NTG Nordic Transport Group A/S

Good day and thank you for standing by. Welcome to the NTG Nordic Transport Group first half 2026 conference call and webcast. At this time all participants are in listen only mode. After the speaker's presentation there will be the question and answer session. To ask a question during the session you need to press star 1 1 on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question please press star 1 and 1 again. Please be advised today's conference is being recorded. I will hand the word to CEO of NTG Nordic Transport Group, Mathias Jensen-Vinstrup. Please go ahead.

Thank you and welcome everybody to our conference call for the first half of 2026. And thank you for dialing in. My name is Mathias Jensen-Vinstrup and I'm the Group CEO of NTG. I have Tineke Torpe, our Group CFO, with me today. As always, we'll spend the next 15 to 20 minutes taking you through our highlights and results for the second quarter of 2026 and finish off answering questions from the participants on this call. And if we move on to the next page, we kindly ask you to read the forward-looking statements provided on the page. And on page number three, you see the agenda for this conference call, which includes the highlights for the second quarter, Review of the financial performance of the group, as well as each of our two divisions. The financial highlights and ratios. The outlook for the year. And finally, we open up for Q&A. Moving on to the highlights for the second quarter of the year for the group. We are generally pleased with the performance that we delivered. Gross profit increased by 8%, while adjusted EBIT increased by 23%, compared to the same period last year. The performance was driven by strong organic growth across the business, supported by higher freight rates and continued market share gains, as well as the inclusion of the final month of the DTK acquisition, as we illustrate on the slide. We continue to operate in a uncertain market with big regional differences, but on a headline basis, market conditions improved during the second quarter. Germany, however, remained muted activity-wise, whereas most other markets, in particular in the Nordic region, developed quite positively. At the same time, freight rates were impacted by higher fuel prices and capacity constraints, which led to higher rates and thus revenue across both divisions. Within the road and logistics division, an important milestone was reached during the second quarter with the completion of the TMS rollout in the southern region of Germany. And while the implementation continued to affect operations and also working capital during the quarter, we are encouraged by the progress made and we remain confident in the long-term benefits of the direction that we have set out, especially in light of the valuable experience that we gained during the first six months of the year and also the organizational strengthenings that we have made in preparation for the continued migration of our groupage activities. Within AnOcean, the restructuring and reorganization program progressed ahead of plan and numerous initiatives have now been executed across the division and we are gradually seeing these efforts translate into a lower cost base and improved profitability. Based on the performance in the first six months of the year, as well as our current view on the market, We have narrowed our full year guidance range for adjusted EBIT to between 625 and 650. The range will be raising the floor by 25 million Danish kroner. On the next page, we summarized the financial highlights for the group. And in the second quarter, we realized double digit growth organically and including M&A. of 14.8% and 16.6% respectively. This was mainly driven by, as I mentioned before, higher freight rates across both divisions, while solid volume growth and continued market share gains, particularly in the road and logistics division, also had a notable impact during the first part of the second quarter in particular. On the gross margin side, which decreased to 21.5%, the development reflected changes in our business mix, as well as the impact of the higher freight rates in the Anocean division. And as we have communicated previously, increasing freight rates create revenue growth, but typically dilute gross margins. The conversion ratio increased across both divisions, supported by operational improvements and cost-out initiatives. which drove the operating margin up to 5.4% during the second quarter. Special items amounted to 12 million Danish kroner in the second quarter and 24 million Danish kroner for the first half of the year, primarily related to the restructuring initiatives that we are currently implementing within the Air and Ocean Division. We turn to the Road and Logistics Division on the next page. The division delivered yet another strong quarter and continued the positive momentum that we have seen over quite a few quarters by now. Growth in adjusted EBIT on an organic basis was 18%, supported by the higher freight rates, volume growth, and generally a strong performance across the majority of our entities. In particular, we did experience very strong performance across the Nordic region, where several of our larger entities delivered strong and significantly improving performance and continued to take market shifts. As quickly mentioned before, Germany continued to be challenging. Activity levels were muted and the rollout of the Group H TMS also affected operations and the results in the second quarter of the year. But as I mentioned, we remain optimistic about the long-term prospects of the migration plan, not only in Germany but across our footprint.

So while there's still much work ahead of us, we continue to be confident in the long-term viability of the initiatives that we have set out across the division.

If we move on to the air and ocean division on the next page, market conditions improved during the second quarter with higher volumes on the ocean freight side, improving air freight demand and increasing freight rates across several of the key trade lanes. Operationally, our main focus was on the reorganization and the strengthening of the division, and we continue to accelerate this trajectory as we introduced earlier this year, which included right-sizing initiatives as well as multiple new hires and team strengthenings globally. Carsten, who joined us on the 1st of April, has now been with us for four months, and he has already had a significant impact on the pace of execution, which is also starting very early days to show in the numbers during the second quarter. During the quarter, we also opened a new branch in Charlotte, North Carolina, which we expect to be the first of many, not only in the U.S., but across our footprint, both as it looks today and also how we expect to see it in the years to come. And we also benefited from an even stronger intercompany collaboration and trading development which is completely in line with the ambitions that we laid out in our Route 27 strategy. Our focus remains very clear. We are building a stronger and more profitable air and ocean platform through a combination of leadership changes, cost-out initiatives, and commercial improvements, and we are accelerating the investments in organic growth. as we move into the second part of the year. As I said, we started to see the first signs of effects on our numbers, as illustrated in the adjusted EBIT growth of 12.5%, which was mainly driven by the lower cost base. And with those words, I will now hand it over to Tineke to take you through the detailed financial highlights.

Thank you, Mathias. So moving to the next slide, then I will start with the special items. As Mathias already mentioned, special items amounted to 12 million in the second quarter and 24 million Danish kroner for the first six months of 2026. This is related to the restructuring program in Arnhem Ocean, which has progressed ahead of plan. And as we will continue this reorganization program, then our expectation is also that special license for that reason will increase to a level of 30 to 35 million for the full year of 26 versus the 20 to 25 million we originally doubted. Moving on to the net financial expenses, they amounted in the second quarter to 31 million Danish kroner compared to 57 million in Q2 last year. When we look at that comparative year of 25, this was mainly impacted by the elevated foreign exchange effects we saw from the US dollar in the second quarter of 25, as well as higher interest expenses. During the second quarter of 26, net financial expenses returned to a level that we consider closer to what is a normal quarter for NTG. Finally, I will address the tax in the CNL. Our effective tax rate amounted to 31.6% in second quarter compared to 46.2% in the same period last year. We continue to be impacted by unrecognized tax losses in Germany. And although the impact was lower in 26 than it was in second quarter last year, We still see an effect. We are pleased with the development, but the tax rate remains elevated and there is room for improvement compared to our long-term expectations.

So this is a focus area for our group.

Finally, looking at our cash flow, then our adjusted free cash flow amounted to 225 million for the second quarter. It was slightly below the same quarter last year, which was primarily due to contributions from our networking capital. The higher EPVA that we delivered in the second quarter was partly offset by a lower working capital inflow. But overall, we are very satisfied with the cash generation that the group generated in the second quarter. and I appreciate it to switch to the next slide, where we now will be focusing on the balance sheet and the key financial ratios. Returning back to the cash flow and the impact on the net working capital, then the development in our net working capital during second quarter was primarily a reflection of a normal seasonality of our business, but also an element of timing. As some of you might remember, then we've made in the first quarter of 26 an unusual early payment to a number of our holders ahead of Easter. And this move of payments from April into March had a negative effect on working capital in the first quarter. while the reverse impact then reflected in our second quarter. And this supported that we saw a positive cash inflow from our net working capital. This was partially counter-effected by our implementation of the TMS system in Germany, which has caused some delays in our invoicing. and therefore had an unfavorable temporary impact on our networking capital. As we are coming close to finalization of the rollout in the southern region of Germany, we do expect that this unfavorable impact will gradually reduce over the coming months and will normalize more likely during Q3. If we then move on to our leverage and our net debt, then our leverage ratio improved in the second quarter and reached a level of 2.25 times EBITDA compared to 3.04 in the same period last year. This improvement was primarily driven by our 12-month increase in EBITDA, but also offset partially by the ongoing share buyback program that has progressed during the quarter as well. And speaking of this program, then it is running in accordance with plan. During the first six months of 26, we had a We acquired the treasury shares for 75 million Danish kroner and the program will be running until November, reaching a total amount of the treasury share brought back of 200 million. Finally, if we look at the return on our invested capital, then our ROIC before tax reached 16.3% in second quarter compared to 16.5% last year. So basically on par year-on-year. The developments that we've seen reflects that we have a higher average invested capital following the recent acquisitions, but also offset by an equivalent increase in our EBIT. And that brings me to our outlook for full year 26. has already mentioned and based on the performance of the first six months of the year, we have lifted or narrowed the guidance that we provide to a fully adjusted in the range between 625 million Danish kroners and 650 million, which is also an indication that we have and we believe in a strong performance for the rest of the year. Our assumptions behind our updated guidance are both unchanged. We continue to expect positive developments during the remainder of the year from both divisions. But we also foresee that we will be operating in a market characterized by elevated macroeconomic and geopolitical uncertainty. The higher freight rates that have supported our performance during the first half of the year are expected to moderate from the current levels during the second half of the year. We do expect to continue to see transport volumes slightly increase, but we also expect that the freight rates will gradually normalize as diesel prices will soften and available capacity returns to the market. At the same time, we are very focused on managing our cost base. and this is the background for why we have narrowed down the guidance. As I already mentioned, special items in our recent guidance updated to ending the range between 30 and 35 million Danish kroner. This reflects our accelerated pace of the initiatives within Air Notion and our ambition is to continue investing in strengthening both Air Notion's performance and also the long-term profitability.

Thank you, Tina, again. To summarize, and as we've both alluded to, we are quite pleased with the development during the first half of the year and the second quarter of the year, and we are increasingly excited for what comes next. With that, I'll hand the word back to the moderator to open the mic to questions from the audience.

Thank you so much, dear participants. As a reminder, if you wish to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star one and one again. Please stand by, we'll compile the Q&A and all studies. We'll take a few moments. And now we're going to take over the first question. Just give us a moment. The question comes from Emily Fung from Buckley. If your line is open, please ask your question.

Hi there. Thank you very much for taking my questions. I have two, if that's all right. The first one I have is, as you mentioned in your outlook, you expect freight rates to normalize from 1H levels. So how should we think about then the gross margin development year on year into the second half for both the road and the air and sea division? And secondly, so how much of that road's 13.8% organic growth in 2Q came from share gains, and should we expect these recent customer wins to also contribute more meaningfully in 3Q? Thank you very much.

So, on the expectations to the gross margin in light of a potential normalization of the freight rail environment, We do not see any reason to expect anything else than what we usually see in terms of the higher level of pass-through revenue that we see when the freight rates go up. So should the rates come meaningfully down, we would expect to see a positive impact on the gross margins. Now, I would say this effect is mainly clean on the ocean side, whereas on the on the roadside during the second quarter of the year, it was kind of a mixed bag of effects, being one, a rather elevated spot market environment, two, a rather significant impact of the situation in the Middle East and the implied impact on the fuel prices, which also impacts both our revenue, gross margin and gross profit. And then, as we mentioned, volume growth. Now, coming back to the volume growth questions, I would say that the composition of volume vis-à-vis price did change over the course of the second quarter, whereas the first part of the quarter was mainly characterized by both volume and price drivers with volumes in the beginning outweighing the price effect, whereas that ratio changed towards the second of the quarters, I would say, with somewhat of a balanced impact, but with rates coming out as the biggest driver by some, but not a huge margin.

Thank you. Thank you. And now we're going to take our next question. and the question comes line of Ulrich Back from Danske Bank. Your line is open, please ask your question.

Yes, hello, Mattias and Tineke, thank you for taking my question. The first one will be on the rollout of the TMS system in road. So could you perhaps provide some more details when will it be fully rolled out? And also you mentioned that it weighed on results in H1 by what magnitude and what that negative impact might be in H2. trying to grasp what is the upside once this is fully rolled out. It would be great if you could comment.

Thank you, Ole. As we mentioned, we did complete the migration in the southern part of Germany, in the Baden-Württemberg area, and the next stop is the western part of Germany, where we aim to be in a fully up and running state. in the early days of 2027. As to the roadmap from that particular point forward, we are currently looking into which part of the Road and Logistics Division to deploy the system next. We are fully committed to the system the groupage side, but we do see a potential to investigate a potential broader application. So we will get back to this when we convene in a broader group at the Capital Markets Day in November. As to the financial impact, we should definitely expect to see a gradual improvement as we move further into the year. However, caveating that There is a rather pronounced seasonality pattern on the groupage side, in particular in Germany, with the summer holiday period kicking in as we speak, and also a very low activity level towards the very late part of 2026. But sort of on a life for life, on a cyclicality or seasonality perspective basis, we do expect to see improvements from this point forward. There's also a few effects as to how we adjust for the fuel key that comes with a delayed effect in Germany that will also provide some support for performance in the second quarter, sorry, in the second half of the year. So all in all, we expect to see an improvement, but it will be a gradual improvement as we move further into Q3 and Q4.

All right, perhaps just a follow-up. So if you decide to roll this TMS system out more broadly, could we see some more negative impact beyond 2026 on the operations?

We expect the adverse implications or the temporary adverse implications of migrating to the new TMS to reduce every time we move to a new location based on Not only the experience and the lessons that we gain, but also because we have invested quite heavily in the organization that is taking care of the migration plan, from a business perspective and also from an IT perspective. So the lessons that we learned in the southern part of Germany, and we must admit it took longer than expected, but we are quite comfortable with us being able to avoid many of the pitfalls that we fell into during this part of the migration. And that gives us a rather high degree of comfort in these temporary adverse financial impacts, reducing case by case or rollout by rollout.

Okay, thank you. Then a question about the restructuring in Air and Ocean. As we all know, you have attempted to restructure the Air and Ocean Division at least once before without too much success. Of course, now you have Carsten Trolle on board and has done it before. So what are you doing differently this time around in this restructuring phase compared to previously that makes you certain that this time it will succeed?

The scope of the reorganization and strengthening of the entire organization is significantly different from anything we have ever done in the past. And if you look at the number of employees in the division, we have previously and as part of the 20 to 25 million range on special items, expected somewhat in the range of 10% and based on the progress that Karsten and his team made since he commenced his endeavors at NCG on the 1st of April, we do expect to see a bigger scope for these reorganization initiatives. And then we have been fairly successful and we have seen a good momentum on also not only right-sizing and initiating cost out measures but also investing in organic growth in particular in the US but also in Denmark where we made the announcement of a new person joining joining us so we do expect the magnitude of cost savings to be significantly higher than in the past so it's this it is this duality of taking costs out of the equation while simultaneously strengthening the platform that we have and investing and expanding the platform together with a very seasoned team of individuals that makes us very comfortable and optimistic about the long-term implications, also from a financial side of this journey that we are on.

All right, thank you. And then my final question here on your guidance, you assume that freight rates will gradually decrease from the Q2 levels. Just for road, can you perhaps just clarify where are spot rates currently and quarter to date compared to the Q2 average? Yeah.

That's a good question. The spot rates differ market by market. We have seen a a sort of moderation of the spot rates, in particular towards the end of the second quarter. And we are seeing a, I would say in particular in the Nordic region, a rather stable situation on the capacity side. But as we've mentioned before, and as Tineke also alluded to, we do expect to see a further moderation and normalization of the rates as we move further into the course. But again, rates are composed of different components, right? So there is the capacity side of the equation. and the related rate impact, but also the fuel impact. So it really comes down to an expectation of what will be the potential resolution, if any, to the situation in the Middle East. What will that impact the fuel prices, and how will that translate into the spot rates? in a net summarized version the underlying market seems to be healthy but there will be substantial fluctuations on the rate side if there is a normalization of the situation in the Middle East and the fuel prices.

Understood. Thank you so much.

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 1 1 on the top of the keypad and wait for a name to be announced. And now we're going to take over the next question. And the question comes from Lars Heindorf from Nordia. Your line is open. Please ask your question.

This morning. Thank you for taking my questions. Follow up on the spot questions. So how much of your volumes are spots and also Are there any particular areas or countries where you are more spot-exposed? And also, given the comments in the report about fairly positive development in the Nordics and probably a bit more muted development in Germany, are there any sort of pockets or areas where you are enjoying particular headwind I have enjoyed particular headwind owing to those higher spot rates here during the second quarter may also see some headwind as you mentioned given a further sort of normalization of spot rates into the second half. That's the first one.

Thank you Lars. I mean keep in mind that you know we sort of participate in the spot market from a buy and sell perspective so we can buy capacity or we can buy loads, if you may, if we have either loads but no capacity or capacity but no loads. So it really depends on what side of the market that we position ourselves on. I would say, over the course of the past few years, we've really seen an uptick in what we refer to as control volumes on the roadside, meaning recurring customers and not agents or other forwarders. that are booking with us. We've always been, you know, have an overweight, a significant overweight in Denmark, and ever since the merger of some of the entities in Sweden, we've seen a steadily increasing share of control volumes there. So if you look at sort of the dependencies on on getting volumes from ad hoc customers. It is fairly low in the Nordic region now. It expands as we move to some of the continental European full and part load operators, but we do see the same overweight of control volumes when we look at the groupage network, of course, depending on which direction is it imported, is it exported, where we mainly

control volumes in the one direction and then work with our own entities across borders or different partners in the groupage network that we have built and acquired over the course of the year.

So it really depends on how you disseminate the spot market exposure, but the key for us is really to position ourselves based on the expectations that we have for the spot market. So if we expect prices in the spot market to be elevated, and we want to position ourselves in a way so that we can leverage these higher rates, i.e. front-loading the capacity that we soft commit to, so that we have the capacity that we can then deploy in the market to take the loads off the market that are being remunerated at an attractive price. So it is really, it is a split that is changing all the time, but key feedback is that we are mainly a controlled volume business on the roadside.

Thank you, and then a second one on the situation south of the border in Germany. You talked about this TMS rollout. Just to be clear, I mean, you're doing this, if I understand you correctly, by location. I mean, have you already rolled out TMS in ITC and Smart Insurance? What is the status with those two in terms of the role of the TMS system and also I don't know if you can see how much they contributed with an EPT in the second quarter.

So we don't do it by location, we do it by legal entity for technical and infrastructure reasons. So what we did complete in the very early days of acquiring Smart Insurance was the entity in Bautzen. And what we did complete here in the second quarter was the largest activity and legal entity in Germany being in the Stuttgart region. So ITC is up next for the migration and that will again also be on a legal entity basis. From an EBIT perspective it was a fairly modest contribution that the entire German market had on the roadside in the second quarter.

And just again on the housekeeping question, how much of the road volumes are groupage?

On the volume side, I think it's a rather difficult measure to have. And that's not something we have on the top of our minds, to be honest with us. But it is... 30-40% of our volumes by now.

Okay. And then I'll follow up on some of your earlier comments on what Carsten is doing now and the development in the Air and Ocean Division. I mean, clearly, there's a lot of restructuring going on, given the size of the special items. In terms of headcount and FTEs, I mean, do you expect that to remain stable in the air and ocean, or will these restructuring that you're currently conducting, will that lead to fewer people going forward? Because you had a comment earlier on that you expected to see cost decline going forward. Will that mean that we will see the other external cost and staff cost in combination will be lower in 27 compared to 26?

We do expect the number of employees in the division as well as the staff cost to continue to decline, although at a somewhat slower pace. during the second half of 2026, yes.

Okay, and then just a final one, Tineke, maybe I didn't hear you well enough. It was on the net financials, sort of the run rate, because you don't carve out what is actually financial, sorry, what is the currency impact on the net finances in the quarterly report. So what should we expect in terms of run rate going forward here?

It will be, we have this quarter 31 million days and that is 30 to 35 million is what you should expect as one week. The impact from FX during second quarter of 26 was rather limited.

Okay. All right. Thank you.

Thank you. Dear speakers, in order for the questions for today, I would now like to hand the conference over to your speaker, Matthias Jansen-Denstrup, for any closing remarks.

Thank you, everybody, for taking the time to join this call. And should there be any follow-up questions, please do not hesitate to reach out to our investor relations officer. Thank you, and have a nice day.

This concludes this conference call. Thank you for participating. May now all disconnect. Have a nice day.