DFDS AS
CSE:DFDS
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
American Express Co
NYSE:AXP
|
Financial Services
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Target Corp
NYSE:TGT
|
Retail
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
133.9
234.4
|
| Price Target |
|
We'll email you a reminder when the closing price reaches DKK.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Estee Lauder Companies Inc
NYSE:EL
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Church & Dwight Co Inc
NYSE:CHD
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
American Express Co
NYSE:AXP
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Target Corp
NYSE:TGT
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
Mueller Industries Inc
NYSE:MLI
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
DFDS AS
You don't have any saved screeners yet
Welcome to the DFDS Q3 2019 Report. [Operator Instructions] Please note that this call is being recorded.Today, I'm pleased to present CEO, Torben Carlsen. Please begin your meeting.
Good morning. I am joined by Jesper Heilbuth Mikkelsen, our CFO; and Søren Brøndholt, our Head of Investor Relations, for this call. And as our headline say -- says, our full year outlook is reaffirmed, although European economies are relatively flat in their performance. Q3, EBITDA on level with 2018 on Page 3, despite the U.K. slowdown. We are beginning to see some recovery of trading between Turkey and Europe. The outlook range on EBITDA level for 2019, we have narrowed to DKK 3.55 billion to DKK 3.75 billion from before, DKK 3.5 billion to DKK 3.8 billion, so same midpoint. And we see in this quarter, how our business model is holding up in face of both the U.K. slowdown and the Turkish recession.Moving to Page 4. Group 3 -- group revenue is up 2%. EBITDA, as mentioned before, on level with 2018. The U.K. slowdown has impacted our ferry routes negatively, especially the Channel's pax volumes are impacted. We see good performance in the Baltic Sea. Mediterranean's EBITDA is above last year, but large operating cost increases offset the revenue growth almost entirely.Logistics Division's EBITDA 15% up compared to last year driven by all 3 business units.Moving to Page 5. Through the year -- throughout the year, we've talked about our 5 key performance drivers for 2019. And some of them do face some headwind. The extended Turkish recession and operational challenges also in Turkey have meant that we are not seeing the full benefits, neither growth-wise or EBITDA-wise in Turkey in 2019. We are well prepared for Brexit. Brexit has, obviously, dragged on much more or longer than we had expected at the beginning of the year. We had an agreement with the Department of Transport leading up to the 31st of March, much less important now leading up to the next deadline.The route network, we invested would be strengthened by 3 new freight ferries. The third is, as we speak, on its way to Gothenburg to assume operation in Sweden -- between Sweden and Belgium. And the 2 others are operating in Turkey, as expected.Our work to digitize continues, and we start to see some real results from this work. And then our long-standing thing about working on continuous improvement is also underway now, and all projects are on track.Turning to Page 6. Again, revenue up 2% driven by Mediterranean growth and also our new route from Gothenburg to Zeebrugge in Belgium, which offset the U.K. slowdown. Margin is reduced due to the lower utilization on our U.K. routes and cost increases, disappointing ramp-up on the Gothenburg-Zeebrugge route and operational complexity in Mediterranean.Again, the investments in Turkey have increased our depreciations, further increased through timing differences of dockings compared to last year.On the other hand, finance costs halved. We don't have the negative currency adjustments that we saw in 2018. And we have reorganized the way we invoice and collect money in Turkey, so that what was before finance cost is now touching our revenue instead. Finally, the result on profit before tax is an increase of 4%, now DKK 647 million.Some graphics on the U.K. trade slowdown that we've talked about on Page 7, where we can see that Q3, both the exports and imports have been below last year, but also that in September, actually, the trade is exceeding last year, probably an effect of the stockpiling leading up to the then-expected 31st of October exit from EU.Page 8. We mentioned earlier in the presentation that Turkey-EU trade is recovering. This is illustrated on this page, where the orange bar is the current year's performance, where we can see on export, less surprisingly, the level is above '17 and '18. But even on import, we now see that the levels are solidly above 2018 and approaching 2017. So good signs that the prediction by economists next year of a 2% to 2.5% growth in Turkey could materialize.Looking at the Ferry Division's EBIT on Page 9, we see that the picture is uneven. North Sea is down due to the lower volumes we talked about on the North Sea, but also the ramp-up of the Gothenburg-Zeebrugge route. And Baltic sea, steady volumes, particularly Germany, Lithuania doing strongly.Channel, down DKK 54 million, 10% lower pax volumes than last year, which is a general market trend, unfortunately, on the Channel. But also ferry cost increases with timing differences on dockings, et cetera.On the freight side, volumes similar to last year due to some market share gains.Mediterranean, although up, disappointingly small difference to last year given that our volumes are up 24%, but unfortunately, costs, likewise, these operational challenges are being addressed and will begin to show improvements Q4 and forward.Passengers, down DKK 15 million. Strong -- relatively strong performance, Amsterdam Newcastle, but weaker yields on Copenhagen and Oslo combined with higher cost. So in total, 6% down to now DKK 696 million for the Ferry Division.A few words on what we are doing on the cost side for Mediterranean. We have added complexity when we added a large customer beginning of the year because we needed extra port terminals, both in Istanbul, Trieste and France and also additional ferries. We have now taken the consequences of the complexity and simplified the network. We have our French route departing from one port in Istanbul, namely Yalova, going to one port in France, namely Sète, with 4 vessels trading on this route. And as a consequence of this, Pendik port in Trieste is only serving Trieste with 6 weekly departures.So we now have clarity and simplicity, both for our own staff and for our customers, which is already beginning to lead to efficiency improvements. We have still a congestion issue in Trieste in Italy, which we are working through and expect to see some resolutions to -- from 2020 forwards.In terms of scrubber installations, we will be ready with probably 3 to 5 scrubbers in January when the new 2020 rules -- low-sulfur rules come into effect. And then during the next 6 to 8 months, the fleet will be fully equipped with scrubbers in interest.Moving to Page 11. Logistics Division EBIT is down in total 2%. However, some specialized services that were quite attractive last year in the Nordic and some one-off elements on pension accruals in the continent actually mean when adjusting for that all 3 business units are up during this quarter compared to last year, with -- especially U.K.-Ireland performing well after the restructuring and closedown of certain activities last year.Page 12, our capital structure, more or less, even with a little downward trend to now 3.1 net interest-bearing debt to EBITDA, we have adjusted down the investment guidance by DKK 400 million due to some delay in certain port investments and also in the ro-pax vessels to be delivered at the end of '21, which also means that our 2020 investments have been revised upward slightly to now DKK 2.1 billion to DKK 2.2 billion.Our Win23 strategy is progressing as planned. We have teams now in place for all initiatives and tracking. Confirmation of the amounts, et cetera, have been -- gone through, and now, execution phase will start from 2020, delivering the results.Turning to Page 14. As we said in the front page, earnings outlook reaffirmed, investments lowered by DKK 400 million. When we look at Q4, we are off to a good start, although U.K. visibility is still low and, of course, still risk of new slowdown, some firming up on Turkey.Europe trade. Revenue growth, which is less focus for us when we guide, we can now see will be around 6%. A lot of the downwards revision is Turkey and U.K., obviously. And I've already said that we have narrowed our EBITDA range guidance, but kept the midpoint.So moving to Page 15. While are our current priority is not that much changed from last time, but a lot of focus on optimizing our Mediterranean operation where the complexity still needs to be reduced. And where with an improved customer service, we will not just gain from the growth in the economy that hopefully comes back, but also from regaining some of the lost market shares to the overland traffic.We have focused on our new route, Gothenburg-Zeebrugge, which needs to turn profitable in 2020. And then, of course, we continue full focus on a hard Brexit and the preparations for that, although we hope that some deal will be made between U.K. and the EU.And then Win23 is well underway, and we'll start seeing results from that during 2020.So a status from DFDS that is quite upbeat. We have challenges, which is obvious with our business being primarily in the U.K. and second-biggest exposure in Turkey. But the business model holds up in these times of uncertainty, and we look forward to talking to you again in 3 months' time. Have a good day.Sorry, I need to ask if there are any questions.
[Operator Instructions] And our first question does come from the line of Dan Togo from Carnegie.
But then on the scrubbers that are postponed, can you elaborate a bit on this? And also are you in any way compensated for this? That is the first question.
I can elaborate on it. We have -- as we have commissioned the first scrubbers, experienced some technical issues with some leakages and some cracks. This is being worked through with the supplier and with our experienced people from our Northern European fleet. So it's fair to say that the scrubber market is red hot at the moment, so it has been difficult to get the required attention in a timely fashion, but we believe that we have that now. And we will progress as planned to build the scrubbers, although with a slight delay. There's no compensation that has been agreed for that.
Understood. And then on the operational challenges that you mentioned in Turkey, is that solely due to the empty trailers in the system or are there other factors playing a role on the port side, for instance? Can you also maybe give some indication of where we are on empty versus full on that ratio now compared to where it has been historically?
The empty trailers is not a significant part of the operational problems. The operational problems have been to coordinate where customers drop off their trailers or containers relative to where they wish that the container and trailers go to. And this may sound fairly simple, but with 3 ports in Istanbul and 2 in Trieste and 2 in France, this has proven not so easy, and it's also not been so easy to keep the required frequency from all drop-off points.In addition, we have had the new mega vessels with some time for the port crews to get accustomed to emptying 450 units instead of 250 units and not creating congestion in the port at the same time. In Trieste, we have an unbalance between the 2 ports in terms of how many vessels come in where, which have required a need for shunting between the 2 entities and congestion, in some instances, meaning that we have simply not been able to get hold off of a trailer leading trains, for example, to leave empty or even ships with less cargo than could have been due to not being able to access the trailers or the containers. So it goes broader than the empty trailers. The empty trailer trend is going down as the import is growing, as you saw on the graph. But there's still empty trailers coming back.
But I guess, just a follow-up, that most of these issues you mentioned on the port side has been resolved with the new initiatives you've made?
Except for Trieste, the rest of the issues have been more or less resolved.
Okay. Good. And then just one final question. On your overland, you mentioned that you want to -- with new setup and the new ferries coming in, you expect to regain some of the lost market share to overland, but will that have an impact on how you price your product also?
No. This is simply a reflection of our less-than-usual performance standard that we have offered to the market that have caused loss of market shares, which in our mind, is in our own hands to correct. We're not talking about taking market shares that have left us for other reasons, including price.
Our next question comes from the line of Lars Heindorff from SEB.
A few questions from my part as well. Firstly, regarding the Channel and the contract with the U.K. government, can you indicate the level of contribution in the third quarter? And then secondly, can you also maybe give us an indication about what kind of contribution we should expect from the new contract that you have won? That's the first one.
We had a 6-month contract from 31st of March with the DfT, which we have taken the income of over the 6 months, and there was a DKK 20 million-or-so income from that in Q3. The new contract is insignificant.
Okay. And then on the Baltics, the fairly sort of, I would say, muted volume growth and when we look at the lane meters, but still quite a dramatic improvement in the margin there. Is this cost out? Or what is the reason for the strong performance in terms of earnings in the Baltics?
Last year, to my recollection, we had some significant cost on the fleet, which we have not seen again as a main element. And then, of course, the bunker price have also favorably developed since last year. There was [indiscernible] passenger result in Q3, yes.
Okay. But the bunker price, you normally say that's a pass-through. Is that correctly understood?
If I maybe clarify it a little bit, the spread between bunker types have widened.
Okay. Then regarding the Zeebrugge-Gothenburg, I assume that's the Stora Enso contract. Is that operating in the full third quarter or is it only partly in there in the quarter?
It's in the...
That's fully in the quarter.
Yes.
Okay. So the volumes that you have from that contract, which adds, of course, to the volume growth on the North Sea, is -- should we expect that, that will be representative for the volume in the coming quarters? Or are there any kind of sort of seasonality as there is normally in your business?
There is, of course, some seasonality in the freight business as well. So I think you can assume that this route will have the same seasonality as the remaining North Sea business.
Okay. And then lastly, on Newcastle Amsterdam. Now with the Moby deal out of the question, I'm just interesting to hear your thoughts about alternatives. Obviously, this will have an impact on CapEx. I mean are there any other places you can go where you can find secondhand vessels to ramp up and get the capacity that you need on the route? Or do you need to go out and contract some new buildings or maybe alternatively just maybe postpone the decision? I don't know if you can give us a bit...
The 3 options we have is to continue sailing with the 2 vessels we have. They could, according to our technical department, sail 10 more years. The other alternative is to see if Moby and its creditors reach a conclusion on the situation that led to the cancellation and then potentially see if there's still a deal to be made there. The third option is to, as you also alluded to, to look at alternative tunnels. All 3 options are realistic and there's a possibility.
But the first option you mentioned that they can sail another 10 years, that will not give you the capacity that you need to grow on the route. Is that correctly understood?
That will, of course, not enhance our freight capacity as the other vessels would. On the other hand, of course, the CapEx, as you mentioned, is lower. So we'll sit down as the opportunities arise and then in each case, we do a quite detailed analysis to see how we best create values for our shareholders and then we will go in that direction. But right now, it's, of course, a disappointment that Moby could not deliver the vessels as agreed.
And the third option about maybe still some likelihood on getting a deal with Moby and its creditors. Is there any time frame on that when you get to a decision on that?
I think just out of respect for Moby and their challenges here, I think we will refrain from commenting on that. But we, of course, are in close contact with them on the status.
Our next question comes from the line of Marcus Bellander from Nordea.
Just one question, if I may. The delay of the new building of the ro-pax ships, could you elaborate why the delays and what's going on there?
So far, it is really the quay laying that was delayed, and therefore, some payments are delayed. We may see 3, 6 months delay on the first delivery. It's nothing that we're really too worried of focusing on right now. But it just have small implications for our cash flow during the period. We...
Are they delayed on your initiative or is it the shipyard that can't deliver?
No, no, no. It's the shipyard that is -- no, no, we have a team in place out there, monitoring it closely and been working well with the yard. So it is a yard-instigated thing.
Our next question comes from the line of Finn Bjarke Petersen from Danske Bank.
Congratulation with your strong results, and I -- and the positive development in Turkey. Could you -- I know that the question has been asked before about overland, but what is the overland market share now compared for a year ago? And how does it affect your new routes to France?
First, thank you for the nice comments. We, of course, don't consider a result that is on par with last year to be strong. But the situation in Turkey is that -- and without having the exact percentages, but we have lost something around 5 to 6 percentage points compared to last year versus overland. And some of that, we can probably attribute to our payment credit strategy, some of it to just mix changes among the customers and some of it to our performance issues. And we certainly believe that there is a likelihood that we can take, let's say, 50% of that back once the operation is back on track.
And that is just in numbers you see. Overland, is the market share -- how much is it today?
It's around 50. It -- they were around 45 before.
Our next question comes from the line of Ruairi Cullinane from RBC.
Three questions, please. Firstly, could you just give us your latest view on where you're going to deploy your Ro-Ro new arrivals over the next couple of years? And secondly, on the widening spreads between low- and high-sulfur fuel, can you sort of talk us through the initial impact of that and just remind us the proportion of your fleet that has scrubbers?And then finally, there's still quite a wide range for EBITDA at this point of the year, and your guidance seems to allow for a deterioration in Q4. If there was -- if an ideal Brexit was avoided in 2019, would you be able to task where you expect to lie this year?
The first question, the vessel that right now is on its way from China will be operating between Sweden and Ghent in Belgium, so Gothenburg-Ghent. Then we have 3 remaining. They can operate on the Sweden route to Ghent or Zeebrugge. They could also operate from the Continent to the U.K., most likely the long route to Immingham or they could operate in Turkey. And except for the one arriving now next week, we have not determined exactly where they will go. It depends on the situation and the demand at the time of arrival.The second question was about the Bonga spread and there, the existing fleet, excluding Turkey, we are around our consumption -- 60%, 65% of the consumption is on vessels with scrubbers, and the remaining without scrubbers, which means that those remaining will burn MGO.The fleet in Turkey, again, the ambition is during 2020 that it will be 100% scrubber-equipped. And there, the alternative to heavy fuel is low sulfur, where there is not an established market yet. So what happens is, of course, when the spread goes out, we have a better contribution from our customers to the investments that we make in the scrubbers, which is the initial investments and commissioning, but also the slightly higher operating costs that you have when you operate the scrubbers. I don't know if that answered your question, too.
Yes. That's very helpful.
The third question, you have to repeat. That was a little complicated.
Yes. I was just hoping, given it's quite a wide EBITDA range for this point in the year, I was hoping you could just talk us through what might make you finish up the year at the top end of your range and what might lead you to end up at the bottom end of your range, if possible?
It's, of course, you can say, it is still a wide range of DKK 200 million at this stage. But it is not -- it is small changes that can move us a little bit in one or the other direction. We, again, do not see any major things on the U.K. side because it has now been postponed until January. So I don't think I can say something specifically that will drive us one way or the other. Obviously, a further recovery in Turkey is good for us. If U.K. continues to trade a little bit stronger as it did towards the end of Q3, that will also help us.
Our next question comes from the line of Stefan Roehle from KfW IPEX-Bank.
I have, first of all, questions on the Mediterranean business. You said you lost some market share to the land transport. So first of all, I wonder how, let's say, easy your customers can change to land transport? And on the other hand, how easy is it to get them back? And second, you said, well, you lost market share on the land transport. So what about your second competitor, Ulusoy Logistics? So do your competitors -- do your customers also change to this kind of competitor? And second, with respect to your route to France, I mean there is also Ekol Logistics that is offering or operating a route to France. So do you now also, let's say, replace Ekol Logistics on this route? Or is it still a competitor of yours? And fourth question on the bunker and low-sulfur fuel discussion, well, we see in the market that some competitors, in particular, in the container business, they are planning to install low-sulfur fuel or sulfur fuel surcharges, so is it also an option for you to -- well, to get through the surcharges for your customers?
Thank you for the questions. In times where the economy is slow, some of our customers will have spare equipment, which makes it easier for them to convert to land transport. In general, they need one tractor for each trailer if they perform land transport, where they need one tractor for 3 trailers when they use our services. So they can move some traffic on the margin, especially when the economy is weak, but it is complex for them to move larger shares of their business, especially in a time like now where cash is not plenty in Turkey and investments are not easy to do.In terms of Ulusoy, they operate from the ISMEA region, so a different area than our Istanbul and Mersin departures. So there's very little competition between us and Ulusoy. They also don't see the same overland issue as the significant longer driving from ISMEA if you want to get to Germany.In terms of Ekol, they stopped their service to France in July, so we are the only Ro-Ro operator from Turkey to France today.In terms of the Bonga, we certainly do have a so-called BAF mechanism, which is a Bonga adjustment factor, which is tied to the fuel type that exists, which you need to apply to the regulations. So for example, in Turkey, which is the new area that we will have a regulation, we have introduced to our customers a BAF surcharge linked to the MGO fuel, but with industry-relief factor to not have a very significant jump, but a jump we think they can afford and which is justified with the additional cost we have.
[Operator Instructions] And there's a follow-up question from the line of Marcus Bellander from Nordea.
I'm just wondering if it's possible to quantify the impact of the wider fuel spreads in Q3.
No. We don't have the exact quantification of that. And as usual, there's always this delay of impact 1 month when prices go up or down or spreads increase or decrease.
And as there are no more questions registered, I now hand back to our speakers for any closing comments.
Thank you very much for all the good questions. And again, DFDS is looking forward to speaking to you all again in 3 months' time, and where we'll also provide, of course, guidance about 2020. Have a good day.
And this now concludes our conference. Thank you all for attending, and you may now disconnect.