DSV A/S

Ladies and gentlemen, welcome to the DSV Q1 2026 conference call. I'm Matilde, 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 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's my pleasure to hand over to Jens Lund, Group CEO. Please go ahead.

Thank you very much and welcome everybody to the quarterly announcement of our Q1 results for 2026. We will quickly go to the first page where you can see our agenda. I forgot to say I'm joined here by Michael Neber, so we're like the usual team from DSV. And there's a statement to the right about forward-looking statements that I just want to point your attention to so that we all are aware of the forward-looking statements. And then we will quickly go into the highlights for Q1. We have basically continued the progress on the Schenker integration. We will dive a little bit more into that. I think one of the things that is very positive is that we've basically now been through a significant part of the tender season and we can see that the customers they are very happy about the integration and Basically, we maintain the volume that we have with many of these customers and also increase our footprint with them. So that is definitely something that is very important. The financial performance, we are satisfied with the financial performance. Of course, it's been a challenging market, as you also saw from one of our peers reporting recently. It's been a quarter where you had even more geopolitical uncertainties on top of many of the issues that we've been dealing with. And we've managed also to limit the impact of the situation in the Middle East to something that is moderate in our numbers. We are continuing to repay debt. Michael will come into this, but we follow the normal seasonality on our cash flow generation. And then, of course, one of the things that is really important that we also had stated last year is that we will soon see that we will have a higher IBS than we had the year beforehand. So we look very much forward to present that. And then of course we reiterate our guidance and also reiterate the synergies on the Schenker transaction. So I think progressing according to the plans that we had announced a couple of months ago. So all in all, we are in good shape, but of course have to work hard to deliver the outcomes. One of the things on the Schengen integration is the progress that we are making on this. Of course, we're very happy with the situation where we are now alive in more than 50 countries. There's one thing that you should note when we go live in a country. It probably takes on average three to six months before we get the synergies in a country because there's a significant procedure where you have to respect local work councils, labour regulation, etc. So it takes some time from when we go live in a country till the integration is actually completed. This is also visible in the chart to the right where you can see that actually having done so much of the integration that you can see in our text, actually the synergies, they're always lagging a little bit behind. So let's say we've finished the integration all in all in 26, then a significant part of the impact will come fully impact in 2027. So the last sort of major countries that we will do in the integration will be done in from a country go live perspective in July, August. And then, as I said, it takes three to six months before we see the synergies on countries like that. So I think this is just very important. And I'm sure we're going to expand on that as well during the call. But apart from that, I think... The slide basically explains itself. We've reported some impact here in Q1 based on the 2025 situation. And then, of course, we expect even more impact as we harvest the cylinders during the year. We are now 7,000 white collar employees less than when we started the transaction. Basically, we have a situation where we can see how the plants are evolving. We can see that we continue at the same pace in the coming quarter as we've been working so far. If we look at the financial numbers, our GDP up with almost 80%, very pleased with that. But of course, then the EBIT impact that we are looking for, it of course depends on us then harvesting the synergies so that it's converted into EBIT. But I just explained the situation on the synergies on the other one. We can see the productivity when we measured, for example in ANC, that the number of transactions per person is in fact higher per Q01 this year than it was last year. So we are in a good situation, but of course we have to drive the productivity further up and harvest the benefit of this. On the EPS, yes, it's getting close now to a situation where we make higher EPS this year than we did last year. And this is something that we are all looking for because EPS growth at the end of the day is very important for all of us. If we take the ANC division, I would say we are very pleased, not least with the development on the air freight GP. The ocean freight has been a little bit more under pressure. I think this is the market conditions as we all have seen them, where there's been in particular in March some disruptions that also drive what can say a little bit lower GP. And if we look at the numbers, then this should be the quarter where we will have typically in an integration the lowest conversion ratio and the lowest operating margin. This is because next quarter we will actually have two months where Schenker was already integrated and one month where it's only DSV standalone. So I think we can with confidence say that the conversion ratio will be somewhat higher in the next quarter. And of course, our operating margins should also be higher. So we've, in other words, hit the trough. And it's all based on the explanation that I just gave when it came to the synergies. I just have to go to the next slide here. If we then look at the air freight, if we look at the sort of gross profit, we are also facing some headwind on the FX side when we look at that. But we still managed to grow these 44% on the yields. Actually, one of the reasons why we have a higher yield is because there are certain customers that had very low yields that are not part of the volume we produce anymore. Apart from that, I think the yield has developed fairly stable during the quarter. So also we are very pleased with that. Of course, he also mentioned the FX impact on the yield. And I think volume wise adjusting for these customers, then actually we are satisfied with the development that we have and it's sort of within our expectations. for the outcome on the air freight side. If we look at ocean freight, here also of course we see significant FX impact, but still the yields or the GP is a little bit lower than what we'd expected. Basically also comes a little bit down to our volume development. Our yield is actually fairly flat, stabilizing around the 3,900. Last year you have to remember that there was a significant activity in Q1 because there was expectations up to the liberation day where a lot of volumes had to be moved and there was some front loading there as well. So also just take that into the equation or take that into account when you evaluate the numbers for Q1. And I would say also here on the ocean freight, this is probably an area where we do see the opportunity to drive productivity also somewhat up so that we get a higher conversion rate on that. So I think that was the ocean freight. If we take road. Here we have a situation where we almost make a billion in a quarter. The gross margin is somewhat higher. This is also due to the fact that we've gotten Schenker in. They have more what they call system freight, we call it groupage, that drives a little bit higher margin because there's a lot of infrastructure connected to that. Conversion ratio slowly moving towards the 20%. And when we integrate the companies, we should also be able to get above on that. And then, of course, a margin on 4.3%. You can say that's in the low end, but we have to remember that if I look at the numbers for Schenker's Road last year in Q1, I believe they were around 1.5% in EBIT. So actually already significant progress has been made on that side because also the Schenker business was somewhat larger than the DSV business. So I think this is important to remember when we look at the numbers. So all in all, we are happy with road. We have had an integration in the Netherlands and Germany where we had some service issues in January, partly because of the integration, but also because we had some weather conditions that were a little bit extraordinary. So it basically also disrupted our services to a certain extent. We are in normal production with normal service levels and all that, so it's all gone. But that's also part of what we see in road. And here I would just also like to call out that we have some very large countries that go live here in the next quarter. So there may be a service issue or two also into Q2. We plan for that there shouldn't be, but it is very large operations that we combine. So just cautioning on that. Then on contract logistics, I think when you look at contract logistics, it's a very positive development. We have, though, to say that our Q1 last year, which is a comparable figure, we were probably not 100% happy about how we performed in Q1 last year. So sometimes that number also looks very nice if you've got a baseline that is, let's say, 50 or 100 million too low. But still, Combining DSV and Schenker and actually growing the way we've done, driving the business forward, it deserves a lot of credit. And one of the things that I'm particularly fond of is that we've set a number of initiatives in motion where we wanted to increase the return on the invested capital. because it simply had become too low. And now we are at 10.7%, which is still a pre-tax ROEG, so it's in the low end, but it's somewhat higher than it was last year and it's trending in the right direction. Let's see how the number evolves in the next quarter and hopefully we can continue that drive where we get a higher return on the capital that we deploy because this is something that we are all in full agreement of that this is what we need to achieve. It's vital for us. So with that said, I'll hand over to Michael and he will take you through the numbers.

Thank you very much, Jens. As usual, I'll just go through some of the highlights. You can go through the entire page yourself or also the quarterly report. Clearly, our numbers are impacted by Schenker. As you can see, our revenue increased more, 75%, and also, like you Talked about contract logistics with the underlying growth as well, which we are pleased to see in contract logistics. EBIT rose more than 30% to 4.9 billion. Again, Schenker, and then offset by some of the challenging markets, primarily in E&C, as we have seen. Conversion ratio, you touched upon that earlier as well, Jens. close to 26% and also something that we expect that will, you can say, change for the next couple of quarters in line with the impact of the integration and the synergies. This is predominantly in ANC as well. Our cost, interest costs, close to one billion. You have to bear in mind last year, same period of time, we had not paid for Schenker. So it's not really comparable figures here as well. And then you mentioned as well that we are on track on Ips, which is something that we look very much forward to see. Finally, the tax rate is also higher than the normal. And I think I've spoken about that some of the earlier calls as well, it is due to the integration of Schenker. So that's how we see it. Then on the cash flow, 1.5 billion in Q1, cash conversion ratio of close to 70%. You have to bear in mind when you assess the cash flow for the quarter, that Q1 is always our lowest quarter for the cash flow. And then you can say this year, apart from the normal seasonality, we have had a temporary impact from some of the integrations in some of the large countries. It's clear when we go live in such large countries, which we go, there will be, you can say, a period of time until we get, you can say, back in full control and use all systems as they are supposed to be used. So there will be some kind of a lack before we can do that. So it is temporary. We see no alerts in our overdue percentages and so forth. But of course, it's something that we monitor closely because we need to get those money back. It's clear. That's it. Of course, I've said earlier as well that we do expect long term net working capital ratio of two to three percent. So we are close to to be in line with that. But of course, I would not have hoped that we were there already right now. Since we started the Schenker integration, I think we've paid off close to 8 billion DKK of debt. And then decreased our net interest on debt by around 700 million from the beginning of the year. So I do believe that we are on track on that one as well. Then guidance. Overall, we have maintained our guidance. Of course, you also wrote the forward-looking statements. Of course, looking, you can say, out of the window, I think everybody can agree to that the uncertainties and things that are developing is a little bit more, you can say, cumbersome than we have normally seen. We've decided and of course we will maintain our guidance. We still believe that there will be slightly positive growth in GDP based on what we see from OECD and IMF and so forth. So in line with GDP is still what we expect. Of course, it's difficult again to foresee what will happen if the situation in the Middle East continues. But our base case is as we write here. So and then on the yield side for RNC, slightly higher average compared to Q4. Also, as we said, in connection with our full year. And then low to single digit growth in the road market. And then we, of course, expect that Contract Logistics will continue to deliver as they have done here in the latest quarter, but also in Q4. basically. And then again, I must highlight the uncertainties that we have to deal with. So we will keep the same range as we have had. And then lastly, of course, the exchange rates also is important that they stay as they is.