GuruFocus -
- Revenue Growth: 9% increase to DKK29.8 billion for 2024.
- EBIT: DKK1.5 billion for 2024, at the low end of the outlook range.
- Adjusted Free Cash Flow: DKK1 billion for 2024, below the outlook of DKK1.2 billion.
- 2025 EBIT Outlook: Expected around DKK1 billion, impacted by Mediterranean competition and Ekol acquisition.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DFDS AS (DFDDF) reported a 9% revenue growth for 2024, aligning with their outlook range of 8% to 10%.
- The company is focusing on unlocking the value of its expanded network, with strong organic growth expected to continue.
- DFDS AS (DFDDF) is implementing a disciplined approach to capital expenditure, prioritizing cash flow generation.
- The company is actively working on turning around the newly acquired Ekol business, aiming for a break-even by the end of 2025.
- DFDS AS (DFDDF) remains committed to its Moving Together Towards 2030 strategy, focusing on profit protection and growth, standardization, digitization, and sustainability.
- The 2024 EBIT of DKK1.5 billion is at the low end of the outlook range, indicating potential challenges in meeting higher expectations.
- The preliminary 2025 outlook projects a decrease in EBIT to around DKK1 billion, impacted by a competitive environment in the Mediterranean and the Ekol acquisition.
- The company's mid-term and long-term financial ambitions have been canceled due to developments in 2024 and 2025.
- DFDS AS (DFDDF) faces a challenging competitive environment in Turkey, with new entrants affecting profitability.
- The company's financial leverage is expected to increase to around 4 times EBITDA, raising concerns about potential impacts on credit ratings and financial flexibility.
A: Yes, the decline is primarily due to the situation in Turkey, with three-quarters of the impact from the ferry business and one-quarter from Ekol. Other business areas are expected to remain stable. Torben Carlsen, CEO
Q: What are the mitigating factors to restore profitability, and when do you expect to achieve a satisfactory free cash flow level?
A: We aim to adjust capacity to match the new competitive environment in Turkey, which should help stabilize the market. An acceptable level for DFDS is an adjusted free cash flow of DKK1.5 billion, and we will provide more clarity on achieving this in February. Torben Carlsen, CEO
Q: With an expected EBIT of DKK1 billion in 2025, how does this affect your leverage and covenants with banks?
A: We anticipate leverage to increase to around four times, but this remains within acceptable limits for bank covenants. We maintain a strong focus on cash flow and CapEx discipline. Torben Carlsen, CEO
Q: Have there been any worsening conditions in the Mediterranean segment since the last update?
A: No major surprises have occurred. The addition of Ekol contributed to reaching the lower end of our 2024 guidance, but the situation has not worsened beyond expectations. Torben Carlsen, CEO
Q: What is the outlook for the Mediterranean Ferry segment in 2025, and how does it affect potential goodwill impairment?
A: We expect market stabilization as we adjust capacity, which should improve pricing power. We do not foresee any goodwill impairment risks for the ferry segment, as our cash-generating units cover the full Ro-Ro business. Torben Carlsen, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.