DSV A/S

Ladies and gentlemen, welcome to the DSV Annual Report 2025 conference call. I am Sandra, the call school operator. I would like to remind you that all participants have been listened on remote 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 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 is my pleasure to hand over to Jens Lund, Group CEO. Please go ahead, sir.

Good morning. Thank you for joining us here on this investor presentation that we will have in relation to the publication of our full year 2025 results. Today, I'm joined by Michael Eber, and we will basically go through the presentation as we normally do and discuss Once we've completed the presentation, we'll be happy to take your questions. If we skip to slide number one, there's just the reference to the forward-looking statements that I would like you to pay attention to, and then, of course, the agenda as well. The highlights of the year, I think, is clearly, of course, for us that – Basically we now can announce that we complete the Schenker integration at the end of 2026. I'll say that both the feedback from the employees and certainly also from the customers has been very constructive because we managed to take out the uncertainty both for employees but also for customers. I'll say a little bit more about integration on the next slide, so I'll move on to the financial performance. It's been a tough market. You can also see from the reporting in the last quarter that there's a lot of headwind on FX, plus all the geopolitical issues as well, and also yields, of course, under pressure as well. So very happy to deliver on our guidance. Furthermore, of course, we can see that actually we do have good progress both on the road side and also on the country logistics side as well. So we're very pleased with that. On the cash flow, I mean, at the end of the day, we have to transform what we're doing into cash flow and It's really great to see that all the efforts we put in, they also are visible in our cash flow statement. Of course, the EPS growth, this is what we're aiming for as well, and we are well on track to deliver on that in 26. So also here we are pleased. On the outlook, $23 to $25.5 billion. I think if you take into consideration the significant headwind on FX, I think actually that we are satisfied with the guidance. Of course, it's a tough market, but overall we think it gives a good indication that we managed to drive the company forward also in 26. And then the synergies, we're going to achieve the $9 billion. We are confident about that. As we speak, we've actually already now made significant progress on the countries where we go live also here in 26. So we have a high certainty or conviction that we're going to deliver on those numbers. And here's just a little slide on the Schenker integration so that it's clear that, I mean, in 25, the numbers they include... almost 1 billion in impact and then of course there's going to be impact here also in 26 as you can see and then we will have sort of the full impact in 27 you have to remember when you integrate a country that it may be that we go live in the country but it will take some months sometimes 3, 4, 5 months before the integration is actually completed in the country and we've moved everything together. And that's also when we then realized the synergies. Sometimes we also have to go through, do a procedure with the employees because of sort of the arrangements that you would have in the different jurisdictions. So it's always a little bit back-end loaded, the impact of the synergies, and that's also what you see in this table here. If we look at the financial highlights, I think we've managed to basically grow our GP and also grow basically our EBIT as well. The guidance is also mentioned over here to the right in the column. And I think the presentation here is fairly self-explanatory, so I won't necessarily mention the numbers. But sort of skip on to the ANSI slide. There you can see that a significant headwind on the ANSI side. If you look at the numbers, it's clear that the GEP is very much being, what can I say, a little bit under pressure because of the yields. not least on ocean freight, but also on air freight. Here you have to think about a little bit the FX as well that plays a role. Conversion ratio, of course, due to the full impact of shink are sort of coming in so that it will come down to the trough and then it will start to go up. This is quite normal for an integration. And, of course, that then drags the margin down, as you can see. There's nothing in the things that we are seeing that is indicates that we're not going to get the productivity back to the levels that we've seen before. If we look at the air freight market, I think, you know, you can see the GP here, of course, on the left. And on the right, there's been some discussions also about, you know, the yield of 7,600. Of course, there's some chamber impact where there's been lower GP than we have, mainly because of the lower VAS components, so less value-added services. And then, of course, also the FX impact as well. So I think that's probably, what can I say, the most important takeaway from this slide. If we look at the ocean freight, of course you can see the GP here takes a hit. The vast element of what we're doing to the value-added services, it's been fairly stable throughout the period, but of course the freight markup, when the weights they compress, then the markup on the freight side, it also compresses as well, and that's really what we see and what we're doing. Here, of course, the FX part also plays a role, but you will also have the Of course, the fees at origin or post-landage, depending on how the trade lane looks, that might be in currency where it doesn't have an FX impact. But the line haul, and typically either at origin or at destination, you will have FX impact for both of them. So that's a little bit on the sea freight. I think on road, you see we are almost one and a half times up on the revenue. Of course, also on the GP. You have to remember that Schenker has more groupage, so more system freight. So there's more infrastructure, so the GP also has to be higher. And then, of course, that we managed, what can I say, to convert an important part to EBIT. It's definitely... important for us as well. I think if we look at sort of the gross margin, it will continue a little bit up in the next quarter because you get the impact of basically Schenker being included in the numbers as well and the conversion ratio on a good trajectory. And of course operating results are also trending upwards. They also have to because we have significant infrastructure in relation to the whole network product that we have. I would just like to mention as well on the road side that we managed to divest a U.S. truck. It was an operation, hard asset operation in the U.S. and we couldn't operate that with a satisfactory financial outcome so we found a new owner for it and we hope that it will be successful there and we're very pleased that we managed to finish or complete this transaction. On contract logistics you can also see that we are one and a half times up on size but almost. and definitely growing our business significantly, also on the GP side doing really well. And then, of course, the conversion from GP to EBIT here is also some economies of scale, and plus that we've actually sanitized also some of our contracts, et cetera, so that we managed to produce the the outcome that we all really need to see from contract logistics where you need to improve the return on invested capital. So one thing is actually that we have a plan to reduce the number of facilities we're working on that, but also then that we drive the operational results up to a very intense focus on productivity. So really happy to see that this development is going in this direction because I think that's something that we've all been looking for. So now I will hand over to Michael, and he will tell you a little bit about the numbers. Thank you, Jens.

A quick run-through of the numbers. Here's just short comments on the slide that we have here for some of the KPIs of the that we have. It's clear that when we have the annual report, you have seen the nice annual report was announced this morning, that they're clearly impacted by the Senka integration and contribution. We can see that on the earnings, as Jens mentioned. You can also see it here on the transaction costs, which relates to integration costs of 2.6 billion, more or less. It's a little bit bigger than Q4 due to the fast pace of integration that we have had. And then also, like Jens mentioned, the USA Drug business that we have divested is presented at discontinued operations, as was the case for the last quarter. You also mentioned, Jens, that a thing that needs to be taken into consideration here is the headwinds. that are predominantly in the ANC and the U.S. dollar and the dollar-related currencies. I think that also is notable here is the tax rates. Luckily, it's not every quarter we see a tax rate of 40% like we have this quarter, and this is, of course, not the long or even midterm tax rate, but this is due to the integration that we have progressed so fast, so this quarter is very, you can say, unusual for that one. Good to see that on our Ips that we are still on track for Ips creation in 2020-26. We jump to the next slide from the cash flow. You all really mentioned, Jens, and thank you for that, that we have had a strong cash flow both in the quarter but also on the year. This is something that has enabled us to repay some of the debt that we took when we acquired Legacy Schenker. I think for the year we've repaid 7 billion DKK and in the core more than 2 billion DKK. So we are on track on reducing our debt. Another thing that is worth mentioning here is, of course, I'm very pleased with the improvement of net worth in capital. But I think we also said in the last quarter that this is most likely not sustainable to have it at around zero. Of course, we work hard to have it as low as possible, but the run rate will most likely be in the area of 2% to 3% as we have talked about. Yes, and also last comment on that sign is, of course, the gearing ratio 2.8. We are As I said, we have already paid back quite a significant amount, and we continue on that journey so we can head down to a lower gearing ratio than what we see so far. Then what most likely interests you the most, this is the outlook for 2026. Jens already mentioned that we have between 23 and 25.5 billion DKK in outlook. Of course, it's an uncertainty period that we have had in the quarter, also what we look into with all the volatility that you mentioned, Jens. So this is the best, you can say, guidance that we believe that we can give right now. We expect the air freight and sea freight markets to grow around 2-3% in line with the GDP. And, of course, the yield is something that we are working on. Of course, we like to have it as high as possible. We work, like you also mentioned, Jens, implementing the way that we produce in the DSV to focus on the value-add services, and that is hopefully something that will bring us to reach the guidance, obviously. But, again, there are uncertainties, which is important to notice. And the tax rate also this year, in 26, will be impacted by the integration. Again, coming back to the fast pace of integration, it will have an impact on the tax rate. And then also, again, as you have already said it all, but it's important that you are aware that the U.S. dollar-related headwind also, of course, impacts our guidance. I think it's, when we estimate, it could be around 500 million TKK. So that is something that we have to consume or assume into that number that we have. So last page before we go to the Q&A, some of the key takeaways. Fast regression on our most complex integration to date and still maintaining solid financial performance in challenging market environments. Also updated, you can say, timeline on the Schenker integration will be done in the year 2026 with full financial impact on the synergies in 2027. Financial performance is challenging, but very well driven, especially by the contract statistics and road business, which have a, you could say, higher ratio of our total EBIT than what we have been used to back in the days. And then the guidance that we have announced today, 23 to 25.5 billion BKK. That was it, and then we have left quite some time for the Q&A session, so please don't hesitate to press 1 and then ask the questions.