DFDS Group

Ladies and gentlemen, welcome to the DFDS full-year report 2025 conference call. I am Maria, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference has been 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 broadcasting. At this time, it's my pleasure to hand over to Torben Carlsen, CEO. Please go ahead, sir.

Good morning and welcome to DFDS's Q4 and full year 2025 conference call. I am, as usually, joined here by Karin Bosen, our CFO, and Søren Bornholt, 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 DFJS through the challenges we've seen in 2025 and to deliver a different level of financial performance in 2026. Let's start with a closer look at our Turning Points on slide three. 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 2025. 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 2025, especially Q1 and Q2. but gained traction Q3 and Q4, and we'll see the full impact of these actions. On freight ferry pricing general through the system, we have had strong focus during the last couple of months of 2025 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, we delivered 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, five areas where the actions have been implemented, where the benefits are showing in Q4 and in January, and then one large area of focus as well, but where there's still hard work, of course, in front of us. Turning to page five, Talking a little bit about Q4, competitive market environment continued, flat markets in Northern Europe and the very soft U.K., headwind from inflation reduction policy, good growth continued in Morocco, Tunisia, Egypt, passenger volumes muted. but we managed to increase onboard spending to compensate partly for this. On the three focus areas, the logistics booth 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 divisions. 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 97 million one-off redundancy costs in connection with our cost savings program. With this, I will on page six 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 six, we're looking at revenue in Q4 2025, where we are more or less flat. That's 1% up. However, organic growth was negative. It was minus 3%. This is driven by, as Torben mentioned, slightly slower passenger markets. 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 Ecol acquisition, which has full quarterly effect in Q4 2025 from Butas, however, slightly offset by the loss of the sale of the Oslo Copenhagen route. So overall, 100 million of revenue, 1%. Moving on to the next page, page 7, our Q4 income statement, just highlighting a few numbers. An EBITDA of $705 million, which is 5% down compared to the same quarter last year. A significant or slightly increase in depreciations, mainly coming from the addition of BU tests, so 9% up on depreciation. which takes us then to an EBIT of minus 62, which is the quarterly EBIT reported today. And then if 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 $1 billion, but $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 62 by the two divisions to the underlying actual performance, referring back to Torben's intro about how we see underlying improvements year on year in the two divisions. So if we look at FAERI first, on the top right corner, we have the reported result of FAERI of 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 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 EBIT of minus 29 versus minus 30 in the same quarter in 2024. However, if we take out the one-offs and EU tests, then we see an underlying improvement of the like-for-like network of 43 million. So again, here an underlying improvement year on year when you compare like-for-like. So overall, these are the signs that indicate 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 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 EU tests, 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 percent, the loss in the EBITDA of 16 percent, down to an EBITDA of 3.7 billion. A depreciation increase of 13%, again, with the addition of B.U. tests, and then we also have the constructive loss of the ferry Finlandia in the beginning of the year, and also here takes a right down. It's offset by a larger income elsewhere in the P&L. Then taking us to the reported EB of 520 today, which is obviously significantly down compared to last year. Same issues on the financing costs, 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 negative $425 million for the year. If 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 700 million. to an EBIT of $791 million. Logistics is down $243 million to an EBIT of minus 30. Again, this is driven by the BU test, which we have already reported as loss-making, so the existing business is offsetting that loss. 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 $1.2 billion offset by a net income from purchase and sale of ferries. We purchased one and sold two, so that has an overall positive impact of $246 million, taking the net capex to just below $1 billion. A free cash flow of 2.3 and then adjusted for acquisitions. we are then at an adjusted free cash flow of $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 spent 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 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 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 in 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 content 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 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 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 Tom.