Release Date: February 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DFDS AS (DFDDF, Financial) achieved organic growth in 2024, with positive customer feedback on their network capabilities.
- The acquisition of the Strait of Gibraltar delivered on its business plan, contributing positively to the company's growth.
- DFDS AS (DFDDF) won a 20-year concession agreement with Jersey Islands, expected to be positive from day one.
- The company is on track with its green transition goals, including a 1.7% reduction in ferry emission intensity.
- The North Sea and Channel regions are expected to maintain or improve performance in 2025, with stable commercial performance anticipated.
Negative Points
- 2024 was financially challenging, with results falling short of expectations due to macro and market headwinds.
- The Mediterranean market faced competitive pressures, impacting EBIT negatively, with overcapacity issues from new competitors.
- The acquired Turkish transport company, Ekol, contributed to significant losses, impacting the overall financial performance.
- DFDS AS (DFDDF) experienced increased financing costs, partly due to higher interest rates and leasing payments.
- The company's leverage ratio increased to 3.9 times, above the long-term target range of 2 to 3 times, indicating financial strain.
Q & A Highlights
Q: Can you explain the significant drop in EBIT for 2025 compared to 2024, particularly regarding the Turkish competition?
A: Torben Carlsen, CEO, explained that the Mediterranean region accounts for nearly half of the EBIT downturn. Other factors include general cost pressures, automotive elements, and the sale of the Copenhagen-Oslo route, which had a positive impact in 2024 due to depreciation cessation.
Q: What is the net effect of losing a license between Gibraltar and Morocco and adding the Jersey route?
A: Torben Carlsen, CEO, stated that the net effect is neutral to positive. The loss of the Tarifa route resulted in a one-off profit in 2024, but the Jersey route is expected to be positive from day one.
Q: With leverage currently at 3.9 times, when do you expect to return to the 2-3 times range?
A: Torben Carlsen, CEO, indicated that while it is a high priority to reduce leverage, it is unlikely to happen in 2025. The aim is to approach the target range in 2026.
Q: How are you addressing the capacity and pricing issues on the Trieste-Istanbul route?
A: Torben Carlsen, CEO, mentioned that capacity has already been reduced and further reductions are planned. Price adjustments are expected in the near future as the company leverages its strong network.
Q: Can you provide more insight into the expected net working capital improvements for 2025?
A: Torben Carlsen, CEO, acknowledged the need for significant improvements and mentioned ongoing projects aimed at achieving this. More details will be shared after Q1.
Q: What is the strategy for achieving breakeven and a 5% EBIT margin for Ekol by the end of 2025?
A: Torben Carlsen, CEO, outlined plans to rightsize equipment and fleet, reduce personnel, increase prices, and integrate Ekol into the existing European network for synergies.
Q: How are you managing CapEx for new routes like Jersey and Spain to Rotterdam?
A: Torben Carlsen, CEO, explained that the Jersey route will initially use existing and chartered vessels, with future investments planned. The Spanish route will utilize an existing vessel.
Q: What are the prospects for the Logistics Boost projects given the structural challenges in some markets?
A: Torben Carlsen, CEO, expressed confidence in resolving internal issues for most projects, but acknowledged that some, like the Dutch full load, require market improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
