Earnings call transcript: NTG Q4 2024 reveals growth amid market challenges

Nordic Transport Group (NTG) reported its financial results for the fourth quarter of 2024, showcasing a 12.2% increase in total revenue despite a challenging market environment. The company’s stock saw a modest rise of 2.73% following the announcement, reflecting investor confidence in its strategic direction and operational resilience. According to InvestingPro data, NTG currently trades at an attractive P/E ratio of 9.22, with analysts maintaining a Strong Buy consensus. The platform’s Fair Value analysis suggests the stock is currently undervalued, presenting a potential opportunity for investors.

Key Takeaways

• Total revenue grew by 12.2% in 2024.
• Adjusted EBIT decreased by 16.8% compared to 2023.
• NTG expanded its operations globally, now active in 26 countries.
• The company is focusing on digital transformation with the rollout of CargoWise.
• The freight forwarding market remains volatile, influenced by geopolitical tensions.

Company Performance

NTG demonstrated solid revenue growth in 2024, driven by its diversified logistics operations. While the company faced a decline in adjusted EBIT by 16.8%, it managed to achieve substantial growth in its Air and Ocean division, with net revenue increasing by 20.6%. This growth is notable against the backdrop of a volatile global freight market and soft macroeconomic conditions in Europe.

Financial Highlights

• Total revenue: 12.2% growth in 2024
• Adjusted EBIT: Decreased by 16.8% from 2023
• Gross margin: Declined from 22.4% in 2023 to 21.1% in 2024
• Net revenue for Road and Logistics: DKK 6,600 million (6.5% growth)
• Net revenue for Air and Ocean: DKK 2,700 million (20.6% growth)
• Adjusted free cash flow: DKK 152 million
• Net interest-bearing debt: DKK 1,600 million

Outlook & Guidance

Looking ahead, NTG has set an adjusted EBIT guidance for 2025 between DKK 575-650 million, anticipating slight volume growth in both its divisions. The company aims to achieve an EBITDA of DKK 1 billion by the end of 2027, with a continued emphasis on mergers and acquisitions and operational efficiency.

Executive Commentary

Group CEO Matthias Jenssen Winstorp emphasized NTG’s commitment to maintaining a decentralized business model, stating, "We will continue to safeguard the DNA of NTG of having a decentralized business model where customers come first." He also highlighted the role of data in enhancing operational performance, noting, "Data is a key enabler of operational and commercial excellence."

Risks and Challenges

• Volatility in global freight markets due to geopolitical tensions, including the Red Sea conflict.
• Declining volumes and consumer confidence affecting the European road and logistics market.
• Potential challenges in integrating recent acquisitions and maintaining growth momentum.
• Macroeconomic pressures and the soft economic environment in key markets.

Q&A

During the earnings call, analysts questioned NTG’s strategy to mitigate reliance on the spot market and the performance of recent acquisitions like ITC Logistics. The company expressed confidence in delivering organic EBIT growth, particularly in its Air and Ocean division, despite current market challenges. With a beta of 1.13, InvestingPro analysis indicates the stock’s moderate market sensitivity, while maintaining strong fundamentals. Discover more exclusive insights and detailed valuation metrics with InvestingPro’s comprehensive research tools and ad-free interface.

Full transcript - Tortoise MLP Closed Fund (NTG) Q4 2024:

Conference Operator: Good morning. This is the conference operator. Welcome and thank you for joining the Full Year twenty twenty four Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions.

At this time, I would like to turn the conference over to the group CEO, Mr. Mathias Jenssen Wissdroop and Group CFO, Mr. Christian Jakobsen. Please go ahead, sir.

Matthias Jenssen Winstorp, Group CEO, NTG: Thank you, and welcome, everybody, to our full year twenty twenty four conference call, and thank you for dialing in. My name is Matthias Jenssen Winstorp, and I’m the Group CEO of NTG. And I have Christian Jacobson, our Group CFO, with me today. We will spend the next twenty, thirty minutes taking you through our highlights for 2024, the outlook for 2025 and the presentation of our newly defined strategy to reach our 2027 target while promoting further resilience and reduced complexity of scaling nCG even further. If we flip to the next slide, we kindly ask you to read the forward looking statement provided on the page.

And if we move to Slide number three, you see the agenda for this conference call, which as always includes the full year highlights for 2024, a short M and A update, a review of the financial performance of the group followed by the two divisions a presentation of other key figures and our outlook and EBIT guidance for 2025 and finally, an outline of our Route 27 strategy.

Unidentified Speaker, NTG: By the end of the presentation, the line will be open to questions from the audience. So if we move on to

Matthias Jenssen Winstorp, Group CEO, NTG: the next slide, Slide number four, you will find the highlights for 2024, which was a year marked by a lot of progress for us, MTG, as a company, including the signing of five acquisitions, defining our strategic direction for the coming years and a strengthening of the leadership team. In 2024, we delivered organic growth and achieved our EBIT target for the year despite challenging market conditions that impacted both the European growth market and the global air and ocean markets. Both divisions grew organically on revenue, but margin pressure, soft demand in key markets, the restructuring of the German Air and Ocean organization and effects related to the AGL earn out provision release, altogether led to a lower adjusted EBIT compared to 2023. A part of our focus in 2024 was dedicated to the development of the organization, ensuring a fit for future setup, and we, amongst others, welcome the new CEO of the Ann Ocean Division and a COO of the Continental European Road and Logistics activities. We also finalized the rollout and migration of the group wide transport management system within Air and Ocean called CargoWise, which is a key enabler of the strategic initiatives within the Air and Ocean direction going forward.

Lastly, we have announced our full year guidance for 2025 of DKK $575,000,000 to DKK $650,000,000 on adjusted EBIT, which Christian will elaborate on later in the presentation. On the next slide, you see a brief M and A update, and I’ll keep this slide brief as I believe you are all aware of our active M and A efforts throughout the last year. But I wanted to highlight that in January, we closed the acquisition of ITC Logistics and Tortons, as shown on the left hand side of the slide. And we are pleased to welcome all of our new colleagues into the NTG family and looking forward to bringing them along on the journey going forward. It goes without saying that M and A remains a strong strategic priority for NTG, and we continue to search for and evaluate opportunities to continue our buy and build strategy going forward.

So with those words, I will hand it over to Christian, who will take you through the financial results for Q4 and for the full year 2024. Go ahead, Christian.

Christian Jacobsen, Group CFO, NTG: Thank you very much, Matthias. Please flip to Page six. In 2024, global freight forwarding markets were once again impacted by the high volatility, the conflict in the Red Sea, changes in ocean seasonality and bankruptcy among hauliers led to increased competition and higher freight rate costs across both divisions. The Air and Ocean division delivered an increase in transport volumes compared to last year, driven by organic growth and startup activities. Meanwhile, the Rolling Logistics division faced a soft market for another year of declining volumes and compared to last year already muted in 2023.

To safeguard, hauliers and capacity freight cost increased during the year. Despite the headwinds, NTT achieved satisfactory results across both divisions with top line growth of 12.2% but a decrease in adjusted EBIT of 16.8% compared to 2023%. Gross margin was impacted by the higher pass through element from increased freight cost, resulting in a margin of 21.1% in 2024 compared to 22.4% in 2023. The gross margin in Q4 recovered due to price increases in growth announced in October 2024. Operating margin reflects current market conditions and lower margins from the newly acquired companies.

And if we flip to the next page, you see the highlights for the Road and Logistics division. As said, we saw for the second consecutive year a declining rate and soft volumes due to the soft macroeconomic environment in Europe. And as a result of another challenging year, the high oil cost squeezed our gross margin and yields. To offset the higher cost, the market responded with a yes, the financial price increase during Q4 twenty twenty four. The Road and Logistics division saw the opportunity to intensify sales efforts and gain market share through the year.

Net revenue totaled DKK 6,600,000,000.0, corresponding to a growth of 6.5. Organic growth was flat at 0.1%, driven by market share gains, but fully offset by lower rates and market volumes. Growth from M and A was 6.1%, driven by the acquisition of RTC Transport in February and Smart Insuring in October. As I said, higher haul year cost and pressure on freight rates negatively impacted the gross margin, which was 21.9% in 2024 compared to 22.3% in 2023. The lower adjusted EBIT was mainly driven by higher cost base related to the increase of activity and the integration of Smart Assurance cost base.

And we flip to the next page. You see the air and ocean. The global air and ocean freight market were impacted by uncertainty and significant rate volatility, where volumes showed while one showed a positive trend compared to previous year In ocean freight, the conflict at the Red Sea that started in late twenty twenty three continued into ’twenty four resulted in longer transit times and higher rates. We estimate that both air market and ocean market grew mid single digit. Net revenue totaled $2,700,000,000 in 2024, corresponding to a growth of 20.6%.

Organic growth was 24.9%, mainly due to higher freight rates and but also gain of new volumes. The acquisition growth was 3.4% due to the impact of from freighting and smart engine.

Unidentified Speaker, NTG: The

Christian Jacobsen, Group CFO, NTG: higher freight rates had a negative impact on margins, resulting in a gross margin of 19.2% in 2024. And adjusted EBIT was positively affected by the higher gross profit from organic growth and acquisitions set by the earnout provision released from the AGL transaction and the one off building sale in Germany last year. Cost base was negatively impacted by start ups activities in The U. S, some one off termination expenses in Germany. And then our projects department across the division had a very strong year.

And then if we flip to the next page, please, you will find an overview of all the key figures. The development in VC was primarily impacted by local challenges in The U. S. Entities, net borrowing capital development and during after several initiatives were initiated to secure a normalized level going forward. And with Smart Insurance coming in, in Q4 had a negative impact on our working capital with around DKK44 million.

The adjusted free cash flow continued its positive development and was DKK152 million for the year. Net interest bearing debt totaled DKK 1,600,000,000.0 as of December 31. Excluding the effects of IFRS 16, the net interest bearing debt would have been DKK $429,000,000. Net interest bearing debt was as mainly affected by the acquisition of Smart Insurance and the leverage ratio, including FX of IFRS 16, ended up at two point zero EBITDA before special items. And then if we move to the outlook, then we had we expect an adjusted EBIT in the range of DKK $575,000,000 to DKK $650,000,000.

The outlook assumes a slight volume growth in post division, but with continued pressure from soft macroeconomies and consumer confidence. In European road and logistics market, we expect the growth in line with European GDP growth. The freight rates environment is expected to see slight increases to the rate adjustment announced in October 2024. For the Ocean Basin, we anticipate moderate growth in transport volumes, offset by declining freight rates due to an oversupply of freight capacity. We will continue closely to monitor activity and adjust capacity and cost base accordingly.

The outlook for 2025 includes the effects of the acquisition completed in 2024 as well as ICC Logistics and Tortrans, which we completed in January 2025. It does not account for potential impact from other acquisitions during the year, if any, and currency exchange rates are assumed to remain at current levels. And given the elevated macroeconomic and geopolitical uncertainty, the assumptions underlying this outlook may change. In addition to the full year outlook for 2025, we maintain our midterm financial target provided in 2021 annual report, aiming to achieve an EBITDA of DKK 1,000,000,000 by the end of twenty twenty seven. This target is based on a combination of organic growth and M and A, financed by our own cash flow and credit facilities.

No assumptions of capital raises are included, although we will evaluate funding sources for large acquisitions. The midterm target assumes no additional material adverse events affecting regional and global cargo volumes and trip patterns. And MTG continued to develop the business, establishing start ups and execute on its M and A agenda. And that was over from me. So I will end the word back to Mercedes.

Matthias Jenssen Winstorp, Group CEO, NTG: Thank you, Christian. And if we move on to Slide number 11, we will now provide a short introduction to our recently finalized strategy, which we refer to as the Route 27 strategy. So in September, we launched a strategic review following more than a decade of rapid expansion, both size wise and geographically. And upon reflecting on the network of businesses that we manage today, we identified several initiatives to further enhance performance as well as resilience going forward. And so if we move on to the next slide, you see a brief snapshot of MTG in numbers in 2019 at the time of the IPO vis a vis today.

And the upper half of the slide clearly illustrates how our business has grown in terms of number of legal entities, operational entities, employees and financial performance. And the bottom half of the slide illustrates how the composition of our portfolio of businesses has changed as well from full and pad loads being the main driver of operating profits to a more diversified portfolio of value drivers, including air and ocean, logistics and groupage activities as well. And it also illustrates how we have expanded from being a Nordic based forwarder to being a global end to end logistics provider with multiple profitable regions around the world. And then last but not least, which is the lower right hand side of the slide, you also see how the incentive mechanisms have gradually changed over the years as illustrated by minority shareholders’ share of net profit in the bottom right hand side of the slide. So with this development in mind and moving onwards to Slide number 13, we highlight the reason for launching a strategic review.

So as I mentioned, we have successfully evolved from a Danish road insurgent to a global freight forwarder by incubating and acquiring entrepreneurial businesses with values similar to ours and with a persistent commitment to pursuing a decentralized business model with a strong belief that empowered local management teams combined with aligned incentive models will drive local market outperformance. This model enabled a lean, cost effective central layer, providing the turnkey solutions and business sparing to support organic growth within each of the local entities. Now this considerable growth, however, raises completely natural challenges that we as a company must navigate, namely increased complexity from scale and the need for implementing appropriate long term incentives when our co ownership model expires within any given local entity. And to thrive in today’s uncertain market environments, we must adapt our operating model to maximize the benefits of our decentralized structure, while simultaneously addressing its complexities and the opportunities that it present to us. So all in all, this rapid growth and expanded network have unlocked the opportunity to focus on optimization in addition to locally driven organic growth initiatives.

And we thus see a significant potential to establish an additional kicker of long term growth and resilience. And the components of this kicker are illustrated on the right hand side of the slide. And with the Route 27 strategy, we outlined the foundation and the operating blueprint for addressing these opportunities and challenges, again, to extract further value from the platform that we manage and operate today. We won’t dive into the specifics of the Route 27 strategy during this presentation. But in summary, our strategy rests on four key pillars that underpins our midterm target of $1,000,000,000 by the end of twenty twenty seven, and we’ll briefly elaborate on each of these pillars on the next page.

So in a nutshell, the strategy is an explicit acknowledgment of the fact that each of our entities transition through different stages of their life cycle at different points in time, and the dynamics and the support requirements differs across each of these stages, and so do our avenues for further value creation. We move on to Slide number 14. We boil down our strategy into an ambition, where to play and how to play. And there are obviously many steps and

Christian Jacobsen, Group CFO, NTG: initiatives that go below the slide you see

Matthias Jenssen Winstorp, Group CEO, NTG: in front of you. But We will We will focus on our core markets, which are Europe in road and logistics and the three core lanes in Air and Ocean being the Transatlantic, Transpacific and the Far East Westbound. So in Air and Ocean, basically, the East West trades. And we’ll continue to serve customers of all sizes, both small and medium sized enterprises as well as large enterprises across general cargo and across our specialized verticals that we operate today. And most importantly, we’ll continue to safeguard the DNA of NTG of having a decentralized business model where customers come first and where we empower our teams in the front line to perform and excel through appropriate incentive structures.

But to leverage the strengths of this decentralized model, we needed to be supported by a robust central function and organization that can provide the corporate and digital infrastructure required for the entities to excel and succeed also in the future. So we’ve therefore identified the core key pillars that I mentioned before to maximize the benefits and manage the complexity of having this decentralized business model that we have, which you see in the middle of the slide in front of you. So when we say as topic number one, when we say leverage and scale our global network benefits, we mean a greater focus on the untapped operational and commercial potential that is embedded within our network. And we’ll do so by establishing a global and regional organizational blueprint to align and promote best practices and improve transparency across the markets we do business in. And with the new CCO and COO support functions, we will act as a proactive steering partner to the local entities, helping them reduce the operational complexity and ensure an even greater degree of transparency within and across the entities that is part of NTT today.

Data is a key enabler of operational and commercial excellence. And the Route 27 direction includes quite a few initiatives to develop and leverage our digital infrastructure to facilitate transparent and data driven decision making, both to reduce complexity but also to maintain agility and preserve our entrepreneurial culture. So as an example, this includes management and employee dashboard overviews, providing real time insights into both the operational and the commercial activities within each local entity and each part of each local entity, allowing for more and increasingly seamless business intelligence on a continuous basis. Our people remain our greatest asset, and we are committed to investing in our growing network of about 2,700 employees across 76 operational entities in 26 countries. And in line with this commitment, we will implement an explicit people and culture strategy focused on talent development, employee engagement and creating clear career pathways and global opportunities to cultivate talent in the future.

And finally, we’ll continue to pursue targeted M and A, leveraging our proven playbook and value proposition to build further scale, competencies and capture synergies across our European rotor logistics and the global and ocean footprint. So finally, on Slide number 15, you see a high level timetable of the strategy execution. We are well underway with the mobilization and execution on select additions that are key to the strategy, enabling a wider launch during this year and actual results of the initiatives kicking in by the end of this year and the beginning of twenty twenty six. Now this was a rather quick introduction to our strategy, but if you’re interested in a deep dive, please do not hesitate to reach out to us. And with those words, it’s now time for Q and

Conference Operator: A. Thank you. This is the conference operator. We will now begin the question and answer session. You.

The first question is from Dan Togo, Carnegie. Please go ahead.

Dan Togo, Analyst, Carnegie: Yes, good morning and thank you. A few questions from my side. I’ll just take them here one by one. In the road business, the price increases in force during Q4, It seems to be optimistic that this is sticky going into 2025. So how should we think of revenue on an organic basis in growth into 2025?

There’s also a component of volumes here. I guess this is probably a low, low single digit we’re looking at here. But what is the price component just to get a better understanding of how we should think of revenue development in 2025 in

Unidentified Speaker, NTG: the road

Dan Togo, Analyst, Carnegie: business. And then you exit 2024 again in road with a gross margin of around 23%. Is that now the level that we should look for going into 2025? That would be the first question.

Christian Jacobsen, Group CFO, NTG: Thank you, Dan. I think we have talked about the price increasing starting in October, but the most of the price negotiation have a price for the full year, meaning starting from January 1. So I would expect to see that price increases have the full effect actually first from quarter two, but already you should see a better effect from Q1. And therefore, I think unless that we see the hauliers coming and asking for higher prices, then you will see that the gross margin is pretty sustainable. But please remember, the price increases is mostly in the North Of Europe.

We have seen less on the continent of price increases.

Dan Togo, Analyst, Carnegie: Okay. So when I think at road as a business area, we are talking low single digit volume slightly and I assume also then low single digit price increases for, sort of, say, the business area as a whole. Is that a fair assumption?

Christian Jacobsen, Group CFO, NTG: To be honest, at the moment, we don’t see the peak of that you normally see in the spring. We just had a chat with the biggest companies here in the beginning of the week. And we haven’t seen this March pick up. So please be a little cautious on the volumes. And low single digit price increases that we’re talking about is mainly in The Nordics.

Dan Togo, Analyst, Carnegie: Okay. Then on Ocean, you mentioned project development here having as something meaningful impact in 2024. How should we think of that in 2025? And what will be the delta when I try to bridge the two years in 2025 compared to 2024 here?

Matthias Jenssen Winstorp, Group CEO, NTG: It’s a good question. And that’s a question alluded to before. There’s definitely been some tailwinds on the project side within a range of different entities. So that will that is expected to decline as we move in further into 2025. Now there’s also quite a few dynamics that goes in the other direction.

So please keep in mind, for instance, the German Air and Ocean organization and the impact on the financial results in 2024 and the fact that the restructuring was successfully completed by the end of twenty twenty four. There’s also been a fairly significant startup in The U. S, being Supply Chain Solutions that have continued to improve in operating performance over the course of 2024, and we expect that improvement to continue at a moderate pace into 2025 also. So all in all, we expect sort of these effects to balance each other out to a certain extent. And then you add the impact of the acquisition of SmartStreams churn.

And all in all, that gives rise to a moderate but positive development in 2025.

Dan Togo, Analyst, Carnegie: Okay. Then a question on the strategy. I’ll read you a bit here in what you say is that in order to grow and continue the pace, so to say, you will focus more on larger acquisition rather than grow alone through, so to say, the partnership model. Has the partnership model, so to say, is that going to be a bit sidetracked going forward at least as part of the, so to say, the whole growth? I guess you will probably do some going forward, But the majority of the acquisition and growth through acquisitions will be through sort of saying outright acquisitions rather than doing partnership audits.

Is that a correct, so to say, interpretation?

Matthias Jenssen Winstorp, Group CEO, NTG: Well, I would say partially correct interpretation in the sense that we are very enthusiastic about the partnership model and we’ll continue to apply the partnership model in the future. However, any ring the bell incentive model has an expiration date because there is an embedded adoption over five years and that will be exercised sooner or later if the entities are successful and they usually are, right? So in that sense, there comes a time after they ring the bell where the dynamics of the entities, both from an incentive point of view, but also from sort of a life cycle point of view, differ from what they were in the past. This is what we’ve seen in Sweden. This is what we’ve seen in Denmark, which are sort of the two main strongholds of the business from all the way back to 2011, ’20 ’12, ’20 ’13.

And it is really a reflection on these dynamics on the other side of the Ring the Bell model and on the other side of being a fast growing entity to being a mature sizable platform. What is it that is required and needed in order to continue driving future growth and operational and commercial performance in this new context and environment. So I would say it’s very much a diversified approach depending on the size, the maturity and the incentives of each individual entity more than it is a down prioritizing of one model over the other.

Dan Togo, Analyst, Carnegie: Okay, good. And just one final question from my side and drop out. Are you considering new burn process? Well, I mean, you’ve added a few along the way in order to, sort of say, either diversify or in yes, to have new income streams, so to say, more legs to stand on. So new verticals, could that potentially also be on the agenda?

Matthias Jenssen Winstorp, Group CEO, NTG: It’s a very good question. And listen, this was a key part of the strategy process also, right, reflecting on sort of what are the attractive pockets of the market and how can we potentially penetrate any one of these. Now sort of the conclusion was that we will continue to pursue verticals. But based on sort of a rather opportunistic approach and based on the decentralized business model acknowledging that the value of penetrating a vertical won’t arise from sort of a group wide global initiative to enter into vertical X, Y or Z, right? It needs to be driven by the local entities and the opportunities they see in the local market.

Could we, as a group, invest in any particular vertical? Absolutely. Would that be the highest return on investment compared to the other opportunities that we have? Probably not. That’s the conclusion.

And that’s why we remain fairly pragmatic in terms of targeting global verticals on the group side.

Dan Togo, Analyst, Carnegie: Okay, understood. Thank you.

Conference Operator: Next question is from Lars Heindorf, Lordea. Please go ahead.

Unidentified Speaker, NTG: Yes, morning. Also a few questions from my side. If we start with Smiles and Schon, when you acquired it last year in August, you stated around about $1,100,000,000 slightly above that in yearly revenue that was in $23,000,000 and round about close to $80,000,000 in EBIT equal to an EBIT margin around close to 7%. And in the notes for this year, you write the earnings contribution, if that had been acquired on the January 1, which suggests that revenue last year declined by around about 30% and EBIT around about 60%. The contribution last year, $33,000,000 which is quite a bit below what it was in 2023.

So the question is actually, what do you expect going forward from Smart Insurers? And is this the EBIT level that we should expect in 2025?

Christian Jacobsen, Group CFO, NTG: First of all, Lars, I think you recall our announcement on the EBITDA a little high. It was not what we wrote. I think we wrote EUR 5,000,000

Dan Togo, Analyst, Carnegie: EBIT.

Christian Jacobsen, Group CFO, NTG: And then please remember that we that they also there is this IT project that we have to do. And that means we are at the moment also they are paying for some group costs that is where they take their fair share of the group costs. And therefore, when you see that figure, you can’t compare it 100% to the real contribution of Smart and True. And then it was a very hard quarter. And I also think we have said that this group is a logistics company with December is very, very low.

And yes, it looked like December. Christmas was already starting on the December 7 this year in Germany. So it’s been really we also have seen a lot of the big companies having Kurzabide and people were sent home. So December has been was very, very slow.

Unidentified Speaker, NTG: Yes. But that was also why I mentioned the full year numbers and not just the fourth quarter contribution, which is I know is very low because of the seasonality. But I’m not sure I understand your answer. Do you expect that the 33, whether that’s pre or post group costs, is that going to be the earnings contribution roughly the same level for ’25?

Christian Jacobsen, Group CFO, NTG: I don’t think we are giving a guidance on each company.

Unidentified Speaker, NTG: Okay. And then on maybe a just a status. Matthias, you mentioned a little bit about it when Dan here asked about the C and A. The development there, which has been very close related to the development in the freight rates because of your involvement in the spot markets. Part of the strategy that you presented here also this morning indicates that you want to perhaps move away from that.

So I mean, how far away are we from this very high dependence on the spot market and hence the quite high cyclicality and volatility in the air and ocean EBIT?

Matthias Jenssen Winstorp, Group CEO, NTG: Listen, Lars, I think every market participant are dependent on the spot market because either you sort of procure at spot or you benefit from any potential discrepancies between the spot and the contracted rates, right? So I think the dependencies will continue now. In terms of having multiple avenues of procurement, then we are getting closer, I would say, almost by the day, if not the week, to having more options and even more competencies to diversify our approach to procurement. It has been sort of a, I would say, rather sporadic ongoing effort for a while, but now we have a very tangible and clear plan on how to develop and execute on these initiatives going forward. So it will be a gradual process.

It won’t be a big bang, and we will do it carefully to make sure that we stick to our agreements and we keep our words, but we will continue to ramp up on the procurement efforts going forward. It will be a very smooth, linear almost process in terms of the magnitude, but we have seen progress and we are a few steps down the road already.

Unidentified Speaker, NTG: Let me try to ask in a different way. So given the decline in the rates both in particularly in seafreight, just maybe also to some extent in airfreight that we see at the moment. Do you believe that you can deliver organic EBIT growth in ’twenty five versus ’twenty four in the air and ocean business?

Matthias Jenssen Winstorp, Group CEO, NTG: Yes, we do. So I think there’s multiple sides of the yields. I mean, if we disregard the car space for a second and just look at the yields, right? So on the yield side, there’s obviously procurement efforts and that’s the sort of correlation with the rates. There’s also a network aspect to this, right?

Being able to service customers in both ends of the shipment. And that is part of the global network and scale initiatives. And we have a very tangible approach to driving further network benefits with a view to just squeezing out more juice of the lemon, so to speak. And that we have confidence in will contribute positively to the results.

Unidentified Speaker, NTG: I think. And then the last one and then I’ll jump back in the queue. On again, getting back to the M and A impact, Dan asked about a little bit about and you said that the GP margin in the road business is sustainable about the 23%. How much? Because if I recall correctly, both of those two acquisitions, Spatenschun and also ITC, which we haven’t seen in the 24 numbers, I admit that, but we will see here in 25%.

How much will they contribute in terms of lift in TP Martin?

Christian Jacobsen, Group CFO, NTG: I think it’s something around 0.7%.

Unidentified Speaker, NTG: Okay. All right. Thank you.

Conference Operator: The next question is from Odlijk, Danske Bank. Please go ahead.

Lars Heindorf, Analyst, Lordea: Yes, good morning. Hi, Matthias and Christian. Also a question on this Smart and Schon contribution. Those $33,000,000 contribution, if it had been on a full year basis, can you share if there are any one off costs here? You mentioned IT, but also integration costs.

Have they been are they weighing on that number? And if you could quantify that, would be great.

Christian Jacobsen, Group CFO, NTG: I don’t think we couldn’t quantify, but they are weighing on that. Please remember that Smart Insuring has a group set up where they need to implement a new group system. So it is something new where we had to invest as a group in new capacities. And because we are now also set that it’s a part of our new setup, therefore, we had to hire the people and we have not booked them as special items. So we have a higher cost base in group with that.

Lars Heindorf, Analyst, Lordea: Okay. And any comments just high level on Smilesensuren, ITC, whether they have performed or developed as you had expected when you entered those transactions last year?

Christian Jacobsen, Group CFO, NTG: I think they are, as everything in Germany, under pressure. So it is a pressured market in Germany. We had put that into our business case, but I think also that the pressure is a little higher than what we saw half a year ago. So the macroeconomic environment in Germany is challenged.

Lars Heindorf, Analyst, Lordea: Understood. Then in terms of current trading, you mentioned that the usual spring pickup in activity hasn’t really materialized. Does that have any impact on the way you are phasing in price increases? So what I’m asking is, has it delayed it? Or has it been lower, the price increase than you had expected when you announced it?

Christian Jacobsen, Group CFO, NTG: I think most of the negotiations have been done in 2024. So of course, it’s harder to now you’re seeing new tenders, you’re seeing new negotiations, and therefore, you get a higher pushback if the market is soft. So of course, it will have an impact, but on the main part, it has already been negotiated.

Lars Heindorf, Analyst, Lordea: Okay. And then follow-up question on your comments around projects in Air Notion. Can you elaborate on what those projects are? And also what the contribution was to EBIT in 2024?

Christian Jacobsen, Group CFO, NTG: But we don’t give any projects. But you know, we are transporting windmill wings, we are transporting cables, we are transporting more kinds of things also in The U. S. And in Germany and everywhere. So we have bought projects set up and therefore, yes, we had some tailwind in several of these companies.

Lars Heindorf, Analyst, Lordea: Understood. And then final question. This reorganization that you did in the Iron Ocean organization in 2024. Can you quantify how much that weighed on your earnings in 2024? And also the roughly quarterly spacing, if you can provide that to?

Matthias Jenssen Winstorp, Group CEO, NTG: Yes. So it’s very low double digit impact on EBIT.

Lars Heindorf, Analyst, Lordea: That’s very clear. Thank you.

Conference Operator: Gentlemen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Matthias Jenssen Winstorp, Group CEO, NTG: Well, thank you, everybody, for dialing in. This was all from us. And please do not hesitate to reach out in case of any follow-up questions in the wake of this call. Thank you, and have a nice day.

Conference Operator: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

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