Ladies and gentlemen, welcome to DFDS conference call on acquisition of Turkish logistics company competitors. I'm Sergen, the conference call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on the telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Torben Carlsen, CEO. Please go ahead, sir. Thank you very much. As usual, I'm joined by Karen, our CFO, and Søren, our Head of Investor Relations. Thank you for joining the call with this short notice. We had hoped that there would be 30 minutes more, but the funds took a little bit longer to clear. But thank you for those who managed to join. Let's turn to page three, just to remind everybody what the deal is. It is basically that we can now combine our ferry and road model that we successfully display in the North Sea to also the Mediterranean, Turkey, Türkiye, Europe flows. Ekol International Transport has around DKK 3.3 billion revenue and 3,700 employees that now are DFDS employees. We get access to global manufacturer customers in high-growth Türkiye, Europe transport market, solidifying the nearshoring strategy or the strategy to get closer to the markets where you see nearshoring growth fueled. The financial performance of the acquired network needs to be turned around as there is an expected loss for the full year 2024. The ambition is to get back to a 5% EBIT margin by end of 2027. Turning to page four, Ekol is strategically an excellent fit with our business model. It feeds volumes to our ferry network. It adds scale to our road and rail network, and it gives access to a new customer portfolio for our logistics solutions. Turning to page five, a little more detailed on Ekol. It's primarily full load and part load transport from Türkiye to Europe. Most of their transports are not just road, but intermodal using either road ferry, road ferry rail, road rail combinations. There's a very high share of in-house haulage. There are third-party ferry rail operators. They offer complementary logistics services, warehousing, customs. The large customers are European and global manufacturers with production in Türkiye. The sectors served are the same as we have with our ferry, automotive, industrial parts, textiles, garments. They have their own office in 10 European countries in addition to Türkiye. As mentioned in the beginning, on page six, the financial performance is challenged. There are commercial and operational challenges, some loss of market share. Türkiye is in the special situation that there's high inflation. The currency is not depreciating to the same extent against euros. So companies with euro inflows and primary cost in Turkish lira are in general challenged, and that is also the case for Ekol, who then in addition, with some loss of market share, have some overcapacity. We have, together with the Ekol management team, built what we believe is a solid turnaround plan looking at the root causes. First, we expect that there will be annual revenue growth at least 5% per year. We do think that with the measures that will be taken and the good work of our new colleagues, that we'll be able to get the company back to around a break-even by the end of 2025. As you can see in the table, the company will post a negative result this year. 3,700 people, as I said, 1,300 trucks, 4,000 trailers, swap bodies, 600 containers, and cross-docking and warehousing facilities that we are taking over. A little more detail on page seven on the turnaround and integration plans. Of course, first, it's an integration of our teams. It's to make sure that we increase the volumes and also consolidate across the now combined network where we can, increase the equipment utilization, align the trade flow changes that followed from the situation I mentioned before with the depreciation misalignment, and then, of course, make sure that customers that are euro customers also cover the increases that we see from the inflation in Turkey, equipment utilization, equipment efficiency, and then coordination between the different modes of transport to maximize utilization. In phase II, also year one, but later, it's about integrating the acquired European network with the existing network. A lot of pre-work has been done, but now we need to go to implementation and, of course, verify our assumptions to see how we can maximize the benefit of this strong addition to the network and do that in a profitable way. Where there are volumes that are going on road, we will try to, of course, use or redirect them to our ferries, and then we have customs clearance also as part of this deal, and we'll integrate that with our extensive customs organization to leverage best practice both places, and then when the turnaround has happened and looking more forward, we are, of course, looking at then how to build the product portfolio, leverage what we have in the remaining system both ways, and optimizing the network for growth, so on November 1, we sent a message that this transaction that we signed in April had been abandoned. On page eight, there are some details of the now entered deal. It's an enterprise value of DKK 1.8 billion, 0.55 EV sales multiple. The change to when we abandoned the deal is that debt incurred since the signing is now excluded from the revised agreement. We have entered an option agreement that gives us the right to extend our good and strong cooperation with Yalova, which is owned by the same owner as the Ekol International Transport Network. The equity value is unchanged since last, and we have financed it with existing funds and new financing. Turning to page nine, impact on DFDS, immediately our outlook remains unchanged. We see there's a stabilization of our Mediterranean route network volumes. What do we mean by that? Well, with Ekol being part of our family, their trailers will travel on our ferries wherever it is feasible. And then with the transaction and the relatively compressed earnings, there will be a leverage increase of 0.3 x, all other things equal. So in conclusion, on page 10, our Mediterranean business model with today's move has been strengthened. Our proven ferry road business model from Northern Europe is now replicated in the Mediterranean with a very strong base cargo. We get access to end customers in the high-growth Türkiye- Europe transport market and further position us to take advantage of the nearshoring or the deglobalization that takes place in the world. And it gives us a possibility in the current market situation in Turkey where new competition has entered to enhance our possibility to protect and grow our stronghold in the Mediterranean. So with that short intro, we will pass over for Q&A. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time, and we have the first question coming from the line of Lars Heindorff from Nordea. Please go ahead, sir. Yes, good afternoon and congratulations with the deal after all. A little bit forth and back. The first one is on the integration costs. I don't know if you can say anything. Will there be some integration costs? What magnitude? There will be integration costs, particularly for IT. And over a three-year period, this is together with all integration costs approaching a three-digit million kroner in Danish kroner. Okay. And the anticipated increase in the EBIT margin in Ekol to 5% by 2027. I don't know if you can quantify or give us any indication. What's driving that? Is it just market improvement? Is it the integration of the systems? Is it that you don't expect hyperinflation in Turkey anymore? What's some of the details behind that? The company in the past has made 5% EBIT margin during hyperinflation. So it's not the hyperinflation that is the problem. The challenge is that Türkiye has kept the value of the currency higher than normal economic markets would do with the currency in an inflationary situation. I think they do that on purpose to curb inflation. So there will be a period where there will still be a challenge in terms of the cost pressure versus the revenues in euro. But the primary path towards recovery of the margin are to, if I call it, regain commercial strength in the market. It's a very strong organization. With the ownership of DFDS, we are certain that some of the lost volumes and businesses over this period can be regained. And of course, also in a growing market overall. Then it is that the company has a higher cost base than some of the competition due to the reduced volumes they have experienced and therefore some empty equipment, less utilized equipment. We also believe that this part can be addressed. Then it's the integration of the European business with our business that should produce benefits. Okay, and they achieved also 5% margin before the pandemic? I know you showed us the numbers that it was 4.8 in 2022, but if you go back a bit further and before the pandemic, they were still operating with 5%? I don't have all the historical numbers here Lars, but a 4%-5% margin or even 4%-6% margin in these markets is not unusual. No, not during the pandemic. And then just on the terms, clearly the price is different. When you originally announced the deal back in April, it was 1.9, and now you say 1.8. But apart from that, what are the changes to the terms if you can say anything about that? Because this is now two weeks ago when you announced that you were stepping away because Ekol hadn't fulfilled some terms which should have been fixed before the closing. I mean, what has changed besides the price? The price, but also the enterprise value, which you will not see from the numbers, have improved compared to two weeks ago and more than the 100 you can see there. Then we have agreed an extension option in the strategically very important terminal of Yalova as another change since last year. And then there were a couple of the less but also important things like transfer of SAP licenses, et cetera., that have come in place since then. And the debt level, how much has that increased? Because now you say it's equity value of 1.5, which means there's a debt of 300. What was it before? It has not. In the deal you see now, it has not increased since April. If we had done the deal on November 1, you would have seen an increase. How much? I don't think it's appropriate. The important thing for you is to know what we actually did the deal on. Okay. All right. Thank you. You're welcome. The next question comes from the line of Ulrik Bak from SEB. Please go ahead. Yes. Hello, Torben. And also congratulations from me on landing the deal. Just a follow-up on the purchase price that Lars just asked about. So you say that the equity value is unchanged, DKK 1.5 billion, and the EV is now DKK 1.8 billion versus DKK 1.9 billion in April. So the debt level has declined from 400 to 300. So can you please just elaborate why is it that you say debt level has decreased more than that? The debt level in April and the debt level at the end of October were different. Okay. So it's not just the discount of 5% that you're getting versus 300? Again, I don't think it's appropriate that we here on a call like this talk about. I think the important thing for you is to see what have we actually paid for the company and strategically, does that make sense? It's a stretched price. I think everybody can see that given the current earnings levels, but with the competitive situation in Turkey, on balance, we believed that back in April. We believe it now with the increased or intensified competition in Turkey, but financially, it was just a little too stretched, and there were these solvable conditions as well, and now the parties have gotten back together and have put together a deal that we all can live with. Okay. Then a question on the 2024 performance. You say that earnings are negative for 2024, but can you quantify it in any way? And also, you don't provide an EBITDA estimate for 2024. Can you guide us here as well? Yeah. EBITDA is probably also a red zero. So that's where we are. It's been a tough year, as I mentioned, for the reasons before. We don't think it's anything structural. They have maybe been a little bit harder hit than the general industry in Türkiye, but still enjoys a very, very strong position with the main industrials. Okay. So for 2025, you state that you want to break even by year-end, and then you have the integration cost of a three-digit million amount. So what kind of earnings drag from the operational business would you expect for 2025 from the acquired company? We have not been able yet to do the timing over 2025. As you can realize, we focused a lot on getting the transaction back on track, and numbers are a little bit delayed due to the nature of the carve-out of this business in the existing business in Turkey. We'll come back in connection with Q4 with a more detailed outlook. Okay. Understood. And you say that this turnaround is nothing structural that's harming the earnings of Ekol. But given that it's been such a long process, has Ekol lost any key personnel, any key customer relationships during this process? They have, but they may not have lost relationships fully. So they are definitely recoverable. They have lost some people that every company would lose in such a prolonged period of uncertainty. Turkey has a lot of good people. Ekol has retained a very strong team. And we believe that the certainty that is created today by the seller and by us by doing this transaction is very welcome. And we will certainly be able to get the right quality of the organization in Türkiye, but also in the European network. Okay. And then in terms of your unchanged 2024 guidance, it was my impression that part of the downgrade from two weeks ago was driven by the termination of the Ekol deal. So am I mistaken here, or are there still some costs that are related to the Ekol deal which were higher than initially expected? I think, obviously, we don't have those costs any longer. We will have Ekol. We will start to incur costs connected to that. So we still think that this range is the right range. Will we be in a more interesting end of the range with this? Probably. Okay. And then the last question here is on your leverage level. At the end of Q3, you had a net debt to EBITDA of 3.3 x. It will now be increased by 0.3 x according to your slides. And with Grimaldi also putting pressure on earnings in 2025, how should we think about your leverage level going into 2025 and also your ambitions to distribute capital to shareholders and also your midterm target of 2.5 times? Are these still realistic? I think maybe there is a slight improvement to what you say there from the sale of the Oslo ferry. This is just the individual impact from this deal. So whether we end at 3.5 or 3.6 remains to be seen. But the dividend capacity, share buyback capacity, we need to discuss, of course, with the board and what their views are in connection with the finalization of the year. Are we delayed with the 2.5 leverage? Yes. Compared to 2026, absolutely. Okay. That's very clear. Thank you. We have a follow-up question coming from the line of Lars Heindorff from Nordea. Please go ahead. Yeah. Hi again. Thank you for taking my follow-up question. So it's just the difference between EBIT and EBITDA suggests depreciation levels to the tune around DKK 160million-170 million. Can you say anything about that depreciation? Is this hardware? Is this customer relations, i.e., amortizations? And do you expect that it will be roughly the same level in 2024 as it was in 2022 and 2023? Just checking a few numbers. I think maybe the current depreciation is a little bit less than what you indicate there, but maybe we can come back on that. And then I lost a little attention because I was checking that. What was the other part of the question, Lars? That was the composition of the depreciation in Ekol. Sorry. Sorry. Yes? are our customers meaning composition? This is primarily trucks and trailers. Okay. So it's okay. All right. If there is, it's very, very limited. There's no IP or anything like that. It's trucks and trailers. Okay. Okay. Maybe some warehousing stuff. Yeah. Yeah. Understood. Now, maybe just the last one. Maybe I'll be pushing you a little bit here, but you've been acquiring quite a bit of companies since 2020 in the logistics space. We've been talking about this before, that integration is maybe not where it should be. HSF is one example. And IT system still is not in place. What makes you so confident that you can do this? Also, now you talked about the SAP license and stuff like that, that you can do that turnaround if this is sort of most of that turnaround is caused by things that you do and you decide and not by the market? I don't know. I'm not sure I fully understand what you're saying. Obviously, it's a challenging integration. The good thing about Ekol is that it's full load, part load using a large part of ferry. It's what we do in the system. So our systems are better prepared for this integration than for the HSF integration. Focus will be on the commercial recovery and the cost-out exercise rather than integrating the company from day one. There will be some ERP systems and others that we will want to prioritize, but other than that, we'll focus a lot on the, you can say, commercial operational elements. Are we extremely confident and comfortable that we can achieve that? I think we are fairly confident, and in the companies we bought with similar services, we have actually been quite successful. And again, here, it is a big part of the collaboration between ferry and logistics that needs to work as well to achieve this. And then there is a structural thing with the Turkish market, the currency parity, and how that has both put a pressure on costs and has changed the balance of flows. And those, of course, we need to also see the market help us a little bit. I recently visited an event with the Turkish Finance Minister. So I think for him, there's nothing surprising in what they are doing now. And towards the end of 2025, if it goes with inflation as they're hoping, they will also relax the currency parity. So hopefully, we will both be able to pull off the plans we put down ourselves and also get a little help from the macro when looking nine, 15 months ahead. Okay, and just how much of the margin uplift is caused by the cost-out? We cannot give you those details at this stage. Okay. Can you say anything? Is this when you talk about own production in terms of because also since the size of depreciation, they must own quite a bit of trucks? So assume that the share of own production is fairly high, or maybe I'm mistaken? own production is very high, and we will, of course, look at whether there is a possibility to change that, but of course, it's also the cost-out. It will be a combination of filling the network with more volumes, which will automatically help the utilization and efficiency, and then it's making sure that we have the right setup. Okay. All right. Again, thank you. Sorry. Congratulations. Thank you. As a reminder, if you wish to register for a question, please press the icon on your telephone. There are no more questions at this time. I would now like to turn the conference back over to Torben Carlsen, for any closing remarks. Thank you very much. And thank you again for the quick calling in. Sorry for the short notice. And also, some apologies for not being able to answer all the questions in detail. As you can imagine, this has been a tough process for us. First, the parties walking away from each other and then coming back together. As you can see, we are closing at the same time as we sign here to make sure that there's no uncertainty in any of the organizations. We have very excited new colleagues. We have the first people on their way to Turkey now. I'm joining them early next week. And we will come out with more detailed information when we get to Q4, when we've had a chance to solidify the plans and making sure that we get the latest up-to-date situation in the company. So thanking for your patience as well. We are absolutely convinced that this is the right way forward for DFDS. And hopefully, we will soon be able to demonstrate that further. So have a good weekend. And once again, thank you.