DSV A/S

Welcome to the DSV Trading Update for the first half of 2024. Today's call is being recorded. For the first part of this call, all participants will be in a listen-only mode, and afterwards, there will be a question-and-answer session. To ask a question, please press 5-star on your telephone keypad. I would now like to introduce Group CEO Jens H. Lund and Group CFO Michael Ebbe. Please begin.

Thank you very much. And to all your listeners, welcome to our Q2 investor call. We are here in Hedehusen. Michael Epp and I are ready to take you through the presentation. And then afterwards, we will have the questions and we will allow two questions per participant in order to ensure that everybody gets the opportunity to ask questions. The call will be an hour long. And if we go to the agenda, we can see that it's the usual agenda we have. And I would just encourage you to have a look at the forward-looking statements as well, so that we also check the box when it comes to compliance. And then we will quickly move to the next slide and talk about the highlights. I think when we sit in the management team and look at the numbers, it's good to see that we now sequentially see growth in both GDP and EBIT. It's been a journey where we've seen a decline for some quarters in a row. So really good to see that we are back on the growth trajectory. We are also raising our guidance so that we narrow it and take the lower end of our guidance out. We previously had 15 to 17 billion DKK, now we have 15.5 to 17. If we look at the cash flow of the company, it's impacted by the increased activity level and of course also by the rate levels going up. But we still launched a share buyback of 1.5 billion for the next quarter, a little bit up from the previous quarter as well. And then we also basically take yet another step in our operational efficiency program and trying to accelerate that a little bit because of the market conditions that we're seeing. And that will kick off here in the second half. So if we move to the next slide, we will go to the ANC division. And of course, the overall figures are very nice to see that also here we sequentially make some progress when it comes to both GP and EBIT. And I think it's also important to note here that now we see that the conversion ratio is also moving in the right direction. So driving the conversion ratio up, the EBIT level is also now increasing again. So very positive second quarter for ANC division. If we go into the products and skip to the next slide, we could take the air product first. Here you also see that the yield is a little bit down, but we see that the tonnage is going up. So actually a nice development for us. And I think there's been a lot of questions about the yield and I think we can all see that it seems to be plateauing around this level. The markets where we're doing well is obviously out of the APAC area and it's in areas like textile and also in the healthcare segment that we're doing well. So all in all also good development when it comes to that. If we move to the ocean freight on the next slide, I think here we can also see that we've actually benefited a little bit on the yield side from the Red Sea situation. I think this was also what we alluded to in Q1 when it comes to the volumes we are also growing here as well. driving the GP up. So also a development that we really like to see. For the ocean freight, we grew in line with the market here in the second quarter. I think both in air and ocean, we expect that we're going to see further progress into the next quarter. So we're quite positive when it comes on that. If we skip to the next slide and go to our road division, I think it's fair to say that the road market is a very tough market. And had we not been able to take the market share that we've done we would not have been able to produce the GP that allows us to keep the profit margins that we are keeping. It is a very tough market these days. And I think we really appreciate the efforts that our team has put in to keep the levels that we are having. So very solid development on the roadside. If we move to the solution side, It's a little bit the same, also a difficult market situation, stock levels coming down, increased competition, but still we've managed to produce extra volumes and also produce extra GDP. And that's actually a lot of situation where there's a little progression also on the EBIT side. And if we look at the operating margin also a little bit up from the previous quarter, we have to remember that normally Q1 is actually a quarter where there's less output and solutions. So it should also come up here in Q2, but it's very good to see that this is also what has happened. So if we go to the next slide, we have the NEOM project. Here we're still waiting for some approvals. The business plan is unchanged and basically everything is, apart from the sort of inauguration, is basically going according to plan on the NEOM side. So with all that said, I'm very happy to hand over to Michael, who will take you a little bit more into the details on some of the numbers. So here you go, Michael.

Thank you, Jens. Then on page number 10 with the profit and loss, just a few highlights I would like to touch upon. Like Jens already has mentioned, this has been a strong financial result for the second quarter. Obviously, our revenue is impacted by the increased activity and freight rates. Jens also said that we've increased sequentially. This also can be seen in our conversion ratio. We still have focus on our cost base and that means it's more or less stable despite the inflation that we have seen compared to last year. We've also, like Jens touched upon, just started on efficiency initiatives here in the second quarter. where we expect to get this savings of around 750 million, and that will gradually be phased in over the coming quarters. Then just the financial items, the FX adjustments, it's important just to mention, it's mainly due to FX, of course, and this is our internal loan, so it has no cash impact. It's how we have to do it according to IFRS. Our net interest costs are impacted by higher interest rate level. And then if we go to the cash flow on the next page, Again, we believe we have a solid cash flow despite the higher net working capital. It's a timing issue. We have our net working capital under control. We don't see any kind of, you can say, bad things in terms of overdue and so forth. So we have it under control. So it will be a matter of timing. Of course, it's impacted by the rates and the activity. In terms of our financing activities, it's important to mention that we issued a new five-year Eurobond during the quarter of €500 million. Last thing about the network capital, we've touched upon it earlier this last quarter. The property projects, we still expect that that will increase over the coming quarters as well. And the network capital will stabilize, of course, depending on the rates and the activity. Then a nice slide on the next page with the allocation to shareholders. As you can see, we follow our normal capital allocation policy. When it's feasible, we have to allocate cash back to our shareholders. And as you can see, up until now, we have allocated more than 4 billion DKK back to the shareholders. And this morning, like Jens also mentioned, we announced a new share back of 1.5 billion. It's, of course, based on the performance for the first half of 2024, our current shape, and then also the expectation to the remaining part of the year. And speaking about remaining part of the year, the last slide for my side, we have also narrowed our outlook for 2024. Jens touched upon that, and that also means that we've also put in now that we expect special items in connection with the operational efficiencies program of 650 million, which will be, you can say, expensed here in the second half of 2024. So, and yeah, you can read the main assumptions for our outlook. And that said, Jens, back to you.