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Edited Transcript of DFDS.CO earnings conference call or presentation 7-Feb-19 9:00am GMT

Q4 2018 DFDS A/S Earnings Call

Copenhagen Feb 8, 2019 (Thomson StreetEvents) -- Edited Transcript of DFDS A/S earnings conference call or presentation Thursday, February 7, 2019 at 9:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Niels Smedegaard

DFDS A/S - President, CEO & Member of Executive Board

* Torben Carlsen

DFDS A/S - Executive VP, CFO & Member of Executive Board

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Conference Call Participants

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* Finn Bjarke Petersen

Danske Bank Markets Equity Research - Analyst

* Lars Heindorff

SEB, Research Division - Analyst

* Marcus Bellander

Nordea Markets, Research Division - Senior Analyst

* Ruairi Cullinane

RBC Capital Markets, LLC, Research Division - Associate

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Presentation

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [1]

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Welcome, everybody, and apologize for the small technical glitch, but we should now be ready to do this Q4 and full year results. We call it, growth set to continue in 2019. We are a little bit more optimistic going into '19 than others may expect. And we'll through this presentation explain why we are so.

But let's turn to Page 3 where you have the headlights of the year, and we'll talk about the quarter, of course, as well. Revenue is up 10% in what was a very busy 2018 year for us through acquisitions, (inaudible) decisions and other things. And also EBITDA is up 11% to DKK 3 billion. This, if you restate it for the new accounting rules coming into effect 1, January '19 corresponds to DKK 3.6 billion on an equivalent basis.

EBITDA is up 20% to DKK 688 million in the fourth quarter of 2018. And as mentioned revenue and earnings are set to continue to grow in our outlook for '19, which we will come back to. The outlook combines market growth prospects with lower visibility than normal, due to Brexit and other things, but also what we call 5 key DFDS performance drivers, which will positively impact 2019. Those 5 elements are the things we control ourselves.

When you take all of this in, then our EBITDA outlook for '19 is a range from DKK 3.8 billion to 4 DKK billion based on the IFRS 16 standard.

If we turn to Page 4. Let me talk a bit more about the growth prospects for '19 and why say the visibility is slightly below normal. Of course, Brexit, we have discussed it a lot. We are getting closer but the outcome is not clear. We do not base our outlook on a hard Brexit. We still believe and hope that a solution will be found. But of course, it is a -- to some extent creating some uncertainty.

Also when you look at both the global and the European growth outlook it's trending down a little bit. We have seen that in the fourth quarter last year but it's still in positive territory. Whether the eurozone will be around 1% growth next year or 1.5% is still up in the air at this point in time.

Through our acquisition of U.N. Ro-Ro last year the European Turkey trading environment is now a major factor for DFDS. We are, you can say, spreading a little bit the trading zones and patterns within our group. And a big topic last year was, of course, the Turkish lira crisis but that is now behind us. But due to; among other things, the increased interest rate in Turkey; we expect a rather flattish GDP growth in Turkey, next year. We have other things in the tool bag to overcome that, which we'll talk about a little later.

Turn to Page 5. And a quick snapshot on these 5 performance drivers, which will help us to achieve the growth and earnings increase in 2019, #1 is of course the automatic benefit from our Mediterranean expansion, the full year integration impact of U.N. Ro-Ro. but also the expanded cooperation with Ekol Logistics, one of the largest logistics companies in Turkey.

Second element is Brexit. Our preparation, which has been ongoing for more than a year, are well advanced now. And we are ready should the unfortunate situation of a hard Brexit occur. And we have also, as you may have seen, entered into an agreement with the Department for Transport in the U.K. for providing additional services in case of a hard Brexit. And I would say the conversations we have had with the custom authorities both in the U.K. and especially in France is making us more optimistic that the authorities will work constructively together with us and other transporters to achieve a smooth situation, as smooth as possible, given a potential hard Brexit.

On the route network sites, we will strengthen that by 3 new freight ferries coming into our network, the first was successfully delivered and on the way en route from China to the Mediterranean, where it will be deployed here end of February. Vessel #2 will also go to the Med, we expect, when it arrives in April/May timeframe.

The fourth element is the ongoing digital focus. We will launch a number or applications and offerings to our customers both on the logistics side and on the ferry side as we move further into 2019. And that will create additional revenue for us.

And the fifth element is the usual improvement and efficiency projects, where we always, every year, have a range of those, ranging from procurement efficiencies, special boost projects as we call it and a number of other things. Earnings should be supported by DKK 100 million from those initiatives.

So that's why we are in spite of, I can say, the slightly reduced visibility, we are pretty confident that things we can control that it will deliver in 2019.

With those introductory remarks, I now hand over to Torben Carlsen, our CFO.

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [2]

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So let us now look at our Q4 performance in detail, where we report a 20% EBITDA increase. Our revenue growth was 13%, mainly driven by U.N. Ro-Ro. As said, EBITDA was up 20% to DKK 680 million also mainly driven by U.N. Ro-Ro. Whereas, our Northern European markets generally have slowed somewhat in the quarter.

We saw a depreciation increase of DKK 46 million again mainly due to the 12 new vessels that we have taken on in the UN acquisition.

In finance this quarter was an income of DKK 11 million as currency losses on receivables in Turkey reversed as the Turkish lira heavily rebound or regained strength. And as a result of all of this a profit before special items and tax was up 22% to DKK 423 million.

Turning to Page 7, where we look at full year 2018. We saw 10% revenue growth, again driven by U.N. Ro-Ro. EBITDA for the full year up 11% to DKK 3 billion, the first ever. Again mainly driven by U.N. Ro-Ro. And a 26% increase in logistics now delivered DKK 330 million EBITDA.

Depreciation increase of DKK 153 million. Finance cost increase of DKK 111 million, which includes for the full year a DKK 42 million currency loss on the Turkish receivables.

Profit before special items and tax slightly up compared to last year to now DKK 1.7 billion.

On Page 8 going into a little more detail on the different activities. Now we see that our North Sea was DKK 9 million higher than last year with lower operating costs offsetting some weakness in our volumes.

Baltic Sea we had various technical glitches that was the primary reason for this small earnings impact. Channel, minus DKK 3 million. It's been a tough second half for Channel with high bunker pricing, which has favored the competition that is not relying on bunker. To counter that we saw some positive timing difference on the Newhaven-Dieppe route.

And the big change is, of course, Mediterranean DKK 79 million additional EBIT due to the acquisition of U.N. Ro-Ro. And then Logistics, some positive developments on that area, when we combine it with the other markets.

Turning to Page 9. We propose to resume dividend, as some of you recall, when we announced U.N. Ro-Ro acquisition we stopped our share buybacks and have now said that the strength of our balance sheet and the prospects for '19 that Niels talked about are relatively strong, we will resume dividend payments for the DKK 4 after the general assembly.

During the year, our free cash flow was lowered due to the acquisitions by DKK 3.6 billion but our free cash flow increased 23% when it -- excluding these acquisitions. Our net interest-bearing debt EBITDA multiple is now 2.8 at the end of '18. And when we have the full-year impact of Turkey it will be 2.6. The leverage increased compared to Q3 due to the accounting treatment of the contract we entered for long-term port terminal lease agreement towards the end of the year.

Turning to Page 10, I will talk about our outlook for 2019. As Niels stated, growth is set to continue. We still believe in a soft Brexit and if it comes it will support our growth and add upside. And in a hard Brexit scenario we have -- we believe prepared ourselves to the T. And in addition, we have this mitigating DFT contract. And Turkish exports expected to grow in '19. And our performance drivers will inevitably help our '19 prospects, the ones Niels just went through, including the addition of a very large customer in Turkey. DKK 2.5 billion of investments as 3 of our large vessels will come on board during the year. And we're investing further in terminal expansion to cover our growing businesses around Northern Europe and Turkey.

So outlook for '19, revenue growth of 10% to 12%. EBITDA range of DKK 3.8 billion to DKK 4 billion spread over our different activities, as you can see here. And then investments of DKK 2.5 billion.

With that I will turn back to Niels who will talk about...

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [3]

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Yes, and wrapping this presentation up sort of the high-level thing. We need to be able to adapt to the market changes as Torben pointed out, we can actually both grow up and down depending on the clarification on Brexit. And we must be flexible both on our cost base and our capacity base shippings grow in either direction. And that's something we have been working on the last 3, 4 years to increase that flexibility.

Secondly we have the 5 performance drivers. And as always customer satisfaction is key to us both training wise and measuring that. As we know that it is a key element to grow our top line, which is still a priority for us. And then we are still looking at M&A activities probably not the size of U.N. Ro-Ro but there maybe 1 or 2 things which could be interesting during the year.

So in spite of the market uncertainties we go optimistically into 2019, not the least due to these 5 performance drivers, which will provide a foundation for another good year for DFDS, we are absolutely certain.

So with that, and I again apologize for the slight delay, we now hand over to you for any questions you may have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Marcus Bellander of Nordea.

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Marcus Bellander, Nordea Markets, Research Division - Senior Analyst [2]

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I had a few questions. First, the agreement with the Department of Transport, is that included in the guidance? And if the Department of Transport decides to kind of utilize this capacity, where will you get the capacity from? Will you charter in ferries or do you move around capacity in the network? That's my first question.

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [3]

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We will move capacity around in our network and we have also recently chartered the in short-term vessel into our network so we can accommodate those needs. So there will be extra costs, of course, to live up to this contract and -- go ahead.

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [4]

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And on the guidance, we have included some of these effects. We also see it partly as a mitigating factor, of course, in case of the hard Brexit. So that we have maybe been a little conservative in how we have included it in our guidance. On the other hand it will reduce the impact -- in case of a hard Brexit.

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Marcus Bellander, Nordea Markets, Research Division - Senior Analyst [5]

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And my second question concerns Turkey. You say that you expect exports to grow in 2019, is that based on what you have seen sort of year-to-date 2019 because data until December suggests that exports are shrinking pretty considerably in Turkey.

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [6]

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We do not have the official numbers for Turkey for January but we do have our own January numbers. And we are 6% up in January over U.N. Ro-Ro standalone last year January. And this is the month where we have just taken on the new customer. So we are confident that the economy will take off on the export side during '19. But even if it is a very modest take off our volumes will definitely grow in '19 compared to '18.

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Marcus Bellander, Nordea Markets, Research Division - Senior Analyst [7]

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And a final question before I get back in the queue. If I do my math correctly it seems like North Sea volumes are up a bit in the quarter but revenue is down quite a bit. What's the reason for that?

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [8]

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Marcus, I think North Sea volumes are down in Q4.

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Marcus Bellander, Nordea Markets, Research Division - Senior Analyst [9]

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Okay, scratch that then. Sorry.

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [10]

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Thank you, Marcus.

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [11]

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Thank you, Marcus.

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Operator [12]

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Our next question comes from the line of Finn Bjarke Petersen of Danske Bank.

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Finn Bjarke Petersen, Danske Bank Markets Equity Research - Analyst [13]

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Turkey, you said that you had -- volume was up 6% in January year-on-year but that's include the new Ekol agreement, how much does that contribute to that growth number?

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [14]

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You can say that without Ekol we would probably -- we would have seen a double-digit dip in volumes in January. I think that's as specific as we will be here.

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [15]

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I think everybody should be a little cautious putting too much into January. We have had a fairly long Christmas holiday, New Year break in Europe this year where we have seen fairly long closures of factories throughout Europe and that is impacting both the North Sea, the Continent but also indirectly in Turkey. It has been a slow end of the year and a slow first week start but the numbers are as Torben mentioned.

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Finn Bjarke Petersen, Danske Bank Markets Equity Research - Analyst [16]

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Slow first week start, what does that ring? Does that mean that, that is the 2 first weeks and then in the second half of January we have a stronger growth?

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [17]

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That's correct.

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Finn Bjarke Petersen, Danske Bank Markets Equity Research - Analyst [18]

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How much is the growth in the second half of January?

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [19]

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(inaudible)

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Finn Bjarke Petersen, Danske Bank Markets Equity Research - Analyst [20]

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Yes, but the -- you are falling out in the -- in Q4 is basically explained by Turkey. You are better off in the North Sea, as far as I see it but that's a -- that's probably some one-off's coming from low oil price and you keep your [pass] a little bit longer. But Turkey is a significant disappointment.

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [21]

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Absolutely in Q4, especially towards the end of Q4, Turkey was disappointing for us. The playing field has been leveled and reset in Turkey. As we have taken on this new customer, which means that even though volumes are down in Turkey, towards the end of the year 10%-15% we will see a very strong '19 based on this situation. Q4 was, in addition to the general economic situation in Turkey, further rather half hit with this yellow vest situation in France where 3 departures was cancelled to France during December.

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Finn Bjarke Petersen, Danske Bank Markets Equity Research - Analyst [22]

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And if you want to quantify the effect on the fourth quarter from the negative development at the end of the quarter, how much does that affect your EBIT in Turkey in Q4 '18?

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [23]

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I think we -- it gets too detailed, Finn, we are happy to, if you want to talk to Soren afterwards we can give some more details.

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Finn Bjarke Petersen, Danske Bank Markets Equity Research - Analyst [24]

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Okay.

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [25]

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But it was -- it has -- it was double-digit numbers are worse than we had expected in Q3, what happened in Turkey in Q4.

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Finn Bjarke Petersen, Danske Bank Markets Equity Research - Analyst [26]

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Okay. Then I just want to turn to the hard Brexit scenario, which you have not included in your numbers. What have you included?

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [27]

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We have included that we will get a resolution one way or another and that could be either it is -- there is an agreement to the plan or whatever new plan they come up with and then the transition efforts will be ongoing through 2020 maybe a little longer. Or you can say there is a postponement of the decision. Those are sort of the scenarios. I think it's difficult to, at this stage, predict what a hard Brexit will result in. But as I said before we are more optimistic today that we will be able to handle the trade flows through the various bottlenecks. And the next concern will then be what happens to the trade after a hard Brexit? How will the pound react? What kind of duties will be added to products for how long, et cetera? Will the U.K. will go into recession or not? Those are some of the things we will have to evaluate thereafter.

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Finn Bjarke Petersen, Danske Bank Markets Equity Research - Analyst [28]

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Then the question -- okay, I understand that and I don't believe in hard Brexit either. But you were saying your key growth drivers for 2019, you were talking about a soft Brexit would likely support growth and add upside. Do you have any estimates for that? I am just trying to get hold of your guidance. Your spend in your guidance is only DKK 200 million. And you have previous said that you have a hard Brexit scenario that would cost at least DKK 400 million maybe DKK 500 million. So I think it's a -- you have -- in that respect you can -- one can consider your guidance optimistic or positive as you have a very narrow spend in the guidance and you are flagging a lot increasing uncertainty. Could you help me a little bit there to understand the guidance?

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [29]

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Yes. We do not guide for a hard Brexit and the impact you quantify there that is not built into the numbers. As I said it is a soft Brexit scenario but we do think, based on anecdotal evidence from our customers that everybody is a little bit fed up with the whole situation that there is no clarification and they have put investments and decisions on hold. And that's why we think once there is a resolution that the hard Brexit is off the table then life will go back to normal. And people are fairly confident that there will be a solution, where you can trade more or less like you do today with a bit between EU and England. So that could in itself create a little rebound in the trade.

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [30]

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And in case of the hard Brexit, where we agreed with the impact you talk about with the Department for Transportation contract and the elements Niels mentioned in the presentation that we now see some very constructive moves from the border officials. We actually think that the impact from a hard Brexit is less than the numbers you mentioned due to these factors for us.

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Finn Bjarke Petersen, Danske Bank Markets Equity Research - Analyst [31]

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Just a final question. The investment DKK 2.5 billion includes new buildings and terminals, could you split it on terminals and new buildings?

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [32]

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There is a split in the report on page…

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Finn Bjarke Petersen, Danske Bank Markets Equity Research - Analyst [33]

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I find it, okay.

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Operator [34]

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Our next question comes from the line of Ruairi Cullinane of RBC.

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Ruairi Cullinane, RBC Capital Markets, LLC, Research Division - Associate [35]

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Could you talk a little bit about the evolution of your U.K. volumes over the quarter and into 2019, is there any urge in U.K. owing to some customers ahead of the end of March?

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [36]

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I don't think we have seen any significant changes over the quarter as such.

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Unidentified Company Representative, [37]

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Volumes were a little lower in Q4 compared to Q3 but it was marginally and it has also been a slow start in January first couple of weeks we can see volumes are increasing now on certain routes to and from the U.K. maybe indicating a little bit build up of inventory as expected. So that's -- but it's not a massive thing but I think it's a little bit higher than we would expect.

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Ruairi Cullinane, RBC Capital Markets, LLC, Research Division - Associate [38]

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Secondly on Turkey, are you able to talk about why Ekol Logistics chose you. Are they switching all of their volumes so they use their own shipping company for over to you.

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [39]

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What they told us when they approached us was that they want to focus their effort and the financial resources on developing their logistics business rather than their ferry business. They have stopped operating from Istanbul to Italy, where they had 4 vessels operating. And they still operate to France. And I have seen in some reports that apparently have had contacts with Ekol owner that there are also thoughts of stopping down that corridor. But of course, we cannot speculate in all their motives for this. But it's been a tough environment cash wise for a lot of domestic retailers in Turkey. And therefore maybe this was a way to make the balance sheet a little less heavy for that group of companies.

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Unidentified Company Representative, [40]

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And given the amount of vessels we have and frequency we are able to offer very attractive solutions for our customers both on the ferry side but also the intermodal side when Italy and France and distribute it further into Europe.

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Ruairi Cullinane, RBC Capital Markets, LLC, Research Division - Associate [41]

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And finally, what proportion of your Turkish customers do you expect to switch over paying in either cash or euro over the course of 2019?

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [42]

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We cannot answer that yet because we have not seen the full impact as of the 60 days payment terms in one of the options but we certainly expect this to have a major impact in reducing our account receivable exposure, minimum 50% reduction.

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Operator [43]

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(Operator Instructions) Our next question comes from the line of Lars Heindorff, SEB.

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Lars Heindorff, SEB, Research Division - Analyst [44]

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A question regarding M&A, you stated earlier in the call that you say that you still potentially are looking for some M&A opportunities. Can you give us an indication when and what you're looking? Are we looking Mediterranean, North Sea, what kind of -- if you can give us any flavor for that?

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [45]

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Europe. But we look -- right now, it's on the logistics side. I think we have plenty to look at on the ferry side and conclude those integrations. These are not huge acquisition but of course, we have a book of opportunities we look at, and as you know we need to look at 10 before 1 will materialize. So it's much too early but just to indicate that we still have ambitions if the price and conditions are right.

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Lars Heindorff, SEB, Research Division - Analyst [46]

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And then the second question is regarding still U.K and Brexit, some of the discussions that you had earlier on here during the call. But can you -- I mean volumes are down and yet earnings are up in the fourth quarter in the North Sea, which is a fairly unusual correlation because normally those 2 will follow each other. Can you explain why that is the case? And also maybe give a -- you have said a little bit maybe there's been a small inventory build up here in the U.K., maybe talk a little bit about that.

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [47]

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Yes. We have seen small mix changes in the North Sea. I don't have the details here but we potentially also reduced capacity slightly in connection with the various fleet optimizations that can have impacted this. And then as I think one caller mentioned, as bunker price have dropped during the quarter, the pain we've had when it goes up with 1 month 45 days delay, it comes back positively when the bunker goes down again, which has also helped us in Q4.

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Lars Heindorff, SEB, Research Division - Analyst [48]

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And the volume decline that you've seen, is that something that has sort of been progressing throughout the quarter or is it more related to the latter part of the quarter and into -- maybe into this year as since has been the case with the volumes in Turkey?

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [49]

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I think it's more stable in the U.K., but again the same effects that Niels mentioned about Christmas and close-downs in December have impacted us. We have not -- except -- there's been extremely bad weather the first couple of weeks in January and that has caused a lot of delays and cancellations. But bearing that and seeing what's happened the second-half of January we don't see that it's a continued downtrend.

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Lars Heindorff, SEB, Research Division - Analyst [50]

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And your preparations for, I mean now your guidance assumes this what you call a soft Brexit, whatever that mean, but you earlier stated that you have postponed dry dockings in preparation, so you were ready for any kind of possible scenarios. Now we're midst almost halfway the first quarter, is that still the case that you have been postponing these things and will that sort of have an impact about sort of the seasonality between the quarters going into the second quarter?

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [51]

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No, not really, not really. We've moved from -- from now you can say end of the year, early January some of the vessels to June, August. But it's not -- in the big picture, it's not changing a lot, it's not. We simply just want to have as much capacity available if there is a pickup and so we can serve our customers well but nothing to sort of be concerned about.

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Lars Heindorff, SEB, Research Division - Analyst [52]

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Okay, and just to be absolutely clear, you have not seen that pick up yet?

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [53]

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A marginal pick up, but it's little bit difficult at this stage to say how much is because we've had a long closedown in factories over Christmas into January and then coming back and how much is restocking connection with Brexit. But volumes are firm right now in the trading.

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Operator [54]

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And our final question comes from the line of Marcus Bellander of Nordea.

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Marcus Bellander, Nordea Markets, Research Division - Senior Analyst [55]

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A few housekeeping questions. What was the EBITDA contribution from U.N. Ro-Ro in Q4?

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Unidentified Company Representative, [56]

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I can come back with that Marcus, but it's not something that is disclosed in the report.

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Niels Smedegaard, DFDS A/S - President, CEO & Member of Executive Board [57]

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Normally we don't talk about that business unit, Marcus.

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Marcus Bellander, Nordea Markets, Research Division - Senior Analyst [58]

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No. No, I guess, but I think you did in Q3, so that's why I asked.

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Unidentified Company Representative, [59]

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Yes, yes, we can follow up.

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Marcus Bellander, Nordea Markets, Research Division - Senior Analyst [60]

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Next question, you previously had a net debt to EBITDA target range of 2x to 3x, are you -- will you update that range given that it probably has changed a little due to IFRS 60?

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [61]

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We haven't yet concluded if we want to change any of our financial target scores in connection with the IFRS thing. For now we assume that we can stick with them.

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Marcus Bellander, Nordea Markets, Research Division - Senior Analyst [62]

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Okay. And a final question or I guess as much an observation as is a question, but you keep -- the guidance range is still, the span is still DKK 200 million, but of course your EBITDA is higher now than ever. So the percentage deviation that that range allows for is smaller, which is maybe a little surprising given the many uncertainties at the moment. Just wondering how you're thinking about that or if you feel that your forecasting ability has increased lately?

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Torben Carlsen, DFDS A/S - Executive VP, CFO & Member of Executive Board [63]

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We have discussed it a little bit, but with our -- these key drivers we talked about, we see that there is a firm bottom for DFDS in '19. And that led us eventually to keep the relatively narrow guidance range. And could we have expanded it upwards? We probably could. But we feel comfortable with this conservative approach.

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Operator [64]

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Thank you. And as there are no further questions in the queue, I'll hand back to our speakers for the closing comments.

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Unidentified Company Representative, [65]

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Yes, thank you very much, everybody, for joining, and we look forward to an exciting year. Have a good day.