NTG Nordic Transport Group AS
CSE:NTG
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NTG Nordic Transport Group AS
Earnings Call Analysis
Q2-2024 Analysis
NTG Nordic Transport Group AS
In Q2 2024, NTG Nordic Transport Group reported net revenue of DKK 2.3 billion, reflecting an 8.7% increase compared to the same quarter last year. Organic growth accounted for 6.2%, propelled by proactive market strategies, higher freight rates, and the initiation of operations in the U.S. The RTC acquisition contributed an additional 2.2%, while currency effects provided a modest 0.3% uplift.
However, the gross profit faced headwinds, decreasing by 1.5% to DKK 475 million, resulting in a gross margin of 20.6%, down from 22.7% in the prior year. This decline was primarily attributed to intense competition and elevated operational costs, especially in the Road & Logistics division where hauler costs surged.
The Road & Logistics division generated DKK 1.7 billion in revenue, marking a 5.5% increase from Q2 2023. Yet, its gross profit slid by 0.8% due to rising hauler costs, resulting in a gross margin of 21.5%. Conversely, the Air & Ocean division performed robustly, delivering DKK 644 million in revenue (up 17.9%) and achieving significant organic growth of 17%, supported by heightened freight rates and the U.S. market start-up.
Adjusted EBIT rose to DKK 165 million, an 11.5% improvement year-on-year, bolstered by DKK 35 million from the settlement of earnout agreements with AGL. Despite the operational challenges reflected in gross margins, the improved EBIT showcases NTG's resilience and effective management.
Looking ahead, the company maintains its full-year outlook for adjusted EBIT between DKK 500 million and DKK 580 million, although this excludes effects from recently signed acquisitions yet to be finalized. The management is cautious, noting ongoing market pressures and geopolitical uncertainties, which could modify their assumptions as the year progresses.
NTG has been active in M&A, signing agreements for three strategic acquisitions, including SCHMALZ+SCHÖN, which is projected to enhance NTG's operational capabilities and double its market footprint in Germany. This acquisition alone is expected to contribute around DKK 40 million to results within 12 months.
The Road & Logistics division is witnessing a significant shift in market dynamics with increased costs from haulers, prompting NTG to consider differentiated price increases in the second half of 2024. Management acknowledges the necessity of monitoring individual market characteristics to implement effective pricing adjustments.
The restructuring initiatives, particularly in Germany and the Netherlands, are progressing, with expectations of improved productivity and profitability towards the latter part of the year. The new leadership in Germany is focusing on stabilization and performance enhancement.
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Good morning. This is the conference operator. Welcome and thank you for joining the Second Quarter 2024 Conference Call and Webcast.
[Operator Instructions] At this time, I would like to turn the conference over to Mr. Mathias Jensen-Vinstrup.
Please go ahead, sir.
Thank you. And welcome, everybody, to our Q2 2024 Conference Call. And thank you for dialing in.
If we go to Page #2 in the presentation, we kindly ask you to read the important notice provided in the slide. And if we move on to Page #3, you see the presenting team of today. My name is Mathias Jensen-Vinstrup, and I am the Group CEO of NTG Nordic Transport Group. And I have, as always, Christian Jakobsen, our Group CFO, with me today.
We go on to Page #4. You see the agenda for this conference call, which includes the highlights for the second quarter of 2024, including updates on the 3 M&A transactions that we have signed within the last 2.5 weeks. It also includes a financial review and a presentation of other key figures and finally a reiteration of the outlook for 2024. By the end of the presentation, the line will be open to questions from the audience.
So if we go to Page #5, you see the highlights for the quarter. And in the second quarter of the year, we did experience an increase in revenue in both divisions driven by a combination of higher rates and increasing volumes. However, gross margins were adversely affected by competition, increasing cost and pass-through effects.
If we take a look at the Road & Logistics division. We experienced a rather significant change in the market dynamics in the second quarter of the year. So if we go back to 2023 and the first quarter of 2024: We aggressively pursued market share gains. We squeezed the haulers
On prices. And we reduced the fleet of trucks that we managed in order to leverage the favorable spot market for procuring capacity, whereas in the second quarter of 2024, this -- we saw the beginning of the end to this previous market regime, as a combination of capacity leaving the market, higher hauler prices, elevated spot prices and rate agreements with customers entered into during the previous periods had an adverse effect on the gross margin and on the organic gross profit development in the second quarter of the year. In the second half of this year, in the second half of 2024, we will be looking to increase prices to counterbalance this adverse margin impact, but we will do that on a differentiated basis taking individual market characteristics and imbalances into account. And we continue to monitor the markets closely to evaluate if and when the time is right to introduce such surcharges.
The reduced gross profit, again in the Road & Logistics division, in absolute and relative terms; as well as investments in sales and group functions were the main drivers of the organic decline in adjusted EBIT for the division in the second half -- sorry, in the second quarter of the year.
In the Air & Ocean division, increasing freight rates, higher pass-through revenue and continued pressure on yields drove the gross margin lower, but the early indications of activity improving in the first quarter of 2024 continued to materialize in the second quarter, as the volume development had a positive impact on the gross profit for the division. Part of the activity increase and the spike in rates that we have seen, starting in May, was likely driven by the early onset of the peak season, with importers front-loading cargo, which is also supported by the latest data related to, for instance, the U.S. consumer spending. And if this is the case, we should also expect that the peak season also tapers off earlier in the second half of the year and what we usually see.
If you factor in the effects of the earnout settlement regarding the acquisition of AGL, the restructuring costs in Germany and Netherlands during the quarter and the effects of the start-up in the U.S., EBIT for the second quarter of the year in the Air & Ocean division was on par with the same period last year, confirming the stabilization in the division that we experienced in the second quarter.
If we flip to Page #6, you will see an overview of the 3 acquisitions that we signed within the last sort of 2.5 weeks, as mentioned in the beginning. And to the left, you see the latest one being the acquisition of SCHMALZ+SCHÖN, a German road and logistics specialist with a revenue of more than DKK 1 billion and an operating profit of almost DKK 80 million in 2023 and an acquisition that we expect to contribute to NTG's results on a local GAAP basis of around DKK 40 million within the next 12 months. The acquisition of SCHMALZ+SCHÖN more than doubles our footprint also on the financial side in the German market, and it significantly strengthens our Road & Logistics division outside of Scandinavia.
And we see multiple strategic opportunities arising out of the acquisition, including but not limited to cross-selling the full portfolio of services within the NTG network to the loyal customer base of SCHMALZ+SCHÖN. We also see opportunities to promote collaboration between the SCHMALZ+SCHÖN entities and those of our entities that have business transcending German territory and, finally, through the application of knowledge and experience that will further develop the combined road and logistics service offering in the German market, so this platform will be the backbone of our German operations going forward. And we will use this as a stepping stone for further growth and expansion in Germany by means of both organic initiatives as well as M&A.
In the middle, you see the acquisition of the land-based furniture activities of DB Schenker in Italy, an acquisition that builds on our entry in the furniture vertical with the acquisition of LGT back in 2021, followed up by the acquisition of RTC in 2023. And these activities that we have acquired -- or signed a deal to acquire are currently part of the same furniture network as LGT Logistics. And they are acting as the partner of LGT in the Italian market, so the acquisition safeguards this network and it opens up new opportunities to expand the furniture activities outside of Scandinavia. In 2023, the activities generated around DKK 90 million in revenue.
And finally, to the right, you see the acquisition of Freightzen Logistics, a Thai-based air and ocean freight forwarder headed up by 2 Danes. And they also have offices in Malaysia and in Vietnam. And the management team of Freightzen will assume the responsibility for NTG's Air & Ocean operations in the APAC region going forward to promote the development of our network, to promote organic growth in the region and, by this, consolidating the activities in Asia Pacific on the one unified umbrella organization. While, of course, we cannot guarantee anything in any way, we are doing everything we can to continue the momentum on the M&A side. And in general, the M&A market seems rather favorable at the moment.
With those words, I will hand it over to Christian Jakobsen, who will take you through the financial results for the second quarter of 2024.
Thank you, Mathias.
On Page 7, you see the main financial highlights for the group.
Net revenue for Q2 2024 totaled DKK 2.3 billion, equal to a net revenue growth, increase of 8.7% compared to Q2 2023, of which organic growth totaled 6.2%, driven by proactive market approach, higher freight rates and the start-up in the U.S. Acquisitions contributed with 2.2%, driven by the RTC acquisition, as Mathias mentioned before. And currency effects had a positive impact of 0.3%.
Gross profit decreased 1.5% to DKK 475 million, corresponding to a gross margin of 20.6% versus 22.7% in Q2 2023, affected by the squeezed yields from intense competition and higher pass-through effect. In the Road & Logistics division, it was driven by higher hauler cost, partly offset by the positive impact from the RTC acquisition. In the Air & Ocean division, it was driven by the pass-through effects from higher freight rates and pressure on gross profit yields.
Adjusted EBIT increased to DKK 165 million, equal to an increase of 11.5% compared to Q2 2023. Adjusted EBIT was positively affected by DKK 35 million due to the final settlement of the earnout agreements with AGL.
And if we move to Page 8, you see a summary of key performance indicators. As illustrated to the left, the gross margin development for the group has declined compared to previous quarter and Q2 2023 primarily due to the demanding and competitive market conditions as well as the prior mentioned hauler costs and muted gross profit yields.
In the middle of the page, you see the conversion ratio which increased compared to previous quarter in Q2 '23, negatively affected by the gross margin pressure in both division but positively affected by the earlier mentioned earnout settlement. On the right-hand side, you see the development in the operating margin which also increased compared to previous quarter in Q2 '23 due to the earnout settlement, whereas the underlying margin was affected negatively by the gross profit -- gross margin development.
And if we go to Page 9, you'll find a summary of the financial performance for the Road & Logistics division. The division generated a net revenue of DKK 1.7 billion in the quarter, equal to an increase of 5.5% compared to Q2 '23, of which organic growth totaled 2.4%, driven by new business in main markets, while slightly offset by some lost volumes in Sweden. Acquisition growth totaled 3% due to the RTC acquisition. And currency effects had a positive effect of 0.1%.
Gross profit decreased, minus 0.8%, to DKK 357 million in the quarter, corresponding to a gross margin of 21.5% compared to 22.9% in Q2 '23, primarily driven by the prior mentioned hauler costs and partly offset by the acquisition of RTC. Adjusted EBIT decreased 12.9% to DKK 108 million in the quarter, corresponding to an operating margin of 6.5% compared to 7.9% in Q2. The reason for that was the negative gross profit development. And of course, the fixed cost was relatively stable.
If you flip to Page 10, you see, you find the summary of the financial performance in the Air & Ocean division. The division generated a net revenue of DKK 644 million in the quarter, equal to an increase of 17.9% compared to Q2 '23, of which organic growth totaled 17%, driven by efforts to win new business, by higher freight rates and by the start-up of SCS in the U.S., whereas currency effects had a positive effect of 0.9%.
Gross profit decreased 3.3% to DKK 118 million, corresponding to a gross margin of 18.3% in the quarter compared to 20 -- 22.3% in Q2 2023. And as mentioned before, it was primarily driven by the pass-through, the higher pass-through effects from higher freight rates; as well as the impact from the muted gross profit yields. Adjusted EBIT increased 133.3% to DKK 56 million, corresponding to an operating margin of 8.7% compared to 4.4% in Q2 '23. The margin development was positively affected by the earnout settlement and negatively affected by the gross profit development and the effect of the restructuring activities in Germany and the Netherlands.
And if we flip to Page 11, we find an overview of other key figures. On the left, you see that the net working capital increased to DKK 18 million as per end of June '24, an increase of DKK 36 million compared to the end of Q1 and an increase of DKK 91 million compared to the same quarter last year. The main driver relates to the higher rates and activity in the sea and some temporary effects in the U.S.
The adjusted free cash flow totaled DKK 56 million in the second quarter compared to DKK 28 million in Q2 '23. On the right-hand side, you see the net interest-bearing debt excluding IFRS 16, which totaled DKK 213 million as per end of June '24.
And if we flip to Page 12, you'll find the -- our full year outlook, which remains unchanged, where we expect an adjusted EBIT in the range of DKK 500 million to DKK 580 million. We continue closely to monitor the current trading development and adjust the cost base accordingly if needed. The outlook includes the effect of the acquisition of RTC and limited effects from the 3 -- and the outlook doesn't -- but doesn't include any effect from the 3 acquisitions which have not been closed yet. The outlook does not include potential impact from other acquisition during the year, if any. And currency exchange rates are assumed at current levels. And because of -- the financial and geopolitical uncertainty remains at a high level, the assumptions underlying the outlook may change during the year.
And that was all what we have planned for today, so moderator, please open the line for Q&A.
[Operator Instructions] The first question is from Dan Togo of Carnegie.
On the road side, conversion ratio now down to around at least 30% 2 quarters in a row. Where would you like to see the conversion ratio going forward? And what are the -- so to say, the remedies? But what can you do to improve and come back to previous levels of the conversion ratio? Is it on the cost side? Is it primarily sales initiatives? What can we expect going forward? I know you expect some sort of a seasonal pickup here in the second half, and hopefully, that will also bring you somewhat of the way.
And then maybe also on top of that or relating to that, some comments on the restructuring going on in Holland and Germany. That has taken some time now. What will the potential impact be from that? Maybe share some -- can you share some financials on that part? How much of the revenue is down there? And then what will the potential EBIT impact be once, sort of say, this restructuring is all settled?
Thank you, Dan. I will start with the road, and then Mathias will take the [indiscernible]. You're right. The conversion ratio is under pressure in the road division, and it all comes from the market situation where we are today. We have seen haulers going into bankruptcy; and then coming to us and telling us, "You need to pay more. Else, we will have to go into bankruptcy," or, "We will just not be able to service you anymore." And that's why we have been forced to accept some price increases towards the haulers. We have been really good at keeping our conversion ratios and our gross margins in the declining market, but simply now we are in a situation where, haulers, they can't live from the prices they had received in the prior quarters. And I think we are seeing that it's a general trend in the market, and we will expect that -- in general that everybody will come out. And as Mathias mentioned, we will also see a price increase throughout the autumn. And then of course, the normal seasonality will also come in place, where we normally also see that the market is coming up, so we expect to see an increase throughout, but it's maybe a little -- it will definitely affect Q4. I'm not sure how much we will see that in Q3, but we will definitely see some improvements in the gross margins in Q4.
And in terms of the ongoing restructuring initiatives or the restructuring initiatives in the second quarter of the year, we need to distinguish between the magnitude of them in Germany and the Netherlands. And in the Netherlands, it is the intention that the restructuring has been completed for the time being and that this was sufficient to stabilize the operations, whereas in Germany we are working very focused on improving the situation. And I think we have been seeing a satisfying momentum during the course of the second quarter. In Germany, we have appointed a new Managing Director on the 26th of June. And we have a solid plan in place that is being executed at the moment in terms of turning things around. We do not expect to see any impact on the revenue and on the GP side, so this is mainly from a productivity and cost perspective that we are focusing the initiatives. So hopefully, we do expect to see that materialize also on the bottom line during course of the third and in particular the fourth quarter of the year.
The next question is from Lars Heindorff of Nordea.
A follow-up on Dan's on the restructuring. What is the actual restructuring costs that you have taken during the second quarter?
I think we have taken a couple of millions in the quarter.
Okay. And Mathias, it sounds like this -- at least in Germany, that you're not done yet, so should we expect more of this in the third quarter and -- or at least [ early ] in the second half?
I think that there's definitely still work to be done in terms of getting that particular business area back on track. Whether or not that will materialize in further restructuring costs is too early to say.
Okay. And then still on the Air & Ocean part, which is, I mean, clearly the fact that you've been subscale has been hurting you on the way down here post pandemic, but you also say that you're investing in new areas, so can you maybe give us a little bit indication? I mean the new office that you opened up and the initiatives you're taking. Exactly how much have they contributed [ with them ]? And what are sort of the magnitude of this? I -- if I understand it correctly, you both have something in the U.S. Is it also in the U.K.? And -- or I might be wrong.
No, you're correct. I mean the offices that you referred to here are not open during the second quarter of the year. These are the latest additions to our Air & Ocean operations, so in terms of the U.S., that is we have to start up supply chain solutions that have one office in Indianapolis and one in Hamburg in Germany. And then we, during the latter part of last year, opened up a new office in Detroit, also on the Air & Ocean side. So I think that's [ the best ] new ones in terms of the U.S. entities. In the U.K., we did also open up in Leeds and Birmingham. And in terms of the specific effect, I think -- honestly speaking, I think we are seeing in the U.K. that they are balancing each other out. They are still being built up, and one office is faster than the other. And on the U.S. side, we still need to see those new office openings turning into a profit, but perhaps Christian can add a few details.
Yes, but we have seen that, if you just take the -- as Mathias mentioned, we opened in Q1. Now we have [ double the ] turnover in Q2, so we definitely see a positive trend there, but they are still not in black figures. But we also didn't expect them to be that when we did the business plan. They have a -- definitely gained customers and they gained ground. And then now they are -- you also -- when you come in, you have to be competitive on your offering. And therefore also, you see a little bit squeezed gross profit, and -- but we knew all that when we started. But they definitely got some, yes, traction on the turnover for the quarter.
Okay. And when -- these 5 offices, I think, you mentioned, Mathias, when they are up and running, what sort of magnitude out of the Air & Ocean will that contribute with?
I think -- in the grand scheme of things, Lars, I think this is not -- this is part of the daily course of business, I would say. And we are not expecting any significant impact on these office openings, and I think we are not seeing any significant drag of the openings either. Set aside, of course, the SCS start-up that we report on separately also in the report, which is growing really fast on the top, but it also -- it is also, I would say, more costly than the average start-up that we have made. But we have no tangible guidance in terms of the impact on the financial side, but it won't be so material that you will note it in the figures going forward.
But Lars, you can do the maths. You have the start-up percentages and then -- and you can do the math yourself how much turnover we have already generated.
Okay, all right. And then a question regarding the SSH acquisition, which I think was very, very interesting. And I think it sticks out compared to what you have done before, a little bit. You've been communicating that, at least historical, you want to buy at 4x to 6x EBIT. This one is a little bit more expensive given its size. And then the -- I know, Mathias, that you mentioned that there may be some cross-selling, but in the statement that you sent out [ for connection ], you're [ absolutely ] right, that there are no synergies, so is this a strategic acquisition? And I mean I -- it just -- I can understand that it might fit in, but on -- then on the other hand, it sticks out with -- given its size, given the higher price compared to what you have paid historically and the lack of synergies. That passes my mind a little bit, to be honest, so what is the -- I mean, what is the reasoning behind this acquisition, if there are no synergies and if you cannot combine it what you already have?
I think it's a fair question, Lars. And I definitely believe that there are synergies and opportunities; however, difficult to quantify from our side. I think what we referred to during the call and also during -- in the release are more sort of in tacit, intangible opportunities. And we would rather be under sort of under-promise, overdeliver side of things. So on the valuation side, we agreed it is a higher multiple than the 4x to 6x. I think we have seen deviations from that range in the past also and also taking AGL into account. And it is not that we are changing that range, but I would also expect that we will be more differentiated in how we go about larger, vis-à-vis small, acquisitions in the future given that we do see some correlation between the multiples and the size and structure of the setups that we acquired. And in this case, it is a strategic investment in the German market where we really are boosting the platform, boosting our capabilities. And we expect to use that platform, yes, and build further on that platform going forward. And that's why we went outside of the range in order to accelerate the development and move once and for all on to the European continent.
But I think, Lars, we also communicated that we are normally saying bolt-ons and smaller acquisitions is below 6x and strategical acquisitions. We can't buy them at 6x, in particular when we can't harvest synergy in that amount. And of course, we are working hard, but we are also not quantifying any soft synergies in those cases. So we definitely believe there will come soft synergies in the strategic acquisition, but that will take time to harvest. And it's impossible for us to quantify. We would like, love to do that, but you can't do that.
Okay, but is it complementary? Or is it just new? Are there any trade overlap on some of the trade lanes that you have in Germany already now? Or what's the reason? Because if you -- I mean, after all, they have a bit of warehousing. You write that yourself in the statement. And if you include the leasing commitment as well, then we get some multiple which is 16x, 17x, as far as I can calculate, 16x, 17x EBIT...
I think, if you add the IFRS 16 debt to the enterprise value, then you need to adjust the operating profit for that also. So I think that will take the multiple down, for sure, from the 15x to 16x you have, but then if you include IFRS 16, we are around 11x. But it is definitely complementary. I mean Germany is the center of gravity. And we have a lot of continental European activities on the -- both full and part load and groupage side of things. SCHMALZ+SCHÖN offer it all, so they offer full loads. They offer part loads. They offer groupage. They offer logistics services. And Germany is a market that will generate cross-synergies for the rest of the countries, both in the North, in the West and in the East, going forward. That is our expectation.
I mean, how much is warehousing out of what they do?
That's a good question. In terms of revenue question...
I'll just come back on that, Lars. And maybe I'll just give you a call and give you a number.
Yes, no worries. And then the last one and then I stop and get back in the queue. So net working capital: Christian, you mentioned that as well. Is there anything particular here? And is this sort of -- can we expect a release in net working capital into the second half?
I would definitely expect a release. I mean we talked about the Danish net working capital of DKK 80 million last quarter, and we all -- we got all that back. In the U.S., they've got a new system. They got a huge pickup in consignments, and therefore, they have a little -- been a little bit behind working with the new system and the many consignments. And then you have the normal pickup as we have as well. So if the rates come down, then we would also see that the net working capital is -- come down, but as we also said, the supply chain services, they are binding more net working capital than what you have seen in the other business areas of NTG, so we'll probably have difficulties coming back to the prior level. But we will see it come down in the second half.
The next question is from Ulrik Bak of SEB.
Mathias and Christian, also a couple of questions from my side. The first one, on your guidance. As far as I understand, this positive impact of this DKK 35 million was not included in your Q1 guidance, which means that by maintaining your guidance, your underlying earnings guidance is actually downgraded. Can you just elaborate on what areas of your business have underperformed year-to-date? Or is it -- if it -- it's something that happened during Q2, also a drag from Q1. And also if you've changed your expectations for the second half of the year. That would be my first question.
Thank you, Ulrik. Just to make sure, we have also told everybody, when we did the guidance, that there was so much uncertainty that we were guiding in the full range of the guidance. And of course, we're not on the way to the top of the guidance, if you looked at the second quarter. And as I said, as we have said, road is under pressure. They have not earned the same as we have expected. We experienced the challenges in the Air & Ocean division. We are seeing that coming up compared to Q1, so it is mainly road that is under pressure. And it's particularly in the Nordics with the squeeze on the gross margin yields.
Okay, so for the second half of the year, it's not like you've adjusted your original assumptions for that given what you've seen year-to-date.
But of course, if you're not, in Q2, hitting where you thought you would be, then it would also be very optimistic if you thought that the remaining 2 quarters would be on the same level. But as I said before, we expect to see some price increases and the squeeze on the gross margin lighten a little bit in -- within the coming months, so yes, we are a little bit -- we haven't -- as you also see [ on the bridge crossings ] on the Maut statistics in Germany, the market is down. We have gained market shares in a very competitive market. So it is a hard market at the moment. And we expect to see the gross margin coming a little bit off a little later in the year.
Understood. And a question on these price increases that you expect to phase in during the second half of the year. When we look at market statistics, the German Maut or [indiscernible], market seems to be roughly flat, perhaps a bit in decline, so what makes you confident that those price increases will stick and customers will accept them?
That's a fair question. And as mentioned during the presentation, it will definitely be differentiated price increases. And it won't be any "one size fits all" price increases, not by market and not by customer, so it's an individual [ evaluation ], but given the development that we are seeing and the pressure that we are seeing from the spot market in terms of recurring capacity and also from the haulers perspective, we do believe that the contracts -- some of the contracts entered into, that the underlying assumptions for those contracts have changed sufficiently in order for prices to be adjusted. But it is a discussion that we need to have with the clients. And we need to be profitable in terms of the businesses that we do; and I think that, that goes for all market participants.
Understood. And then a question on the Air & Ocean. You did quite nice organic growth, 17% in the quarter. If you can provide a split of price and volume would be much appreciated but also perhaps some flavor whether -- what we should think about in -- for Q3 and Q4. You talked about squeezed yields. And also we see it on the gross margin also quite diluted, but should we expect some sort of restoration of the yields levels or -- and the margins, particularly also thinking about what's happening in the Red Sea and what's been going on with the container rates? Should there be some uptick here in Q3 and perhaps also in Q4 if this situation is not resolved?
That's also a good question. In terms of the split between volumes and prices, I think, I mean, this will not be the first time that we provide that particular split, but it is definitely a combination. And we have seen solid progress on the volume side also. In terms of expectations for the remainder of the year, I think, as I also mentioned, that part of the activity increase is likely to be caused by the early onset of the peak season, meaning that there will expectedly be some slowdown during the second half of the year as the peak season tapers off also earlier than previously anticipated, but for the time being, I think we are seeing a stabilization also in the yields. And we are seeing increasing file sizes also, especially on the air side, which is supportive on the gross profit side. So we are overall satisfied with the development in the Air & Ocean division and are carefully optimistic about the second half of the year.
[Operator Instructions] Gentlemen, there are no more questions registered at this time.
Okay, perfect. Well, thank you, everybody, for participating on this conference call. Thank you for all the questions. And have a nice day.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.