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Investing.com -- Shares of DFDS (CSE:DFDS) climbed 2% after the company reported first-quarter earnings that surpassed consensus estimates, despite a year-over-year decline.
The company’s revenue increased by 8% to DKK 7.54 billion, exceeding the company-compiled consensus of DKK 7.32 billion. Earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 22% year-over-year to DKK 748 million, still ahead of the consensus of DKK 665 million.
The ferry operator’s EBITDA dropped 17% year-over-year to DKK 574 million, surpassing the consensus of DKK 476 million. The logistics segment saw a more significant decline, with EBITDA down 36% year-over-year to DKK 196 million, falling short of the consensus of DKK 219 million.
Despite these declines, DFDS reported an increase in adjusted free cash flow (FCF) by DKK 573 million year-over-year to DKK 246 million in the first quarter of 2025, partially due to a DKK 382 million inflow from working capital, bolstered by a factoring program.
The company’s net debt decreased to DKK 16.8 billion from DKK 17.2 billion in the fourth quarter of 2024, following the acquisition of Ekol Logistics’ international transport network. The leverage ratio slightly increased to 4.0x net debt/EBITDA from 3.9x in FY24, which is above the long-term target range of 2-3x.
DFDS expects leverage to peak in the second quarter of 2025 but to improve by the end of the year. The company reiterated its guidance for both EBIT and adjusted FCF of around DKK 1 billion for the fiscal year 2025. DFDS has taken multiple turnaround actions, including price increases, capacity adjustments, headcount reductions, and the closure of unprofitable activities, which have started to show an improvement in earnings trends since March.
RBC commented on the results, stating, "1Q was a weak start to the year for earnings, although less bad than forecast by consensus. However, adjusted FCF grew by DKK 573m y/y to DKK 246m in 1Q25, supported by working capital/ a factoring programme. FY25E group EBIT and adjusted FCF guidance is unchanged, with DFDS commenting the earnings trend started to improve in March following the execution of multiple turnaround actions during the quarter, with further actions being taken."
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