Earnings call transcript: DFDS Q3 2025 revenue misses estimates

DFDS A/S reported its Q3 2025 earnings on November 6, revealing a revenue of DKK 8.3 billion, which fell short of the forecasted DKK 8.19 billion. The company’s stock reacted negatively, with a 3.54% decline following the announcement, extending its year-to-date decline of 31.27%. DFDS’s financial performance was marked by a 7% year-over-year drop in EBITDA, alongside strategic shifts and cost-cutting measures aimed at future growth. According to InvestingPro data, DFDS has not been profitable over the last twelve months, though analysts expect the company to return to profitability this fiscal year.

Key Takeaways

• DFDS reported Q3 2025 revenue of DKK 8.3 billion, missing forecasts.
• EBITDA decreased by 7% compared to the previous year.
• The stock price fell by 3.54% post-earnings release.
• DFDS is implementing a cost reduction program targeting DKK 300 million in improvements by 2026.
• The company reduced its EBIT outlook for 2025 to DKK 600-750 million.

Company Performance

DFDS’s Q3 performance showed a challenging environment, with revenue failing to meet expectations and EBITDA experiencing a notable decline. The company is navigating a period of transition, focusing on cost reductions and strategic innovations such as the launch of e-trucks and increased solar infrastructure. Despite these efforts, competitive pressures and geopolitical factors continue to pose challenges.

Financial Highlights

• Revenue: DKK 8.3 billion, below the forecast of DKK 8.19 billion.
• EBITDA: Down 7% year-over-year.
• EBIT: DKK 532 million.
• Profit After Tax: DKK 304 million.
• Adjusted Free Cash Flow: Near zero.
• Net Interest-Bearing Debt: Reduced to DKK 15.9 million.

Earnings vs. Forecast

DFDS’s earnings did not meet the market’s expectations, with revenue coming in below the forecast. The shortfall in revenue compared to projections highlights ongoing challenges within the company’s operating environment. This miss follows a period of mixed performance, with the company striving to improve its financial health through strategic changes and cost management.

Market Reaction

Following the earnings announcement, DFDS’s stock price decreased by 3.54%, reflecting investor concerns over the company’s ability to meet financial targets and navigate competitive market conditions. The stock’s movement is significant, considering its 52-week range, and suggests a cautious outlook from investors.

Outlook & Guidance

Looking forward, DFDS has lowered its EBIT outlook for 2025 to a range of DKK 600-750 million. The company has also reduced its CapEx projection from DKK 1.3 billion to DKK 1 billion. DFDS aims to enhance its free cash flow to around DKK 900 million by focusing on organic growth and pricing strategies in the Mediterranean market.

Executive Commentary

CEO Torben Carlsen emphasized the company’s ongoing transition, stating, "We are still in transition to a higher level of financial performance." He acknowledged the progress made in Q3 but highlighted the challenges that remain, noting, "We made progress in Q3, but we still have major challenges to resolve."

Risks and Challenges

• Geopolitical turbulence affecting market stability.
• Increased competition in the Mediterranean and Turkey-Europe routes.
• Pressure to achieve cost reductions amid rising operational costs.
• Slow market growth expected to continue into Q4.
• Potential impact of macroeconomic factors on shipping demand.

Q&A

During the earnings call, analysts focused on DFDS’s strategies for addressing competitive pressures in key markets, the details of its cost reduction program, and the company’s leverage and liquidity position. These discussions highlighted the importance of strategic adjustments and financial discipline in the current market environment.

Full transcript - DFDS A/S (DFDS) Q3 2025:

Healy, Conference Call Operator: Ladies and gentlemen, welcome to the DFDS Q3 Report 2025 conference call. I am Healy, the conference call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. 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.

Torben Carlsen, CEO, DFDS: 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 Brønholt, 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 will try to not make that a focus in today’s call. I am, 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 am 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 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 Türkiye and Europe South turnaround, progressed but with less pace than expected also in Q3. Let’s start with putting it all into perspective on slide three. There you see our pathway to a higher level of financial performance. We launched as part of our first outlook for the year three focus areas that we needed to resolve in 2025: our logistics boost projects, eight-ten 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 Türkiye and Europe South business. We are now.

With the challenges we’ve had in primarily the two 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 four, 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 had planned.

Then, of course, a cash flow focus to bring our leverage down through debt reduction, non-core asset review, and specific networking capital initiatives. Moving to page five, 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 waged by Russia. The German spending, we are not seeing the impact yet, this EUR 1,000 billion program, but we expect that to come late next year. 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 has 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. We’ve seen attempts 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 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 the North Sea South.

Which obviously can have some spillover effects on our routes, primarily from Rotterdam to Felixstowe. Which is also part of the Q4 uncertainty. Moving to page six. Staying the transition course. Some September positives. The Q3 results are on level in the ferry division. The logistics division, excluding tests, so the Türkiye and Europe South new network, performed well above 2024, 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. This is driven by the high season passenger reversal of prepayments and then.

A yearly ETS payment where we over during the year receive 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. A lowered Q4 outlook due to the uncertainties of primarily the two of the three focus areas. Rest of network looks stable. We have implemented, will implement various asset sales in Q4 to strengthen the cash flow. As mentioned, we launched a cost reduction program that will not have a positive effect in Q4, but will accelerate the transition to improved performance for 2026. With that, I will hand over to Karen, so please turn to page eight.

Karen Boesen, CFO, DFDS: 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 addition. So the addition of our BU tests 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 Tarifa-Tangierville route and the Oslo-Copenhagen route compared to last year. Freight ferry, obviously down because of the situation in the BUMET 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, and that overall takes us to the revenue of the quarter of DKK 8.3 billion. Turning to page nine, the income statement.

EBITDA down following the challenges we face, 7%. Depreciation up, which is all activity driven, really by adding BU tests and other new activities, taking us to the EBIT of 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 the profit after tax of DKK 304 million. Turning to page 10, just putting the Q3 EBIT in context with 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 BUMET, but also some impact from route changes. That is exemplified on page 11, if we turn to that, where we have the impact of 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 Oslo-Copenhagen and the Tarifa-Tangerville, both routes that have their strongest season or had their strongest season in Q3, so therefore the impact is strongest in this quarter. The Mediterranean challenges with the competitive situation down there. Those are the two things really impacting the ferry result for the quarter. 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 two entities compared to last year. Again, we find that worth noting. And then.

U.K. and Ireland at level, and then with the loss-making BU 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 zero. However, our year-to-date is at DKK 740 million. The DKK 600 million of operating cash flow, as Torben mentioned, impacted by some unfavorable move in our working capital. This was expected because it is seasonal in the way that the ETS clearance payments for 2024 all fall in August 2025, which means that all the prepayments we have received for ETS charges from our customers or passengers throughout the year then.

Are due payable in August 2025. In addition, we then have a classic seasonal for our passenger business where we have prepayments for Q3 that then gets 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 decimal then ends at 4.3, driven by the lower EBITDA. We are seeing that reducing slightly towards the end of the quarter. With that, I will hand back to Torben.

Speaker (Likely an Executive), DFDS: Thank you, Karen. Moving to green, a 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 a science-based target 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. Further, launching of e-trucks and also having now more solar infrastructure in both Ballymena 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 is the logistics boost projects. It is adaptation of our Mediterranean network to the new realities. It is a continued improvement of our Türkiye and Europe South business. If we take them separately on page 18, the boost projects, we have, as we talked about, eight boost projects that we initiated in 2024. In Q3, seven of those projects or those areas that we are focused on had a break-even or better. There is 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 eight. 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 is Denmark domestic, where we still have further improvement and where we expect a move to positive in Q1 2026. 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 have seen positive impact, not full impact. We will see more in 2026, but at least a good trend. When you look at the total market volumes in Q3, we are up 6% versus last year, mostly driven by route conversion and then relatively small market growth, especially in Türkiye.

Perspective of 1%. The market share for DFDS of the total market. Where you have 50% route, as you can see in 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. Our team down there has done really well in terms of right-sizing 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 are 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. We are hoping for some uplift there. In addition, we are struggling with getting enough visas for Turkish drivers, which moves costs up as we have idle capacity waiting for this. 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. We have 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-DKK 750 million, excluding the one-off program cost of around DKK 100 million for the layoffs.

As mentioned, the key driver for this are the uncertainties related to the network, primarily the Mediterranean network and tests. The ferry division, other than Mediterranean, looks stable. Volumes stable. For logistics, we will continue to see the improvement trend from Q2 and Q3 following into Q4. EBIT, as I mentioned, now DKK 600 million-DKK 750 million before the DKK 100 million cost that we expect mostly to hit in 2025. 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. 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. Continued focus on working capital, where we believe we can release cash from particularly working capital. Continue the green transition, and we, of course, stay true to our values when it comes to DE&I. With that, we will hand over to the operator to run the Q&A session.

Healy, Conference Call Operator: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Rory Quinal from RBC Capital Markets. Please go ahead.

Speaker (Likely an Executive), DFDS: Yeah. Good morning. The first question on the DKK 300 million targeted improvement from the cost program, how will that be split across divisions? And then on full year 2026 expectations, clearly. You have the cost program that should help. The midpoint of your range implies improvement in Q4. Could you talk at all about full year 2026 expectations at this stage? Yeah, finally, just perhaps a comment on the Channel. Is it stable there, given it did not come up in the prepared remarks? Thank you.

Torben Carlsen, CEO, DFDS: Hello, Rory. The cost plate, I cannot give you that. You have probably similar impact to logistics and ferry, but you also have impact in corporate functions. Those costs are split out to the division. I do not 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 2026, we unfortunately cannot at this stage help with guidance. The program is, of course, an attempt to make sure that we solidify the expectations that we have internally. Of course, we have also seen what analysts think 2026 can look like. In terms of the Channel, we have different businesses. We have our route from Ireland to Dunkirk. We have our New Haven Jet. We have the Dover route, 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. There is a little there. Overall, an okay performance on the route from Ireland, the New Haven Jet, and the Channel. The startup of Jersey has proven harder than expected. There was a very short timeline due to the tender process that 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. A long answer, but Channel performance a little bit down in Q3 due to this issue.

Dan Togo Jensen, Analyst, DNB Carnegie: Thank you.

Healy, Conference Call Operator: We now have a question from the line of Dan Togo Jensen from DNB Carnegie. Please go ahead.

Dan Togo Jensen, Analyst, DNB Carnegie: Yes. Hello. Good morning. 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 Grimaldi now? What is the impact on volumes here in September? Is it a net positive, so to say? How do you see that pan out for the rest of the year? Maybe also a few comments on why it is exactly that you can basically charge more than Grimaldi? Maybe also on that, is Grimaldi actually following suit, or are they just staying at the same price point?

Torben Carlsen, CEO, DFDS: 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. Our initiation of price increases was necessitated by the results that we could see we were delivering. Despite relatively strong volumes on that particular route, we have an earnings problem. 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. We have also reduced capacity.

It is definitely the right path. The price increases will have further impact in 2026. We can hope for a little more tailwind in terms of growth in Turkey as well next year. We have a positive impact from the net of the price increases and the loss of volumes. It is the path that we will stay on. As we said already in last quarter, we are not looking too much to what the competition is doing. 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.

Dan Togo Jensen, Analyst, DNB Carnegie: 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?

Torben Carlsen, CEO, DFDS: We are very unhappy with how we have been treated in the PLT 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. We are 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. I will be able to update you better when we have seen the full impact of this move by the terminal and, yeah, terminal in Italy.

Dan Togo Jensen, Analyst, DNB Carnegie: I guess these challenges are baked into the new guidance.

Torben Carlsen, CEO, DFDS: Absolutely.

Dan Togo Jensen, Analyst, DNB Carnegie: Good. Maybe if we can jump to the Marseille route, where you now see a competitor, 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. Are the dynamics similar in this market? I mean, you’ve been able to stick with your key clients in the Trieste-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 to say, a similar market dynamic as we see in Trieste-Istanbul? What will your response be down there?

Torben Carlsen, CEO, DFDS: We know that. Apparently this week this new operator has been starting operating. We can see from the schedule that it is a schedule that goes to Marseille, but also to Tarragona in Spain. It is quite a long sailing where you have to stop in Marseille. 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 have obviously picked our terminals in a time where we had first pick, and we think that is a quite big competitive advantage. We have seen, looked at what capacity will come in from the competition, and it is a different capacity that we are facing on the Italian corridor in terms of size and efficiency. We have not seen quite the same response from our customers in terms of price focus.

is always, of course, some focus, but again, we have a strong network. We have a strong frequency. We have a very competitive setup. There is always impact, of course, when you have more capacity, especially when you call a new area where maybe others would have taken hours before and drive. We see an impact. It is baked into our forecast. Of course, we will see longer term what the impact will be. I guess we have 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. That seems to be working well with this new situation.

Dan Togo Jensen, Analyst, DNB Carnegie: How much of the volumes to Marseille and on that route is Ekol, actually?

Torben Carlsen, CEO, DFDS: We do not have a route to Marseille. We have a route to Sète.

Dan Togo Jensen, Analyst, DNB Carnegie: Sète, yeah. Sorry. Yeah. Yeah. Of course. On that route that is in competition with the new one here, how much is Ekol here?

Torben Carlsen, CEO, DFDS: ECOL is a top three customer on that route. It’s a little bit, it’s probably more, the Sète route probably has even larger concentration among customers than the Trieste route. The top five has a larger percentage of the market than the top five on the Trieste route, would be my guess.

Dan Togo Jensen, Analyst, DNB Carnegie: Is it easier for you to defend? Can you conclude that?

Torben Carlsen, CEO, DFDS: 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. We do not see the same impact from the new competitive situation that we have seen in the Italian corridor.

Dan Togo Jensen, Analyst, DNB Carnegie: Okay. 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 Q1, Q2, and Q3 compared to Q2. With 1,000 FTEs being reduced, I know some of them are being circumvented, coming back in as you hire them. Why isn’t employee cost coming down faster, so to say, in logistics, Q1, Q2?

Karen Boesen, CFO, DFDS: In Q3, we still have a bunch of redundancy cost as well for the actions taken back in Q2 as well.

Dan Togo Jensen, Analyst, DNB Carnegie: Okay. How much is that?

Karen Boesen, CFO, DFDS: I think we can but it’s in the ballpark of DKK 10 million, maybe.

Dan Togo Jensen, Analyst, DNB Carnegie: Okay.

Karen Boesen, CFO, DFDS: It’s across the board, right?

Torben Carlsen, CEO, DFDS: I also, the 1,000 people, we. Are you comparing quarter to quarter, or?

Dan Togo Jensen, Analyst, DNB Carnegie: Yeah, quarter to quarter, yeah.

Karen Boesen, CFO, DFDS: It is.

Torben Carlsen, CEO, DFDS: Yeah, exactly. That has happened since the start in November. Of course, against last year, you only had six weeks of tests. I think it may also simply be a matter of that you do not have good comparisons. We will try to find something for you that, if you want to talk to IR, we can maybe give you more clarity.

Dan Togo Jensen, Analyst, DNB Carnegie: I just want to understand. What you are now introducing, the DKK 300 million, and how much is from this program as well?

Torben Carlsen, CEO, DFDS: Yeah, yeah. No, it’s 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 tests. This is the old network primarily where this comes from.

Dan Togo Jensen, Analyst, DNB Carnegie: Okay. Thank you.

Torben Carlsen, CEO, DFDS: You are welcome.

Healy, Conference Call Operator: As a reminder, if you wish to register for a question, please press star and one on your telephone. We now have a question from the line of Ulrich Barth from Danske Bank. Please go ahead.

Ulrich Barth, Analyst, Danske Bank: Yes. Good morning, Torben and Karen. First question on, yeah, the Mediterranean segment. Just an update on this new competition from the new competitor, UGN Ro-Ro. Also just, we’ve seen Grimaldi adding a fourth vessel, the terminal situation in Trieste not going according to your preference. Do these items or these factors, do they impact the way that you have implemented the price increases? Perhaps also part of the reason why you have not gotten the level of price increases through as you have hoped for, as you alluded to in your prepared remarks. Also, these factors, what do they mean for the market recovery prospects into next year?

Torben Carlsen, CEO, DFDS: Of course, the competitive situation in the market has an impact on what prices you can charge. We have, again, as said to Rory before, we have focused on what we need to run a profitable route or profitable routes. We have started the journey to get back to the required profitability. That’s not easy, and that’s not fast. We have taken what we believe is feasible in this first round. There has, of course, been pushback from customers. We have settled at a certain level where we see improvement. We already have commitments that will mean further improvements in 2026. It’s clear that coming mid-year or September and asking for price increases are harder than price increases 1st of January. We are on a good traction. It’s harder to get price increases when you have.

Before you had the choice of Road, you had the choice of Ulussoy. Now you have another choice. That obviously means that it is a little bit harder. We focus on our network, our services, and stay the course. Will it impact our 2026 outlook that there is also now a competition on the French route? We, of course, factor that in when we build our bottom-up expectations for 2026. We will talk more about it when we get to February.

Ulrich Barth, Analyst, Danske Bank: Understood. And then these changes that Grimaldi has made with the fourth vessel and now also having improved terminal access in Trieste. If you had to evaluate your service from Istanbul to Trieste and Grimaldi’s currently, I guess their service has, relatively to yours, improved, given that you now face some challenges in Trieste. Is that a fair assumption? What do customers say in terms of this service between you and Grimaldi?

Torben Carlsen, CEO, DFDS: 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. We are very comfortable with the strength of our network.

Ulrich Barth, Analyst, Danske Bank: Understood. Then on the test business or the old Ekol, how is that affected by this new ferry operator, UGN Ro-Ro? Is it affected at all in terms of pricing or, yeah, competitive tension? Just to get some feedback on that.

Torben Carlsen, CEO, DFDS: That’s relatively marginal, the impact to Ekol from this.

Ulrich Barth, Analyst, Danske Bank: Understood. Then in terms of your leverage and liquidity position, I see that you make a sale and leaseback of three warehouses in Q3, giving proceeds of more than DKK 700 million. You’ve now also sold a vessel here in Q4. Earlier this year, you also initiated a factoring program, which has also released some liquidity. How many more of these initiatives do you have in the drawer? How are you looking at your debt or debt leverage ratio at the moment and in terms of your debt covenants? Are you comfortable with the levels? If you can just also remind us, where are the debt covenants? Is there a certain threshold you need to get below at a certain point in time? It would be appreciated.

Torben Carlsen, CEO, DFDS: I’ll let Karen answer. Just one correction. We did not release DKK 700 million from the sale and lease back of the warehouses. We released the profit element of, was it some DKK 50 million? But anyway, Karen, over to you.

Karen Boesen, CFO, DFDS: Just staying on that, that was actually a renewal. It was existing warehouses that we had on sale and lease back, but we had a purchase option that had value. That was what we released, and we prolonged with the additional years possible the sale and lease back of those warehouses. It is not of the magnitude that you mentioned there, Ulrich. Of course, it was providing some improvements, right? In terms of questions on the first question, if we have more of that in our pocket, we are constantly adjusting our capacity base, of course, to the business needs. As you saw earlier this week, we have sold a vessel. I think that is a part of our continuous housekeeping to adapt our fleet and our infrastructure on the logistics side to the requirements of our business.

That cannot be ruled out. It’s not like we sit with a list of 10 assets that we are just waiting to execute on tomorrow. That would be my answer to that part. 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. 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. We’ll continue those efforts until we get to a level 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.

We are able to continuously refinance debt as required. There were quite a few questions in your, so maybe one of them that I missed. I’m not sure.

Ulrich Barth, Analyst, Danske Bank: 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. Has there been some, yeah, restructuring one-off or anything? I’m just trying to get a sense of what the run rate will be from Q4 and onwards?

Karen Boesen, CFO, DFDS: No, but there’s been some general renewal of the fleet, which would be trailers and trucks. Of course, then the starting point for the depreciation gets up. We have done that both in BU Test and in other places.

Torben Carlsen, CEO, DFDS: Of course, then there is the fact that Ekol is still not in comparison numbers from last year. There was an adjustment at Ekol.

Karen Boesen, CFO, DFDS: Yeah. Oh, yeah.

Torben Carlsen, CEO, DFDS: Regarding previous quarters.

Karen Boesen, CFO, DFDS: Correct.

Torben Carlsen, CEO, DFDS: For just over DKK 40 million.

Karen Boesen, CFO, DFDS: Yeah. So that’s improved.

Torben Carlsen, CEO, DFDS: That’s improved. Yeah. You see that there’s an increase in EBIT there, but then also an increase in depreciation. So at our EBIT level, it’s unchanged.

Ulrich Barth, Analyst, Danske Bank: Okay. This adjustment of 40 million should be excluded going forward, I suppose.

Torben Carlsen, CEO, DFDS: It’s 46, actually, I think. Let’s take that offline with Søren as well, how that and where it comes from. Yeah.

Ulrich Barth, Analyst, Danske Bank: Okay. Thank you. Thank you so much.

Torben Carlsen, CEO, DFDS: Thank you, Ulrich.

Healy, Conference Call Operator: 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.

Torben Carlsen, CEO, DFDS: Thank you. 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.

Healy, Conference Call Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Coruscall, and thank you for participating in the conference. You may now disconnect your lines.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.