Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DFDS AS (DFDDF, Financial) achieved organic revenue growth, particularly driven by logistics, aligning with their strategic focus.
- The first high season for the acquisition in the Strait of Gibraltar showed great performance, meeting expectations.
- The company reported a 4% increase in organic revenues, with logistics contributing 7% and ferry operations 2%.
- DFDS AS (DFDDF) continues to reduce emission intensity from ferries, with a 1-2% reduction across the network.
- The company is expanding investments in shore power in terminals and ships, aligning with EU regulatory frameworks.
Negative Points
- DFDS AS (DFDDF) lowered its 2024 outlook for EBIT and adjusted free cash flow due to financial performance and the termination of the ECO acquisition.
- The company's ROIC is at 6% over the last 12 months, and cash flow is reduced due to tighter investments.
- Q3 results were below expectations, with a slowdown in the European economy impacting performance.
- The automotive sector's challenges and the ongoing war in Ukraine are negatively affecting growth in the Baltics and Eastern Europe.
- The company faces intensified competition in the Mediterranean, leading to reduced prices and impacting the Italy-Istanbul line.
Q & A Highlights
Q: In light of intensified competition and uncertainty related to ECO in the Mediterranean segment, has anything changed in your approach to this segment? Can you also guide us on the price impact from this competition?
A: We have moved closer to our customers to ensure they continue to use us, which involves adjusting prices. Planned price increases are not coming through; instead, we are seeing reduced prices, primarily affecting our Italy-Istanbul line.
Q: Regarding your capacity in the Mediterranean, are there any considerations to reduce or move it?
A: We have already started out one vessel and are not bringing it back. We have also started a route from Italy to Egypt, and there may be one more vessel that will come out of the system depending on developments in the next month.
Q: On the ECO deal termination, you postponed your 10% target to 2027 from 2026. Why not move it back to 2026?
A: We have had a tough 2024 and now face a new competitive situation in Turkey, which influences our decision to maintain the 2027 target.
Q: Can you elaborate on the guidance downgrade, particularly the rough split among different geographical segments?
A: The Mediterranean is a significant part of the midpoint downgrade, and we continue to see weaknesses in the Baltics as well.
Q: Regarding the new Italy-Egypt route, what kind of ramp-up period should we expect, and when do you expect it to be EBIT positive?
A: It will take some time as there is no existing route today. You should not expect it to be EBIT positive in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
