Welcome to DSV Interim Financial Report for the second quarter of 2023. For the first part of this call, all participants are in listen only mode. Afterwards, there'll be a question and answer session. To ask a question, please press five star on your telephone keypad. This call is being recorded. Today, I'm pleased to present Group CEO, Jens Bjørn Andersen, Group COO, Jens Lund, and Group CFO, Michael Ebbe. Speakers, please begin. Good morning, everybody, and welcome to the Q2 conference call here from Hedehusene in Denmark. We're pleased to go through the results that we have published this morning. We might as well go straight to page number two, where you will see the agenda and also our forward-looking statements that we would kindly ask you to read. Yeah, the agenda is as you have seen on many previous occasions as well. As we have said the last couple of times, when we get to the Q&A, if you could restrain yourself to asking only two questions, and also not ask questions that have already been posted. Let's go straight into it. On Q. On page number three, we have put down some of the highlights of the first half and of the second quarter. We're very pleased about the performance. We are happy about the result that we have published this morning for the second quarter of the year. It exceeds our expectations a little bit as we also saw in Q1. We actually do believe that we have seen a pretty good and a solid financial performance across all business areas in a market which is still soft and characterized by low volumes which we will get back to. The result has also led us to upgrade our guidance for the full year. Now, it represents a range from DKK 17 billion-DKK 18.5 billion, meaning that we have taken away DKK 1 billion at the lower end of the range and increased the top part of the range with DKK 500 million. Not to forget, it's all about free cash flow, of course, and I think we can once again demonstrate a satisfactory position when it comes to the cash flow. It has been supported by a significant reduction in net working capital, like we saw in Q1 also. Really nice to see that we are still able to convert the earnings of our company to cash, which is, it is all about. Earnings per share, I guess this is also what you get as a shareholder. It's down, but it's just down 3% year-on-year. Of course, also supported by a lower number of shares, which is a consequence of the share buybacks that we have done in the period, and that is also what we are going to do now. We have announced a new share buyback program of DKK 4 billion for the coming three months, and that has been initiated also this morning. Of course, when you look at the numbers, needless to say, we are comparing now Q2 this year with the best quarter in the history of DSV in 2022. EBIT is down 35%, but if you take an average of all the quarters we had last year, it's down 25%. At least the comparisons are getting easier as we go along and enter Q3 very soon. Now we go to page number four, Air & Sea. Of course, when you see a result which is down 40% compared to a year ago, it's highly unusual in DSV, but I'll still characterize the result as being very strong, the market conditions taken into consideration. Gross profit, of course, as you can see, in the quarter, down 27%, impacted by lower volumes and slightly lower yields. Actually, air yields, as you will see in a second, holding up pretty good, but sea freight a little bit down. What is good to see is that the freight markets have largely normalized after all the commotion we saw the last couple of years with all the significant supply chain disruptions we experienced. I think it's great to be able to service our customers in a good manner and live up to the expectations that they have to a company like DSV. We, as you will see in a second, we are underperforming the market, particularly in air freight. I'll come back to that. It has led to a further reinforcement of our commercial efforts. We have plans to get back to growing faster than the market once we see the results of the efforts that we have, and also when we see probably a more normalization of the markets, and particularly in air freight. Conversion ratio still, I think with all margins, it can stand the test of anybody in the market. We are pleased and proud about still being able to deliver industry-leading margins, and the conversion ratio have stayed above 50%, which is really nice to be able to see. Also, partly a consequence of the management's strong focus on cost in the quarter. On page number five, Air Freight, you can see that we have more or less the same development in volume as we had in Q1. 21% down, volume-wise, year-on-year, whereas the yields are more or less the same. I think if you actually convert the yields to US dollars, they are the same or even a little bit up. It is a trade-off, we do live from the GP, and of course, if you protect the yields, of course, you see sometimes a little bit negative development on the volumes. This is the way we have always done it in DSV. It is profit over growth. We do see some still behavior in the market, which is maybe not super rational. We have decided to step away from those opportunities, and it's also maybe worth to notice that we are not exposed to some of the verticals, which are actually performing quite nicely in the last quarter. To mention one is perishables, which actually had a positive growth, but with yields, which are only a fraction, of course, of what we have in DSV. What is also important to stress is that even though we do report the volume developments in air freight, a number of tons, number of TUs and sea freight, respectively, the internal measure that we use is number of shipments, meaning the number of invoices that we send to our customers. We've calculated that both for air and sea is something approximately 7 to 8 percentage points better than what we see in terms of the overall volume. That is the old explanation that we would rather move two times 500 kg for our customers than one time 1,000 kg. The profitability is twice as high on that, even though it is still only 1 ton in these calculations. Internally, the developments look much better than the volume development that we show on this slide. A little bit different development in Sea Freight, better market developments for DSV. We are closer to the market, maybe a couple of percentage points off when it comes to growth. 7% down, an improvement on the last two quarters. Again, as I said, the trade-off is that yields are then dropping a little bit, so just to slightly below DKK 5,000, which is still something which we are happy about. Transpacific and Transatlantic are still the weakest trade lanes. Asia to Europe are actually doing quite nicely on that on that front. We hope that we will get into positive territory when it comes to volume growth, when we enter the second half of the year. Comparisons coming down, inventory is probably also reaching a level where we can anticipate somewhat of improved market conditions on sea freight. We go now to page number seven, Road. Not a lot to say. Rock solid again. Great result from the organization. We've seen again market share gains in Road. Unfortunately, it's not possible for us to quantify, as there are no official metrics or statistics that we can use. Both domestically and internationally, we feel that we are taking market share. There's still a high demand for our new groupage product in Road, and it's really nice to see. Particularly Germany and the Netherlands have performed really well, and a country like Germany, which is still the engine in Europe, performing is really a pleasure to see. The flatlining of the graphs below have stopped a little bit, and we've seen an uptick both in the gross margin to 21%, and of course, also an EBIT margin of 5.4%, which the division can be really proud about. We congratulate also everybody in the Road division for a job really well done. Last but not least, before I hand over to Michael Ebbe, is page number eight, Solutions division. We have seen the impact, also of the low activity levels in Air & Sea, and particularly in APAC, in the warehouses we run in APAC. Still, again, margins, which also can be compared to anything in the industry. We are happy about that. We have seen that the cost base have been impacted, partly by inflation. We are also here for the long run, so of course, we are not only looking at the results from quarter to quarter, but we have done some investments which will hopefully enable us to see or to support EBIT growth in the future by expanding the warehouse capacity, which is something which we believe will continue in the coming quarters as well. DKK 613 million is a great result for the Solutions division, and we are happy about the results and also the plans that the management and the team running the Solutions division have for the coming period of time. I think I will stop here and hand over to you, Michael. Please. Thank you very much. If we go to page nine, there's a few highlights here for the P&L for the first half of 2023. If we look at the revenue clearly impacted by the lower freight rates, as well as the volume, as Jens Bjørn just alluded to. It's clearly a significant impact on that one. Gross profit was supported by our strong yields that we've been able to keep in Air & Sea, and also the improved margins in both in Road and also in Solutions as well. If we take a look at the cost base, we've had some questions about that earlier as well. We have initiated some few cost savings programs. It's important to say that we keep an eye on the cost base every month, every week, so it's not something that we have initiated large programs, but even though it seems like we have been able to reduce number of FTEs of roughly 1,900, it's mainly within the Air & Sea and the white collar staff there. It's also clearly that we have been seeing the cost inflation, so that works the other way around that. Another number that a small comment attached to that is the FX adjustments. It's like it always looks a little bit strange. That's as usual, our internal funding that give rise to these deviations or fluctuations there. It has no impact on our cash flow. Another thing that worth to mention here is the tax rate which is close to 25%. Especially this quarter, it has been impacted by the dividends that they have received from the subsidiaries from the last year high earnings. Clearly, when they come to Denmark, we have to pay a tax on the dividend, that lead to higher tax payments this year. We stick to the long-term target of have a tax rate around 24%. I think that's also important to take notice of. Of course, like Jens Bjørn mentioned, the diluted, adjusted earnings per share for the rolling 12 month, this has been maintained at a quite high level, nearly DKK 70 per share. If we go to the cash flow slide on page 10, we are pleased with the cash flow we have had reported here for the first half of 2023. Clearly, the reduction of our working capital have a significant impact, offset a little bit by the higher tax payments that we have done here. The net working capital improvement is, of course, impacted by the freight rates, but it's also the work that we have done to continue and optimize our processes here even further after the last couple of integrations. Currently, the net working capital sits at around 1.8% of the annual revenue. I think I've earlier said that we will be around 2%, so I think that's still the target. We cannot expect to see continued improvements in the range that we've done this half year. Our gearing ratio is also quite low, 1.2%, so we will initiate, or have this morning, initiated a new share buyback. I'll come back to that later. If we look at our balance sheet, we have a strong balance sheet still. We have committed loans and facilities, which are duration of 7.8 years, and we pay roughly 1% in interest. It's a strong balance sheet as well as the cash flow, which then lead to the initiation of a new share buyback. If we go to page 11, mentioned a couple of times, we have started a new share buyback of DKK 4 billion this morning. That will run onto 23rd October, the next three months. As of today, or this morning, we have acquired 5.7 million shares back here in 2023, an average price of DKK 1,275 per share, and we have around 2.7% of own shares of the share capital. This will mean if we take this initiated share buyback this morning into consideration, we have committed currently to allocate DKK 13 billion, nearly DKK 14 billion back to the shareholders. Of course, depending on how the situation looks, when we come to the Q3 reporting, we will, of course, assess if there are room for even further share buybacks to be initiated back then, as we have always done. It's also important to say that what you see here in Q3 and Q4 for the last program, it's estimations of whether it will be in Q3 or Q4. It, of course, depends on the execution from the banks. It's under the safe harbour program, we are not able to kind of say to you guys whenever that will be brought back. Next to the last slide from my side, as Bjørn already mentioned that we've decided to adjust our outlook a little bit. We have upgraded to an area of the EBIT between DKK 17 billion and DKK 18.5 billion, and a tax rate of around 25%. Clearly, the updated outlook, we have assumed a recovery in the global trade, so no significant worsening of the current economic environment in the second half year of 2023. We also, in terms of the normalization that we have spoken so much about, we expect that to continue, and also a further decline in the gross profit yields for Air & Sea compared to the level we had in first half of 2023. I think it's important here to mention that there is a connection between the yield and the volume. We've talked about that several times, and I expect that you'll have some questions to that as well. It's important to say that it goes together, like we have said all along. For the Road and Solutions, we expect the markets to be flat or decline slightly. For the tax rate, I already touched upon that. Of course, the currency exchange rates, if they remain at the current level, that's also an assumption that we have made for this upgraded outlook for 2023. I think that was it from my side, so I think we can go to the Q&A session. Thank you. If you wish to ask a question, please press five star on your telephone keypad. To withdraw your question, you may do so by pressing five star again. There'll be a brief pause while questions are being registered. The first question will be from the line of Cristian Nedelcu from UBS. Please go ahead, the line will now be unmuted. Hi, thank you very much for taking my questions. The first one, if I look at 2024 consensus, the GP per unit in Air & Sea are already around DKK 9,000 and DKK 4,500. Are you comfortable with that sort of levels? You've been delivering stronger yields over the last few quarters versus expectations, so are you comfortable with that level of normalization versus your old targets? The second one, looking a bit at the cost in, again, in Air & Sea, the cost between GP and EBIT, can you tell us a bit how you expect the second half to play out? You talked about the reinforcement of commercial efforts. I don't know if that comes along with a increase in cost. Anything more on restructuring, that you can do to bring costs down? Just the moving parts, if you can tell us how to think of the second half versus the first half. Thanks very much. Yeah, we don't guide. Thank you for that question. As you know, we don't guide on specific yields, but with the assumptions that we will get back to a little bit better performance growth-wise, it's not a bad what should you say, range that you are mentioning in your question. It's something that we can relate to, so we are fairly kinda comfortable with that. Should it mean that we all of a sudden start to significantly outgrow the market? As I said before, it's a trade-off. It could have the negative consequence that the yields then would go down, but then the absolute GP would still be fairly okay. The yields you mentioned are okay. When it comes to the reinforcement of the commercial activities, you should not assume any cost to that. It's more the focus we have, the way that we do deal with strategic opportunities in DSV and, the way that we kind of, in a more structured way, deal with the sales activities, with the pipeline management, the way that we also control the commercial organization to a slightly different degree than what we did maybe in the past. From a general point of view, you should also not expect any cost to be booked under special items. What you should expect is, of course, if we don't see an improvement going into the second half of this year in volumes, that we will again, of course, readdress the cost base and do the necessary, as we have done in the past also. It's simply we have assumed a pickup in volume in the cost base that we have right now. If that does not happen, a natural consequence for us is, of course, that the cost base should shrink in line with the volumes. That's very helpful. Thank you. Just a very short follow-up, though. What drives your assumption above DKK 8,000, DKK 4,000? What is it that they're gonna end up better than what you were expecting at the Capital Markets Day? Is it the mix? Can you provide any color? Why are you comfortable in DKK 9,000, DKK 4,500? I said it's, we are not guiding. I don't wanna get into too many discussions about the numbers. We have moved away from the giving specific guidance on the yields. It's a combination of many things, as I said before. The GP also is constituted on the number of shipments that we have. Sometimes that is also calculated in a different way than the yields. Of course, already since the Capital Markets Day that we held, the service catalog and the number of services that we offer to our customers have increased. The, you can say the complexity in what we offer to customers have also increased. We don't wanna get into a situation where we sit and discuss if it's gonna be a couple of hundred DKK up or down on the yields. We have the long-term financial targets that we have set, we are super comfortable with those, and you should measure us on the progress towards those. Very helpful. Thank you very much. Thank you, Cristian. The next question will be from Tobias [Fromme] from Bernstein. Please go ahead. Your line will now be unmuted. Good morning, everyone. My first question is regarding the supply chain complexity. Well noted on your APAC airfreight and sea freight volumes show the weakest development. I was wondering if you see any evidence of companies relocating their production away from China or other structural relocation trends, so supply chains becoming more complex as a result, and has this also played into your upgraded 2023 guidance? The second one is essentially, yields obviously very good, volumes generally softer. Was there anything else driving the yield besides the smaller average shipment sizes? Is this a deliberate commercial decision or simply the market to have smaller ship sizes? Lastly, could you maybe shed some light on the development of eTouch, any news on that being rolled out to sea freight right now as well? That'd be appreciated. Thank you. On the supply chain, it's correct that we do see more and more of our companies, of our customers. They have this China Plus One policy, where they try not to be too dependent on one supplier. That could also be not to be too dependent on a supplier in another country than China. The fact that supply chains are being more complex is absolutely a right assumption that you set out. This is what we see. Production are being moved to neighboring countries like Vietnam, Indonesia, India, also benefiting. It's all countries where DSV, they have a strong foothold, so we can support our customers when they move. That only makes things more complex, which is also better for us. You are right in saying the yields, it's more the markets that shipments have become smaller. It's not something that we are, have deliberately chosen. What we have deliberately chosen, as I said initially, is to not participate in the tenders where rates reach a level where it will be break even or even loss-making for DSV. As hard as it is, good, old, large clients would simply say no. It's actually hard for clients to leave us as well, but if they get some sort of fantasy offer from somebody who has fixed capacity, they simply feel an obligation because the cost savings can be rather large. We will then be patient and hope that that these customers will eventually return to DSV. To be honest, I didn't really understand the last of your questions. I think it's a product that one of our competitors are offering. I think that the last one was more on eTouch. Any light on that? What has happened? How are we doing on that end? I think it's actually a colleague of ours that have reported this morning, that, what can I say, has this specific way of describing certain digital services that they offer. Maybe you can talk about the digitalization efforts that we are doing and the strategy. Yeah, of course, driving productivity in a company like DSV is very much about digitizing our services and automating some of the back office workflows, and I think we have industry-leading productivity in our company. Of course, we also have similar, what can I say, services that we produce, where customers, they can to a large extent basically perform the service or request the service digitally, and then we can produce it in an automated way. I think this is fairly standard, and it's something that many of the players in the industry, they are capable of. Thank you. Thank you, Tobias. The next question will be from Alexia Dogani from Barclays. Please go ahead. Your line will now be unmuted. Good morning. Thank you. It's Alexia Dogani from Barclays. Two questions as well, please. Just firstly, could you give us some color on the cost per shipment evolution? I guess, should we expect your focus on higher yielding, cargo to kind of come with a bit more cost because of the service suite, kind of demanding a kind of higher service intensity? Any color you could give on the cost per shipment in Q2 and forward would be greatly appreciated. Then when we look ahead for 2024, and the comments you just mentioned, Jens, on the competitive landscape- Should we expect to be able to sustain the level of earnings you're delivering this year, given the normalization has been slightly smoother, perhaps, than we would have thought at the start of the year? Thanks. Sorry, it's not that I wanna comment on everything. I really wanna say something on this. When you look at, on the cost per unit, you should not expect the cost per unit to increase. I think we actually have a great opportunity when volumes start to kick back in in terms of operational leverage. We have cut costs, Michael explained that before, but it is simply a matter of fact that it is more easy for the operational units to increase productivity in a growth environment. If volumes are starting to grow, we will not start to rehire a lot of the people. We will see improved productivity, and also that should have a positive effect on the margins. It is simply much, much less complicated to do when you are a department or a branch manager out in the DSV organization, simply to cope with a little bit more volume in the existing cost environment. When it comes to 2024, it's a little bit too early to give guidance on that, but we do know what the consensus is in the market. I guess from an overall perspective, there's nothing we see which kind of disturbs us greatly. I think you guys, you've done a good job when it comes to kind of putting in some decent assumptions for 2024. Thank you. Thank you, Alexia. The next question will be from the line of Robert Joynson from BNP Paribas. Please go ahead, your line will now be unmuted. Good morning, everybody. A couple of questions from me, please. First of all, just on the EBITA guidance for the year. The revised guidance implies an average of between DKK 3.8 billion-DKK 4.6 billion per quarter for the second half. The upper end of that is only just a little bit less than the run rate during H1, but the low end is almost 20% less, so it's quite a wide range. Could you maybe just provide some color on what scenario you're thinking about for the low end, and likewise, for the high end of that guided range? just second question, a quick one, just with the Air & Sea division, the number of employees reduced by about 6% between the end of last year and the end of Q2. Should we expect to see further reductions during the second half, or would you think that headcount is now once again optimized in that business? Thank you. Yes, I will try to give a go on your questions, Robert. In terms of our guidance for... You're right, how it looks for the second half of 2023. Clearly, it's also a range. We don't know all the facts for of what will happen. It is based on a couple of scenarios, and this is the best, you could say, estimations that we have done. It is a matter of the combination of yield and volume, where if we have higher volume, we expect a little bit lower yields, and the other way around. That said, of course, the yields, like as Bjørn mentioned earlier, we expect that to decline, and then it's a matter of how much the volume will develop. In terms of number of FTEs in the Air & Sea division, it's a thing that we monitor closely, the efficiency of the per FTE and the number of shipments per FTE, so we monitor that closely. As Bjørn mentioned that if things are as they are right now, most likely there will be a small reduction in number of FTEs, but no dramatic changes are expected based on what we see right now. All clear. Thank you. Thank you, Robert. The next question will be from the line of Ulrik Bak from SEB. Please go ahead. The line will now be unmuted. Yes, hello. Just a question on your updated outlook. Previously, you have communicated some assumptions about volume and yield development, but as you also alluded to earlier this call, you've refrained from doing that right now. Still, can you still shed some light on what you have baked into your upgraded guidance? Second question is your comment on your guidance for Road and Solutions. You guide for flat to slightly declining markets for these two divisions in the second half of the year. What does that imply for second half earnings versus last year? Would that also mean a slightly declining or flattish? Thank you. Okay, who will take the I think if we take the agency on the guidance and the yields, I think you know that we have covered, you know, that part of the what can I say, discussion for now. We can take on Road and Solutions. We have seen a slight decline in the volume. Actually, we've managed to still produce better earnings. I also think that this will be the case for the second part of the year. And this goes for both Road and Solutions. I think with our yield management, the way we've managed the capacity and basically also the operating efficiency that we have will help us to drive it in this direction. I hope this, what can I say, covers your questions. That's very clear. Thank you. Thank you, Ole. The next question will be from Muneeba Kayani from Bank of America. Please go ahead, your line will now be unmuted. Good morning. This is Muneeba Kayani from Bank of America. Two questions from me. Jens, you did talk about kind of inventory levels, if you could just give a bit more color on what you're seeing as we head into peak season. Do you think inventory levels now are kind of normalized and we're could go into a restocking if macro holds up? A bit more color on that side. Secondly, just in terms of your guidance of yield decline in the second half, how much of that is based on kind of a normalization of market conditions, and how much of that is based on kind of your market share and kind of being more volume focused into the second half and hence yields coming down? Thank you. Yeah, I wish we had, maybe Michael will take the second part of your question. Thanks for posting both of those. I just wish we had really valid and strong statistics that we could point to when it comes to inventory levels. Transparency is always low, but some data suggest that at least the U.S., you know, I'm sure you follow this inventory to sales ratio, the growth remains relatively high on that. We expect that levels will gradually normalize. It does make sense. We see it ourselves, you know, the own warehouses that we run for our customers, utilization of warehouses have come down just a little bit. sense, uh, tells us when we continue to consume and when, uh, inventories, uh, are not being, uh, yeah, filled up again, that, um, inventory levels will come down and hence also support, uh, sea freight growth, uh, in the coming quarters. Yeah. For the yield, the it's, there are many moving parts in the yields. There are some internal factors which we obviously can affect, in terms of productivity, efficiency, and so forth, and some external ones, whether it's the rates or whether it's surcharges and whatsoever, which we are, can, to a certain extent, impact by the bargain power, but not all. We don't have the exact split of how it is composed. We cannot decompose it. The level that we have just spoke about, is the best estimates, that we have, when we look into the second half of 2023. Overall, you think that market would also be kind of resetting down? Yeah, yeah, like we mentioned, I think so. Thank you. Thank you, Muneeba. The next question will come from the line of Sam Bland from JP Morgan. Please go ahead, your line will now be unmuted. Hi, thanks. Thanks for taking the question, please. Well, thank you. I've got two, please. The first one is this sort of shipments versus volume piece. You talked about that before. Is that a factor in both Air & Sea? Am I right in thinking that it sort of makes the yield look higher than it otherwise would be? The second question, I know we've touched on it, is this sort of trade-off between volume and yield. Impression so far is that you've probably prioritized yield maybe a little bit over volume. Have we got to some sort of tipping point, or has management changed maybe a little bit the view, and you think it makes sense to maybe take in some lower yielding cargo now, conscious of that sort of easier to increase productivity point you mentioned earlier? Thank you. Yes. Thank you again for those questions. It's obvious that any new, at least sizable customer that we gain, will always dilute yields. It's just a matter of how the competition works. It's very rare that you get a large customer that with the same yields as you have on average on all your customer portfolio. We have in the region of 500,000 customers in DSV. It's of course, the incremental kind of, conversion ratio discussion is interesting here, which also means that we can maybe accept a slightly lower yield than what we've were willing to do in the past. What we alluded to before was the fact that if we talk about an actually loss-making business, you go in and you simply pay more to your supplier than what the customer pays you. This is not why we go to work in DSV. We simply refuse to do that. When it comes to the number of shipments versus the number of TUs and tons, you're right. You could say that that makes the yields look lower, that would also be in comparison when you compare with what the yields looked like a year ago, they would also have been lower. It would kind of be to reset it at a lower level. It's just to illustrate that the developments in DSV in terms of volume is maybe not as negative or dramatic as it could look. It's simply just a fact of the number of shipments from our customers, which has been slightly smaller, which is, in essence, not necessarily negative for us. It's not the bigger the shipment a customer books to us, the higher the profit. That's not how the mechanisms work. All the associated services that we produce for a customer are more or less the same, regardless of. The profit structure is more or less the same, regardless of the size of the shipment. Yeah. Understood. Thank you very much. Thank you, Sam. Next question is from the line from Nordea. Please go ahead, your line will now be unmuted. Thank you for taking my questions, two for me as well. The first is regarding the average size of the shipments. You've been alluding to it early on the call as well, and you've been around long enough to experience at least a couple of macroeconomic cycles. In your view, I mean, do you think that the average size of shipments will continue to decline, or are we maybe at a point where it's sort of starting to flattening out, and, at some point, maybe if we see a pickup in the economy, they will start to increase again? That's the first one, and then the second one, which is more sort of, maybe a liquidity question. In some cash flow statements, there is DKK 550 million related to acquisitions. How much of that is related to the two U.S. acquisitions that you have done as of lately? Thank you. Yep. I think Michael will take the cash flow part, now that he's the guy in charge of that, but I will take the, the macro thing last. I think it's a, it's a valid point, that, you bring up, that typically in, what can I say, if the economy slows down, people, they actually have the same shipment frequency, but sometimes the shipments, they get a little bit smaller. That's also the reason why we mention it. We don't use this as a way of counting in our, external reporting, because here, I guess, the industry norm is, TUs or tons. I would also say that, with the size that we have and with the strategic focus that we have on products like the LCL product for sea freight, or also basically our consolidation efforts when it comes to air freight, we've probably, you know, had a little bit of extra focus on these services. That is, as Jens Bjørn also talked about a little bit earlier, part of the yield explanation as well, and that's it. It's very hard for us to decompose this. I think, as a rule of thumb, there is some kind of correlation between the development in the economy and the shipment size. That's what we have seen from the past. Then I'm sure Michael, he will take care of the cash flow. Yeah. Yeah, Lars, you're right. It is, it is the biggest part of the amount you just mentioned. There is an adjustment and a smaller one as well included in that, but it is the biggest part. Okay. Can you get it closer? No, I can't get closer than that. Sorry. Okay. All right. Thank you. Thank you, guys. Thank you, Lars. The next question is from Sathish, from Citigroup. Please go ahead, your line will now be unmuted. Thanks again for the presentation. I got two questions here. Firstly, on the initial comments where you flagged about rational behavior, is it specific in Air & Sea or is it more, say, in, segment that you are seeing? Like, can you clearly say you are actually seeing some irrational behavior? Just addition to that, is it being done by, say, top five freight forwarders, or how does it work? Like, where are you seeing that competitive pressure coming from? Secondly, in the Road segment, if I look at your commentary in Q1 as well as in Q2, you highlighted best performance in Germany. What exactly? Is it like a structural thing that you changed there that's driving that, or is it some of, like, say, competition is pulling back in that market and that's helping you all? Where we are on the Road forward project. Yeah. Thank you. I'll just start with the air freight, and then Jens can maybe talk about the second part of your question. We are not here to sit and complain and whine about the competition. We stand up to any competition in our industry. It's just to explain what is happening in the market. It's only, I would say, in air freight. Sea freight is a normal, competitive kind of the market conditions that we see. I think, and I'm not gonna comment on from which direction this comes, but of course, we are short in terms of procurement of air freight, meaning that we track more or less the spot rate. If some are not short, if they are long, if they have long commitments on capacity, planes hanging around different airports with no cargo... Any cargo that you can get into these planes are better than flying half empty. This is a little bit what we see. We think this will ease off as some of the agreements, some of these at least agreements, lease agreements, run out, and then we will get into a normalized market. It's a temporary thing. We just wanted to point to that fact for one of the reasons for the underperformance volume-wise in air freight. Again, the trade-offs of this, as I said initially, that the yields have kept the very high levels that they were at before. Otherwise, of course, it would be more problematic for us. Yep, Jens, maybe on the Road? Yeah, I think on the Road side of, what can I say, the domestic operations in Germany, they have done slightly better. I think on the international operations in Germany, we have invested heavily in that for the last couple of years. We've seen a good, really good performance there. I think if we add these two things up, it's been quite a positive surprise, and that's the reason why it's noticed in the report on the Road. What can I say, the roadway forward or the, what can I say, groupage project that we're running, where we have established this international groupage network. We are now from an operational point of view, with the European groupage network fully up and running, and that's also what partially plays into the German results, that it helps them with their load and capacity management on that. From an operational point of view, the network is fully operational and up and running. On the system side, where we support it with new IT infrastructure, we are running a little bit behind plan. We had to go live in Poland here in Q4. The next go-lives will probably only be in Q1 because we've had some final deliveries. We have the last dependencies we have to weed out before we go live. We haven't received them from the vendor in a condition where we can actually test and introduce it. We're probably a quarter go late, a quarter delayed when it comes to go-lives. We are still, what can I say? Comfortable that the solution will work and will be fully operational as expected before long. Overall, I think we are executing very well on the strategy when it comes to Road. Okay. Thank you. Thank you, Sathish. The next question will be from Michael Rasmussen from Danske Bank. Please go ahead. The line is now unmuted. Yes, thank you very much. two questions. First of all, if we could talk a little bit about the momentum in the Road business during the year, the second quarter. According to at least the channel checking that I've been doing, it seemed like June was a fairly strong month. Maybe if you could kind of confirm the exit rate on the Road business, also if you could add a little bit of comments into kind of the next quarters here for Road, most specifically. My second question is on the Solutions division. You keep on getting some... Delivering some rather strong gross margins, even as utilization is rather low in warehouses, obviously right now. How should we think about this going forward when your utilization picks up and you've invested in optimization and so forth? This industry from a margin perspective can go a lot further, I'm guessing. Thank you. Yes. I think, as you state, the volumes that we produce in Road, of course, it follows the normal economy, and it's like it's been doing slightly better. I'm not sure, you know, if, you know, we are in, in very, positive development in June, but the results we saw in June and the volumes that we produced were actually a little bit, better than the previous months. I think we can, confirm that. When it comes to Solutions, I think the utilization is down a couple of percentage points. You have to remember that you earn money in two ways in Solutions. One is the storage, where you basically, you know, resell the rent that you have procured, and then the other one is the activity. In and out of cargo, VAS, we call it, as well, value-added services. We might produce repack, go-back, light manufacturing services, et cetera, we also produce. I think it's clear that the level of automation and the level of complexity that produce and Solutions, if we look at it overall, has increased. This means that we can also create more value that we will then share with the customer on these services. Let's say that the inventory levels, we get a couple of percentage extra. That will, of course, generate some extra income where we've already paid the rent. Let's say that the activity levels, they also increased, and I guess you're right, with some of the automation that we have put in certain places, we will be able to capitalize even further on that. It's been the strategy all along that we consolidate and that we introduce these things, and that we also produce volumes with higher complexity. It's really nice to see that it also filters through in the numbers. I think that can confirm most of the things that you alluded to there. Great. Thank you so much. Any comments on Q3 Road? Just the starting point here. Yeah, it's July. It's always depressing. That's more or less what I can say, because it's like. It's a month, July, and also in certain countries, August, where we are a little bit impacted from the holiday season. It's not so easy to forecast. I think on the tenders and on the things where we've been into, it's been a positive experience where we seem to have fairly good traction. For us, it's of course nice to see what the market does, but it's also important for us that we gain a little bit of market share, and I think we will be capable of doing that in the second half on Road with the wins we've seen. Great. Thank you very much. Thank you, Michael. The next question will be from Nikolas Mauder from Kepler Cheuvreux. Please go ahead, your line will now be unmuted. Hi, thank you for taking the question. First one, during the call, I heard that you hope to get back into positive growth territory and see during H2, maybe some commentary on air. I know that there is a trade-off with yields, and you probably don't know how it unfolds, but perhaps in your thinking, how will it go? I'm sort of asking where your desired growth and yield combination for H2 would be. Secondly, given that you kicked off the commercial efforts probably sometime during Q2, can you comment on the exit rates for air and sea gross profit deals, please? Yeah, it's correct that we have a clear statement saying that we want to grow faster than the market. The markets are not growing, but we want to outperform the market. Exactly when that's going to happen, I don't know. You're right in saying there's a delay, in this. It's not the first day you reinforce your commercial activities or you... It's also not the day you win a particular tender, that the bookings start flowing in. Sometimes there's a three, four months delay, with the larger, customers. It's fairly complicated to set up, the booking interfaces and stuff like that, so... Let's see how it goes in the second half. We are adamant that we will at least bridge the gap, and if we could get into positive territories, that would be really, really nice as well. I don't know if there was anything missing or Michael or Jens, if you wanted to. No contribute or? I think it's, I think on the ocean freight, I think the trajectory is quite good. I think on the air freight, when the market it normalizes, and we get a better, what can I say, match between, what can I say, capacity that have been committed a little bit longer term, but not necessarily sold. I think that we will see that we will then start to gain market share. Our reinforcement of our commercial efforts, it is in this, what can I say, downward trend that we have seen, that we try to strike a balance where we get paid for our services. It's not to be understood in such a way that we will start to take volume in order to show some nice volume numbers, where we actually lose money. Okay, that's good. Thank you. Thank you, Nicholas. The next question will be from Cedar Ekblom, from Morgan Stanley. Please go ahead, your line will now be unmuted. Thanks very much, gentlemen. It's Cedar Ekblom from Morgan Stanley. This is a more medium-term question. The opportunity for AI and machine learning has been thought about in a process industry like freight forwarding, and I'd like to get your perspective on where you see the dynamics for your business and your industry. What is the starting point today in terms of AI or machine learning solutions, in terms of their penetration into the industry? What are you most excited about or concerned about on this thematic on more like a three to five-year view? Thank you. I think Jens Lund will take that question, but as headcount related costs represents about 70% of all our costs, this is something that we are super excited about, that can really move the needle going forward. Jens, maybe you can. Yes. I think when we move shipments, we need to, what can I say? We need to use a lot of data for that, and we source that from different sources. It could be an email with a booking, could be an online booking, could be an EDI or many other types of bookings. These bookings, they also have a variety and quality. Of course, you can use things like AI, for example, on a booking. If you have the right conventions in place yourself, you have a solid booking domain, then you can use AI to enhance these bookings and sometimes also to sort the data. That could then, if we have millions of bookings, that could then help the work, for example, in relation to a booking. The same goes, for example, where we have something called AI Factory, which we are implementing on customs formalities, where there's also quite a few details that have to be filled out in various systems. Here you can both use the system to acquire the data, but you could also use the system basically to enhance the data. Let's say you would need to put something on called an HS code, which is like the code that you would put on a SKU to see what kind of duty you should pay on it, then you can ask what can I say, the computer to do some of the work for you. It is couple of use cases that I just show to you here or tell you here. There will actually be multiple use cases like this. Many in many situations today, this is done by human intervention. In reality, there are two sort of main types of question that our customers they have. You know, one is, you know, the booking or the work in relation to the booking. Then the second question you already always have in customer service is also, "Where's my cargo?" So you can use then technology to eliminate some of that work. It all requires then domains, definitions, high integrity of data, and then we need to embrace the new technology in order to get the productivity gains. You also need a consolidated infrastructure. If you have that, you don't need to do it multiple times. If you have a scattered system landscape, it's very difficult to get the benefits from AI tools. I don't know if it confused you more or if it helped you, but it was at least an attempt. No, that does help. That helps a lot. Can I just ask a question then on... You say you have lots of data, different sources, need to be interpreted. How soon should we actually be expecting broad-based AI solutions to be implemented across your business? The second question, or follow-up question: if we think about a lot of this stuff, it sounds like there's a cost benefit that you talked to, which is helpful. If it sort of frees up capacity in the industry, do we not start thinking about this being a revenue risk as well, with those, you know, lower costs ultimately passed on to customers in what is still a very competitive backdrop? Thank you. Yeah, it's always been like that. I don't know any service industry where you don't have to produce more for less. This is also the case here. The winners, they are gonna be the ones that embrace it and adopt it first, and the losers, they are gonna be the companies, what can I say, that basically they miss it or they miss out on the opportunity. I think it's gonna be implemented. It's a little bit I don't know if you can remember blockchain. At a certain point in time, I can remember that I got a call, and basically, I was on vacation, and I thought, you know, with blockchain, that when I came home, that DSV didn't exist anymore. I think these technology changes, first, you develop the solution, then you have to implement them in global organization. It takes years before you can do that. We have some tools that we are under implementation of, it's called AI Factory. I guess we all understand, you know, what it is that it can do, artificial intelligence. We're rolling that out, replacing some tools where we already had productivity efficiencies. It's a little bit more manual, but being produced in shared service centers. Now, the computer, it can do more work than it could before, but then we eliminate people in Manila and in Warsaw. They're probably not the highest-paid people that we have in the group. It's not like it's a new idea, but it refines the way we do it. On customs formalities, I think we have a breakthrough because we really have, what can I say, an opportunity to consolidate some of this. This is not only in relation to us, but it's also in relation to the authorities. The authorities in certain countries now can receive custom clearances via API, and that's really what we need in order, what can I say, to really capitalize on this. It will come in the next years, you will see it, and it's actually sort of baked a little bit into our strategy and into our financial targets already. If we do it really well, we can outperform a little bit and move the needle. You're quite right, we need to produce more volume for less money, which has been the case for, what can I say, at least, more than 20 years I've been part of it. That's fantastic. Thank you so much for the explanation. Thank you, Cedar. The next question will be from Marc Zeck from Stifel. Please go ahead. Your line will now be unmuted. Yeah, good morning. Thank you for my question. I'm afraid I only got one. You talked about Europe and Ocean freight doing somewhat better than the others, and I guess we can see in industry statistics that Latin America or North-South, as well as Middle East, is also doing quite well. Could you give us some color, what is the main difference, maybe in terms of verticals, maybe in terms of inventories, maybe in terms of customer structure, that DSV is doing so well, and the rest of the world is the Ocean more or less sluggish from year-over-year basis? Thank you. Yeah. It's you're right in saying that the development on ocean is somewhat better than sea or than air. This is definitely what we are seeing. We have an overview of the different kind of verticals which are doing the best. We have seen also something like capital equipment and high technology. High tech has been actually having had a positive growth in the period. Some of these have the same negative trend in air freight, which also tells us that it's a continuation of the trend that we have seen, that customers are deliberately moving from air to sea, which is also some, a part of the advice that we are giving customers when we come to the customers' decarbonization efforts. Of course, the best thing you can do is moving some of your freight from air into sea. I'm sure you have the, the trade lane statistics, yourself, where, of course, Asia to Europe is performing the best, and Transpacific being, still, somewhat under pressure. I think, yeah, I guess that's what we can say, at this moment in time. Okay. Thank you. Thank you, Marc. The next question will come from [Asjay] from... please go ahead. Your line is now unmuted. Yeah, hi, thank you for taking my question. I have two, if I may. First, in one of the statement, you talked about that, you're ready for the M&A rather of a larger ticket size. Can you talk about some of the verticals, some of the region that acquisition opportunities might arise with on the other side of town? Is it something in your backyard, which has been talked about for a while? My second question is, with relatively lower expectation of any peak season in 2023, particularly for ocean, does it put your air cargo operation in a sweetest spot? Assuming its consumption held up, we may potentially see a rush order materializing sometime in late third quarter, early fourth quarter, which could potentially give a boost to your air cargo business. Thank you. I'm sorry. The line was simply so bad that we could not understand your question. Maybe we can take the next question. You can maybe jump onto a different line or something. You can ask the questions again. It's. I'm sorry, we'll probably answer the wrong questions if we try. Is it any better if I talk loudly and slowly? Yeah, it's somewhat better. Yeah. Take one question at a time, please. Sure. First question is with respect to your upcoming M&A opportunities. When you talk about a larger ticket size acquisition, can you share some color on some of the opportunities in different parts of the world that you are keeping an eye on? We are both, we have specific names, as we always we've had the last 20 years. Some good companies that we would love to acquire. Some of them are not for sale, some might come up for sale, so we keep track of those, and then we are opportunistic in nature as well, meaning that, if an opportunity materializes all of a sudden, we're also ready. Nothing has changed in terms of the strategy of DSV. We still wanna take part in the consolidation in the industry. The company is ready from a financial point of view and operational point of view also, to do acquisitions, basically of any size. There's no particular geography. I mean, we like to acquire companies with a global reach, like the three large ones we have done most recently, UTi, Panalpina, and Agility. Should we find companies with a similar structure, we would love to engage with them. Sure. My second question was with respect to your expectation of a peak season in 2023. What we are hearing is that expectation of peak season in the ocean segment is pretty low, and therefore, closer to the time, if consumption held up, there is a bright possibility of a peak season in the air cargo. Do you echo that view or appreciate any insight you may have on both the segments with respect to upcoming peak season? Very short answer, and that is, yes, we can echo that. Lovely. Thank you so much, and have a lovely day. Same to you. Thank you. Bye-bye. Thank you very much. We have a follow-up question from Alexia Dogani from Barclays. Please go ahead. Your line is now unmuted. Thank you. It's just a quick follow-up on the air freight market, based on the comments about committed capacity by competitors. I just wondered, have you seen any evidence of basically freighter capacity that got reactivated during the pandemic already exiting the market, given where rates and volumes are developing? From memory, I remember the full freighter fleet is really old. I just wondered if you have seen any evidence of grounding already. Thank you. Yes, we've heard that a few freighters have been grounded. It's, of course, very old planes, as you say. They might not carry a lot of depreciation, but they have a very large consumption of fuel. Sometimes it's not possible, what can I say, to operate these planes at a profit if the rates are too low. This is a situation where they're in, and some very old planes have now been grounded. It's not a big portion, but it's the first sort of stories we've heard about that. Yes. Thank you. Thank you, Alexia. The next question will also be a follow-up. It's from Cristian Nedelcu from UBS. Please go ahead, your line is now unmuted. Thank you for allowing me one more question. In RNC, could you remind us your exposure to small and mid-sized customers? Some of the channel checks that we are doing, speaking with some of the shippers, are telling us that they are still paying today 30%, 50%, 30%-50% higher rates than in 2019. Actually, they're happy with it because it's much lower than last year. I guess what I'm going at, I wonder if we could be underestimating the decline in yields that could come in 2024 for a lot of these small and mid-sized shippers. Any, any color that you could provide there? I think it's a very we actually have a segmentation of our customers. We call it A, B, C, D, and E. You could typically have an E customer it doesn't really mean anything in the volumes that we produce. That's why you could have a scenario like that. I would say all the SME customers that have meaningful volume, none of them that we know of, move freight that is so way out of market. They might pay a little bit more for their rates, on the rates. They might pay a little bit more for our customs clearance than if you are a very large customer for whatever it is that we produce of extra services for them. I don't think we can recognize a situation where you can, what can I say, overcharge them like you just described there. I simply don't see that as at least the behavior that we have. I think the proportion of SME customers, if we take the segmentation, and let's say we would go to the C, D, and E clients, I think we are below the 50% mark. Let's say our A and B customers are large customers and sort of mid-sized, good, large customers. They are a significant part of our operations today. Excellent. Very helpful. Thank you very much. Thank you, Cristian. Our last question is from Robert Joynson, from BNP Paribas. Please go ahead, your line will now be unmuted. Thank you for the follow-up. I know we're a bit annoying. There's been a lot of talk today, regarding the number of shipments and how they're down by much less than the number of units handled. Just in that context, if we look at H1 specifically, during which the number of air freight tons was down by around 20% year-on-year, and the number of TUs was down by around 10%, would it be reasonable to assume that the corresponding decline in the number of shipments was maybe a quarter of those levels, of maybe down 5% for air freight and down 2%-3% for ocean shipments? Is that ballpark the type of dynamic that we're looking at? any color would be great. Thank you. I think if we look at the number of shipments, we are more down, what can I say, between 5% and 10%, depending on, you know, which market we talk about. So that would be mid to high single digits, if I should translate it, that we are down. Of course, a little bit more on the air freight side and a little bit less on the ocean freight side. As a ballpark, maybe the number of shipments is down by roughly half the number of units. Is that a kind of fair guesstimate for us to go with? Yeah. You would be... That would be fair. Great. Perfect. Thank you. If there are no further questions, I'll hand it back to the speakers for any closing remarks. Thank you very much. I think this is close to breaking the record for the most questions. We really appreciate that. Thanks, good questions, also, all of them. Please, feel free to reach out to the IR team if you have any further things you want us to mention or to comment upon. We will now continue the roadshow activities, and we will go back to yeah, working towards delivering a continued strong performance in the company. We thank you all for your questions, and we wish those of you who are still on holiday or still are going on holidays, a wonderful summer. Thank you here from Hedehusene, Denmark.