.

Last slide on the financials, turning to Page 13, the cash flow. An operating cash flow of just shy of DKK 600 million with a CapEx close to DKK 400 million and then some interest payments takes overall our adjusted free cash flow down to just below 0. However, our year-to-date is at DKK 740 million. The DKK 600 million of operating cash flow is, as Torben mentioned, impacted by some unfavorable move in our working capital. This was expected because it's seasonal in the way that the ETS clearance payments for 2024 all falls in August 2025, which means that all the prepayments we have received for ETS charges from our customers for passengers throughout the year, then are due payable in August 2025. And in addition, we then have a classic seasonal for our passenger business where we have prepayments for Q3 that then get reversed by the end of the quarter.

Turning to our leverage situation. We have reduced the net interest-bearing debt down to DKK 15.9 million despite taking on more debt. So that's an improvement within the year of more than DKK 1.3 billion. Our leverage ratio with One Decimo then ends at 4.3, driven by the lower EBITDA. And we are seeing that reducing slightly towards the end of the quarter.

With that, I will hand back to Torben.

Thank you, Karen. Moving to green and Great Place to Work. The Page 15 information relates to our continued drive to reduce our emissions from our ferries. We reduced 2.7% versus last year here, helped by increasing the burning of biofuel on a couple of our Rotterdam-based routes. We committed in this quarter to Science-Based Targets Initiative, where we now work with the SBTi organization to agree a pathway that will not be miles away from what we already work with internally. E-trucks, further launching of e-trucks and also having now more solar infrastructure in both Ballemina in Northern Ireland and Peterborough in the U.K.

Safety, we have a very measured approach to reduce our lost time incidents, and we are now quite significantly seeing improvements, both in our Logistics and Ferry divisions, and the balance between women and men in leadership positions is improving compared to last year by another 2 percentage points.

Moving to Page 17. Our priorities, nothing changed. It's the logistics Boost projects. It's adaptation of our Mediterranean network to the new reality, and it's a continued improvement of our Türkiye and Europe South business. And if we take them separately on Page 18, the Boost projects -- we have with you talked about 8 Boost projects that we initiated in 2024. In Q3, 7 of those projects or those areas that we are focused on had a breakeven or better. There's still large improvement potential, but it is a clear sign to us that the project structure works. We are using this structure also for other areas than these 8. And there, we also see progress, and this is also the reason for the relatively strong performance of our logistics network at large when excluding tests and when comparing to last year.

As you can see from the table, it's Denmark domestic, where we still have further improvement and where we expect a move to positive in Q1 '26.

Moving to Page 19. Mediterranean's new pricing model that we talked about in Q2 would come in September, have caused better rate levels. We have seen more intensified competition on the Istanbul Trieste corridor. We have reduced capacity on our corridor. You saw maybe an investor message that we sold a vessel this week from that network. We've seen positive impact, not full impact. We'll see more in '26, but at least a good trend. When you look at the total market, volumes in Q3 were up 6% versus last year, mostly driven by road conversion and then a relatively small market growth, especially in a Turkish perspective of 1%.

The market share for DFDS of the total market, where you have 50% road, as you can see in the slide on the graph, we had then 32% of the market of trailers from Turkey to Europe, and other ferry companies, 18%.

Turning to Page 20, the test turnaround, slower pace than targeted. We've done -- our team down there has done really well in terms of rightsizing the business and implementing organizational changes. There are still opportunities. What is hurting is that our volumes are lower than expected. There are some good commercial initiatives that is reverting this trend, and we are seeing in October an uplift that we expect that we can continue. We see that on the cost side, rail performance is lagging. There are a lot of infrastructure issues from Italy through to Germany and France through to Germany that we cannot impact, but there are also areas where we can work with our supplier and internally to improve things. So we are hoping for some uplift there. In addition, we are struggling with getting enough visas for Turkish drivers, which move cost up as we have idle capacity waiting for this.

But in general, progress, clear delay, but the arrow pointing in the right direction.

Moving to Page 22 and our outlook. Unfortunately, despite the good Q3, we have decided to upfront include the uncertainties we see in Q4 in our outlook. So we've lowered the outlook. It was, of course, already at the low end of our previous outlook, but we have decided to take it down a notch to DKK 600 million to DKK 750 million, excluding the one-off program costs of around DKK 100 million for the layoffs. And as mentioned, the key driver for this are the uncertainties related to the network, primarily the Mediterranean network, and the Ferry division other than Met looks stable, volumes stable. And for logistics, we will continue to see the improvement trend from Q2 and Q3 following into Q4.

So EBIT, as I mentioned, now DKK 600 million to DKK 750 million before the DKK 100 million cost that we expect mostly to hit in '25. CapEx reduced compared to previous outlook from DKK 1.3 billion to DKK 1 billion, driven by primarily sale of assets, but of course, also some CapEx discipline. And then on the adjusted free cash flow, with the CapEx reductions, we could uphold the DKK 1 billion, but we have then cautiously reduced the DKK 100 million in program cost to lower it to around DKK 900 million.

Moving to Page 24. Key priorities, some overlap to our focus areas. Obviously, organic growth focus still in all we do. Mediterranean, stay disciplined on the increased yields, test, strengthen the turnaround progress, see if there are more levers we can pull also jointly with our ferry network. a rigid implementation of our cost reduction program and continued focus on working capital where we believe we can release cash from, particularly net working capital, continue the green transition, and we, of course, stay true to our values when it comes to DE and I.

With that, we will hand over to the operator to run the Q&A session.

[Operator Instructions] The first question comes from the line of Ruairi Cullinane from RBC Capital Markets.

The first question on the EUR 300 million targeted improvement from the cost program. How will that be split across divisions? And then on full year '26 expectations, clearly, you have the cost program that should help. The midpoint of your range implies improvement in Q4. So just could you talk at all about full year '26 expectations at this stage? And then yes, finally, just perhaps a comment on the channel. Is it stable there, given it didn't come up in the prepared remarks?

Ruairi, the cost split, I cannot give you that. It's -- you have probably a similar impact to logistics and ferry, but you also have impact in corporate functions, and those costs are split out to the divisions. So I cannot -- I don't think we, at this stage, can tell you the exact split on the divisions, but it is a sizable impact on both divisions. In terms of '26, we unfortunately cannot, at this stage, help with the guidance. The program is, of course, an attempt to make sure that we solidify the expectations that we have internally. And of course, we have also seen what analysts think '26 can look like.

In terms of the channel, it's -- we have different businesses. We have our route from Ireland to Dunkirk. We have our Newhaven Jet. We have the Dover routes, and we also have now Jersey. We see some increased volumes are challenged on the channel, and that seems to raise a little bit the competitive intensity. We, of course, think it's from the competitors. But -- so there is a little there. But overall, an okay performance on the route from Ireland, the Newhaven Jet, and the channel. The start-up of Jersey has proven harder than expected. There was a very short timeline due to the tender process had to be changed last minute by Jersey. We are working with Jersey to see how we can agree different changes to both secure a good service to the islanders and visitors, but also can ensure that we, going forward, can deliver the results that were implied in the agreements we made with Jersey.

So a long answer, but channel performance a little bit down in Q3 due to this issue.

We now have a question from the line of Dan Togo Jensen from DNB Carnegie.

A few questions from my side as well. I'll just take them one by one here. Could we maybe start with the route from Istanbul to Trieste and the price increases you have introduced here? How much have you increased the prices? And what is the difference to Gremeldy now? And what is the impact on volumes here in September? Is it a net positive, so to say? And how do you see that pan out for the rest of the year? And maybe also a few comments on why it is exactly that you can basically charge more than Cromeldy? And maybe also on that, is Cromey actually following suit? Or are they just staying at the same price point?

These are all good questions. I think you will understand why we cannot go into details on this. I will try to give you an overall understanding of how things are developing. We've seen the competition entering a fourth vessel in October, following, you can say, our price initiative, whether it's connected or not, we don't know, and we don't speculate on that. But our initiation of price increases were necessitated by the results that we could see we were delivering despite relatively strong volumes on that particular route, we have an earnings problem. So we decided to increase prices. Have they been increased as much as we would have liked? No. Have they had an effect? Yes.

In terms of volumes, we've lost, I think, versus last year, we are probably 10%, 15% down in volumes between Turkey and Italy. But we have also reduced capacity. So it is definitely the right path. The price increases will have further impact in '26. We can hope for a little more tailwind in terms of growth in Turkey as well next year. So we have a positive impact from the net of the price increases and the loss of volumes. And it is the path that we will stay on. And again, as we said already in last quarter, we are not looking too much to what the competition is doing. And I cannot speculate. Of course, we hear a lot of rumors about what the price differential may be, but we look at our own, the necessary prices we need to make this a profitable route.

And maybe some words on what will happen with the PLT terminal now you are forced to reduce your attendance or your slots here. Can you make room in your own terminal to accommodate? Or will you need to reduce the frequency on the merchant route?

We are very unhappy with how we have been treated in the PLC terminal. That is a fact. We have established a project to see how we can make sure that customers pick up trailers faster from our own terminal to see if we can free space to accommodate these extra calls. And we're also looking at whether we have to reduce calls to succeed. We can already see, of course, that the operation has become more challenging at our own terminal, but I will be able to update you better when we have seen the full impact of this move by the terminal and terminal in Italy.

But I guess these challenges are baked into the new guidance?

Absolutely.

And then maybe if we can jump to the Mersin route, where you now see a competitor and I understand that they now have permission to move trailers that was initially banned from them as I understand, but now they have the permission here. Can you -- are the dynamics similar in this market? Or is -- I mean, you've been able to stick with your key clients in the Istanbul route, but this market between Turkey and France. Can you maybe give some indication of how that market functions? Is it similar? And are we heading into, so say, a similar market dynamic as we see in Istanbul? And what will your response be down there?

We know that apparently this week, this new operator has been starting operating. We can see from the schedule that it's a schedule that goes to Mersin, but also to Tarragona in Spain. So it's quite a long sailing where you have to stop in Mersin. Obviously, some of our customers will like the fact that they now have a Spanish route. Others will like our frequency and our point-to-point service, plus our rail connections. We've obviously picked our terminals in a time where we had first pick, and we think that's a quite big competitive advantage. We have looked at what capacity will come in from the competition, and it's a different capacity that we have -- that we are facing in the -- on the Italian corridor in terms of size and efficiency.

So we have not seen quite the same response from our customers in terms of price focus. There's always, of course, some focus. But again, we have a strong network. We have a strong frequency. We have a very competitive setup. So there's always impact, of course, when you have more capacity, especially when you call a new area where maybe others would have taken ours before and drive. But we see an impact. It's baked into our forecast. And then, of course, we'll see longer term what the impact will be. But I guess we've learned from the first situation in Turkey to believe more in our own strength and have really focused on what it is we are offering, and that seems to be working well with this new situation.

How much of the volumes to Mersin and on that route is ECA actually?

Well, we don't have a route to Marseille. We have a route to Z.

Z, yes, sorry. Yes, of course. But on that route that is in competition with the new one here, how much is ECA here?

ECA is a top 3 customer on that route. So it's a little bit -- it's probably more -- the Z route probably have even larger concentration among customers than the Trieste route. So the top 5 has a larger percentage of the market than the top 5 on the Trieste route would be my guess.

So it's easier for you to defend -- is that -- can you conclude that?

We think we have a really strong service. We think the nature of the competition is different than what we are seeing on the Italian corridor. So we don't see the same impact from the new competitive situation that we have seen in the Italian corridor.

And then just maybe a household question for Karen, maybe. When you look at logistics and the employee costs here, it's more or less the same Q-on-Q here in Q3 compared to Q2. But with 1,000 FTEs being reduced, I know some of them are being circum million coming back in as you hire them. But why isn't employee costs coming down faster, so to say, in logistics Q-on-Q?

In Q3, we still have a bunch of redundancy costs as well for the actions taken back in Q2 as well.

And how much is that?

I think we can, but it's in the ballpark of DKK 10 million maybe. But it's across the board.

But I also -- the 1,000 people, we -- are you comparing quarter-to-quarter or?

Yes, quarter-to-quarter, yes.

Yes, exactly. That has happened since the start in November. And of course, against last year, you only had 6 weeks of tests. So I think it may also simply be a matter of that we -- you don't have good comparisons. We'll try to find something for you that if you want to talk to IR, we can maybe give you more clarity.

I just want to understand what -- you are now introducing the DKK 300 million, and how much is from this program as well.

Yes, yes. But no, this is completely different. The 1,000, that's a lot of outsourcing of traction. to subcontractors. The DKK 300 million is by the clear majority office-based workers throughout the system, and actually not from -- to any large extent to do with the test. This is the old network, primarily where this comes from.

[Operator Instructions] We now have a question from the line of Ulrik from Danske Bank.

First question on the Mediterranean segment. Just an update on this new competition from the new competitor, U.N. Ro-Ro. And also just we've seen Grimaldi adding a fourth vessel, the terminal situation in Trieste not going according to your preference. Does these items or these factors, do they impact the way that you have implemented the price increases? And perhaps also part of the reason why you have not gotten the level of price increases through as you hoped for, as you alluded to in your prepared remarks? And then also these factors, what do they mean for the market recovery prospects into next year?

The -- of course, the competitive situation in the market has an impact on what prices you can charge. We have -- again, as I said to Ruari before, we have focused on what we need to run a profitable route or profitable route. And we have started the journey to get back to the required profitability. That's not easy, and that's not fast. So we've taken what we believe is feasible in this first round. And there has, of course, been pushback from customers. And then we have settled a certain level where we see improvement, and we already have commitments that will mean further improvements in 2026. It's clear that coming midyear or September and ask for price increases are harder than price increases 1st of January.

So we are on a good traction and it's harder to get price increases when you have -- before you had the choice of road, you had the choice of Uudesil, now you have another choice. And that obviously means that it is a little bit harder. But we focus on our network, our services, and stay the course. Will it impact our '26 outlook that -- there's also now a competition on the French route. We are, of course, factoring that in when we build our bottom-up expectations for '26. And then we will talk more about it when we get to February.

And then these changes that Grimaldi has made with the fourth vessel, and now also having improved terminal access in Trieste. So if you had to evaluate your service from Istanbul to Trest and Grimaldi currently, so I guess their service has relatively to yours improved given that you now face some challenges in Trest. Is that a fair assumption? And what do customers say in terms of this service between you and Grimaldi?

Our service is very strong still. We have a very high frequency. We have a very, very strong rail connection offering. We have some congestion issues. There are also congestion issues in PLT. So we're very comfortable with the strength of our network.

Then on the Test business or the old ECO, does that -- how is that affected by this new ferry operator, UGN Ro-Ro? Is it affected at all in terms of pricing or competitive tension? Just to get some feedback on that.

That's relatively marginal, the impact to Test from this.

And then in terms of your leverage and liquidity position, I see that you make a sale and leaseback of 3 warehouses in Q3, giving proceeds of more than DKK 700 million. You've now also sold the vessel here in Q4. Earlier this year, you also initiated factoring program to -- which has also released some liquidity. So how many more of these initiatives do you have in the draw to -- and how are you looking at your debt or the leverage ratio at the moment and in terms of your debt covenants? Are you comfortable with the levels? And if you can just also remind us where are the debt covenants? And is there a certain threshold you need to get below at a certain point in time, would be appreciated.

I'll let Karen answer just one correction. We didn't release DKK 700 million from the sale and leaseback of the warehouses. We released the profit element of, was it some DKK 50 million. But anyway, Karen, over to you.

And just going on that, that was actually -- that was a renewal. It was existing warehouses that we had on sale and leaseback, but we had a purchase option that had value. And that was what we released. And then we prolonged with the additional years possible, the sale and leaseback of those warehouses. So it's not of the magnitude that you mentioned there, but of course, it was, of course, providing some improvements, right?

Then in terms of questions on -- if your first question was if we have more of that in our pocket, we are constantly adjusting our capacity base, of course, to the business needs. And as you saw earlier this week, we have sold a vessel. So I think that's a part of our continuous housekeeping to adapt our fleet and our infrastructure on the logistics side to the requirements of our business. So that cannot be ruled out, but it's not like we sit with a list of 10 assets that we are just waiting to execute on tomorrow. So that will be my answer to that part.

And then your questions around leverage ratio. I mean we have been transparent about that our leverage ratio is higher this year than where we want it to be. And we are, of course, monitoring and making the improvements we can, in particular on the net interest-bearing debt reduction in terms of improving working capital, in terms of reducing CapEx to the minimum, and so forth. And we'll continue those efforts until we get to a level where -- which is our targeted level.

In terms of headroom, we are still comfortable with the headroom we have. We have good support from all our core banks. We have no concerns on their side, and we are able to continuously refinance debt as required. There was quite a few questions in your -- so maybe one of them that I missed.

No, I think that was great. Just a final one also some housekeeping. Your depreciation level is increasing quarter-over-quarter. I see that it's logistics that's sticking out here. So any -- has there been some restructuring one-off, or anything? Just trying to get a sense of what the run rate will be from Q4 and onwards?

No. But there's been some general renewal of the fleet, which would be trailers and trucks. And of course, then the starting point for the depreciation gets up, and we have done that both in BTS and in other places.

And of course, then there is the fact that Tess is still not in comparison numbers from last year. There was an adjustment at Tess regarding previous quarters, correct just over DKK 40 million Yes, you see that there is an increase in EBITDA, but then also an increase in depreciation so that on EBIT level, it's unchanged.

And this adjustment of DKK 40 million shouldn't -- should be excluded going forward, I suppose?

It's DKK 46 million, actually, I think. But let's take that offline with Søren as well, how that -- and where it comes from.

Yes. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Torben Carlsen for some closing remarks.

Thank you, and thank you for listening in and having good questions today. Let me wrap up the call. We are still in transition to a higher level of financial performance. We will now start to see stronger quarters than the comparison going forward. We made progress in Q3, but we still have major challenges to resolve. We are working hard to achieve that. Our new cost program will firm up earnings in 2026, along with our well-performing business units. Thank you very much for joining the call and your questions. Look forward to speaking to you again soon. Have a good day.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.