DFDS Group

Ladies and gentlemen, welcome to the DFDS Q1 Report 2026 conference call. I am Shari, the chorus 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 Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mrs. Karen Bersen, CFO and Interim CEO. Please go ahead.

Thank you, and good morning, and welcome to the DFDS Q1 2026 conference call. I'm joined here by Søren Brunholt, our head of the IR. Earlier this year, we labeled 2026 a turning point for DFDS. And I'm pleased to report today that our Q1 result confirms that this is the case. We're turning around and making steady progress on transitioning DFDS to a higher level of financial performance. In addition, we're also making progress on improving our financial leverage. And as you may have seen this morning in the Q1 report, we have firmed up our full year expectation for the adjusted free cash flow as well. So we'll now dive into a presentation of the numbers and We'll start looking at slide three. As mentioned, we have communicated our six turning point actions that are pivotal to our recovery from the unsatisfactory 2025. The six turning points are Mediterranean capacity reduction and pricing models, so a recovery from our BUMED situation, generally freight ferry pricing optimization, ramp up and improvement of our Jersey result that we started last year, logistic boost projects continuing to improve with a full year impact, the cost program that was announced in November last year, and then our test turnaround progression. Other focus areas for the year are to stay the course on the green transition and the continued focus on cash flow to improve our balance sheet with the debt reduction, non-core asset review, and working capital improvement as the key actions in that respect. We will now turn to page four. We summarize our first quarter of the year as delivering a solid improvement of the result compared to last year. We improved with 150 million quarter on quarter last year. We obviously still have a long way to go to get back to where we want to be, but Q1 2026 is a good start. It was driven by solid improvements across our network, very result-improved, in most business units and largest in the Mediterranean. The logistic result continued to improve and was mainly driven by continent recovering from the foot and mouth disease that hit us same quarter last year. And finally, we have a non-allocated items that are hit negatively by CEO severance cost. As mentioned, our turning point actions are progressing. Five out of six are progressing better than performed jointly. We are on track with our cost reduction program, and our test turnaround is progressing, but we would like to accelerate it. If we look ahead, the world around us cannot be characterized as steady in any way, not in Q1 and not today. So obviously market volatility is a key factor in how our future looks. We focus on being adaptable to changing in any cost demand or other market developments. And we focus on fuel cost recovery across our network, that being ferry, road, or rail. In the next couple of pages, I will take you through the result, turning to page five. In Q1, we saw a slightly lower revenue than last year. That was driven by weather impacting our number of sailings and also reduction in revenue following restructurings we, by choice, have made in 2025. So I know a group revenue down 2.5%. We are still maintaining that on the full year we will be on level with 2025. The reasons for the lower revenue this quarter was driven in large part by the passenger segment, where we had fewer sailings, rougher weather, and generally just less income from that segment. Our freight ferry was slightly up 1%. and mainly driven by good volumes in some parts of our network. And finally, our logistics were down 5% following lower volumes, but in particular restructuring, so closing of traffics during 2025. Turning to page six, looking at our income statement for the quarter. As mentioned, revenue slightly down. EBITDA up 51 million or 7%. taking us to 799 million for the quarter, translating that into an EBIT of 33 million, which is up 150 million since last year. Last year, we had a net EBIT impact from insurance income following the total construction loss of Finlandia. That's what you see in the other income in 2025 and then offset by the write-down of 83 million. The net impact of that was 33 million. We also had other positive one-offs in Q1 2025 impacting our EBIT. Some were route changes made during the year, and we also had other things. Finally, we have this year also the CEO severance cost of 37 million included in this quarter. So overall, if you clean out for all these one-off items We have in the blue box on the slide listed where the actual underlying improvements, how they look. And overall, our EBITDA increases when cleaned up for one-off, 227 million versus last year. And the EBIT increases actually as large as 262 million versus last year. So, again... Quite a little bit of a complicated explanation, but it is to get into the real underlying improvements of our business that we are doing these adjustments for illustration. Turning to our fairy division on page seven, we had a very good quarter, obviously, as I've already mentioned, starting the recovery in some of the lost earnings that we have had over the past two years. Ferry EBITDA is up 51 million. EBITDA is up 133 million to a result for the quarter of 124. Most business units contributed to this improvement. So North Sea with volume, better rates, Mediterranean with capacity and cost reduction and new pricing model, Channel with improved resource, Arctic Sea with improved volume, positive from entering the space charter that we have done with TT Line. And finally, we have Strait of Gibraltar contributing slightly negatively because of a lot of reductions due to tough weather in Q1 in the Strait of Gibraltar. Like I just presented for the group result, we have also in ferry division adjusted for the various one-offs and route changes to illustrate the full underlying improvement, which is an EBITDA up by 190 million and an EBIT improvement of 208 million. Turning to logistics on page 8, we also see a good start in the recovery for most business areas in logistics. Our EBITDA is up 31 million, or 16%, despite a continued tough market in Europe. Our EBIT is up 48 million, taking into account taking it close to break-even for the quarter for our business. And we remind you that Q1 is seasonality, a low quarter for our logistic business. Again, most business units contributed to this improvement. Nordic result improved on most locations. Some progress on our boost projects and still a few challenges left in this business unit. Continent showed a very strong recovery following the foot and mouth disease last year. UK and Ireland had a good stable performance, whereas Scotland and North Ireland had some volume reductions. And our BU test, the Turkey and Europe South, had improvements in volumes, but a result and a performance overall on a like-for-like basis on par with what we saw in Q1 2025. Our AB margin for the quarter... If you exclude the loss-making test, business unit is up at 3%. Still more to achieve, but again, a good step in the right direction. Now turning to page 9, looking for cash flow at the quarter. Our Q1 cash flow, adjusted free cash flow, was $300 million. That is 22% higher than last year. And it was driven by better operational performance, but also supported by improvements in working capital and tax. And you may recall that our Q1 2025 cash flow was positively impacted by the introduction of a 900 million factoring program when you compare like for like. So therefore also a significant improvement as there is no factoring impact in this quarter. We also, in our cash flow for Q1 2025, had the insurance income from the total construction loss of the Finlandia Ferry. Turning to CapEx, our CapEx were in line with last year, and this is mainly maintenance CapEx in ferry from the dry dock season that we have in Q1, where we take most ferries into dry dock. Turning to Pack 10, with an update on our capital structure and leverage ratio. Our capital structure is stable in Q1 2026 as opposed to 2025, and we also have seen a significant reduction over the past year in our net interest-bearing debt. That combined with an improved earning takes our leverage ratio below the 4.0 markdown to 3.9 for Q1 2026 last 12 months. Again, that is an achievement that we have been looking forward to, and we expect that we will be able to stay below the 4.0 mark going forward. That ends the walkthrough now of our financial highlights of the quarter, and I will now turn to ESG efforts on page 12. Looking at safety first, our seat-based safety improved in Q1 and our lost time incident frequency was reduced to 2.3. Unfortunately, our landside safety deteriorated significantly in Q1, and we were all the way up to 6.1 in lost time incident frequency. This is due to mainly trips and falls on icy weather conditions and has to be a continued key focus area for us. The increase in land-based safety is not acceptable nor satisfactory for us. Another not-so-good performance was that our CO2 emissions from our ferry fleet were up 2.9% compared to same quarter last year. This is partly due to rough weather that made us use more fuel during the same amount of sailings. but also because the timing of when we use biofuel. And in Q1 2025, we had a usage of biofuel in. This will come later in 2026, so that is also making part of the reason for why we are up compared to the same quarter in 2025. When we look at full year 2026, we are still targeting to have lower CO2 emissions overall from our ferry fleet than we had in 2025. We deployed two more e-trucks in the Q1 2026, taking us to 149, and those were deployed on the Shetland Islands. Finally, we increased women's representation in management with one percentage point and with two percentage points if you look at non-office-based persons. With that, I will now turn to our outlook and priorities for the remainder of 2026. On this page, page 14, we present our updated guidance that was communicated on the 14th of April. We still expect our revenue to be on level with 2025. We raised our EBIT outlook in mid-April to be between $1 billion and $1.4 billion in 2026. CapEx is maintained at around $1.7 billion And that includes now a purchase of a ferry, Stena Vinga, that we have concluded the contract on and we will take over officially in November. The ferry is already deployed on our Jersey route as a chartered ferry, but we will take over ownership, as mentioned, in November. Finally, we have changed and improved our adjusted free cash flow guidance from January being above zero to now being above 250 million for the year. Summing up and turning to page 15, our Q1 was a good and strong step in the right direction, but we still have much more to improve and we remain focused on that. Our priorities remain to be focused on organic growth and monitor and be responsible to any changes in our market, delivering on our six turning points, continue our strong cash flow focus and working capital improvements, committed to our green transition, and finally also deliver on our diversity, equity, and inclusion targets. With that, I end our presentation on the call and now open up for questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to move yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. The first question comes from the line of Lars Heindorf, Nordea. Please go ahead.