DFDS.

DFDS AGREES NEW TERMS AND COMPLETES TURKISH LOGISTICS ACQUISITION

November 15, 2024 at 06:54 am EST  Share

DFDS acquires international transport network connecting Türkiye and Europe from Ekol Logistics

Acquisition replicates DFDS’ ferry/road business model to the Mediterranean and connects Türkiye to DFDS’ existing logistics network

Network expected revenue for 2024 of DKK 3.3bn and 3,700 employees

Share purchase agreement revised since 1 November 2024

Transaction enterprise value of DKK 1.8bn corresponding to 0.55x EV/Sales for Q3 2024 LTM

Investor/analyst conference call Friday 15 November 2024 at 1.30pm CET, see registration details below.

DFDS has today completed the acquisition of the international transport network of Ekol Logistics (the “Company”). Ekol Logistics is a leading Turkish transport and logistics company headquartered in Istanbul.

The acquisition is based on a revised set of terms agreed since the termination of the share purchase agreement on 1 November 2024. The main change in terms relates to the amount of debt included in the transaction. In addition, DFDS now has an option to extend the duration of the terminal agreement with Yalova Port.

The Company transports goods between Türkiye and Europe with own offices and facilities in 10 European countries. More than half of transports provided are intermodal using combinations of road, ferry, and rail making the Company the largest customer of DFDS’ Mediterranean ferry route network.

“DFDS’ acquisition of Ekol’s international transport network greatly enhances our ability to provide a reliable and efficient transport infrastructure supporting Türkiye’s continued growth as a manufacturing hub. Given the revised terms, well prepared business plans, and the strength of our expanded network, we are well positioned to protect and grow our Mediterranean business”, says Torben Carlsen, CEO of DFDS.

“The strategic logic of the sale of Ekol Logistics’ international transport network to our longstanding partner DFDS is compelling. On behalf of all my great colleagues, I’m therefore very pleased we came together again and forged a revised agreement. A new growth story can begin”, says Ahmet Musul, founder and Chair of the Board of Directors of Ekol Logistics.

The Company’s transport network builds on a partnership since 2019 with DFDS through a long-term customer agreement providing stable access to ferry capacity in the Mediterranean route network.

Strategic fit and business model
The acquisition is fully aligned with DFDS’ transport network strategy focused on moving goods in mainly trailers by ferry, road, and rail, and on offering complementary logistics solutions.

The addition of the Company adds road transport to DFDS’ Mediterranean ferry network thereby extending the proven northern European ferry/road business model to this region.

Moreover, DFDS’ logistics network will be expanded across Europe and connected to Türkiye. This provides DFDS access to offer end-to-end transport and logistics solutions directly to end customers trading between Türkiye and Europe.

In addition, the acquisition expands DFDS’ presence in a high-growth region supported by nearshoring of supply chains closer to Europe.

Business and integration plan to improve financial performance 
The Company’s EBIT-margin declined to 2.5% in 2023 and for 2024 the Company is expected to report a loss.

The key drivers of the Company’s earnings development comprise both commercial and operational issues, including a loss of market share and margin pressure due to changing trade flow balances between Türkiye and Europe as Turkish import volumes slowed down in 2024 while export volumes increased.

The business and integration plan’s financial objective is unchanged since April 2024 to improve the EBIT-margin to around 5% by year-end 2027. This includes a net positive impact from synergies and integration costs. The latter are mainly related to system integrations. A break-even result is expected to be achieved by year-end 2025 while annual revenue growth is expected to exceed 5%.

Extensive integration preparations have been made since April 2024. A management organisation will be established comprising managers from both companies. Detailed plans are in place to drive the earnings turn-around and the integration focused on three phases:

Phase 1 (year 1): Commercial and operational focus to increase volume throughput and improve equipment utilisation by enhancing sale of transports to/from Türkiye by leveraging DFDS’ existing northern European network. Grow volumes to Türkiye from acquired European offices. Align operations to change in trade flows. Improve cost coverage of pricing/surcharges. Improve equipment operating efficiency and road/ferry/rail coordination.

Phase 2 (year 1-2): Integrate acquired European networks with existing networks to gain scale benefits, including improved utilisation of equipment/facilities and consolidation of offices/facilities. Move select volumes to ferry/rail from road. Implement best practices in customs organisation.

Phase 3 (year 2-3): Network optimisation and sales to key customers of contract logistics products to complement transport solutions (FTL/LTL).

The Company will be managed as a separate business unit as part of the Logistics Division, although some country organisations will be integrated in the existing Continent business unit.

Transaction structure and financing
DFDS acquires the Company for a debt-free price of DKK 1.8bn (EUR 240m) equal to a EV/Sales multiple of 0.55x based on revenue for Q3 2024 LTM. The Company has since April 2024, due to the decline in earnings and asset investments, incurred additional debt that has been excluded from the revised agreement. The transaction’s equity value of DKK 1.5bn (EUR 205m) is unchanged compared to April 2024.

The transaction is financed by a combination of loan financing and use of existing cash funds.

All relevant regulatory approvals have been received.

Investor conference call today 
An investor and analyst conference call will be held on 15 November 2024 at 1.30pm CET.

Please register for the call via this link. Live streaming is available from this link.

About the Company’s international transport network 
The Company transports goods for global manufacturers between Türkiye and Europe using primarily trailers to minimise trip days as most goods carried are time sensitive.

The network is set up for both intermodal and road-only transports using mostly inhouse haulage and ferry/rail transport provided by third-party ferry and rail operators. Around 80% of all transports combine transport modes. DFDS is the key provider of ferry transport between Türkiye and Europe for the Company.

Customers are mainly European and global manufacturers with production or assembly plants in Türkiye and Europe. Primary sectors served are automotive, industrial parts, and textiles/garments.

The network offers customers both full-load (FTL) and part-load (LTL) transports with a split of around 60/40 as well as complementary services, e.g. customs. The top three transport flow corridors are Türkiye-Germany followed by Spain and France. Own offices and facilities are operated in 10 European countries to service customers and haulage operations.

The Company operates around 5,800 owned equipment units, including 1,300 trucks, 3,900 trailers/swap bodies, and 600 containers. There are 26 facilities in Europe with a total area of 120,000 sqm. Around 75% are cross-docking terminals for LTL operations and the remainder are warehousing with storage capacity.

Dette fra Market screener

Problemet med selskaber som DFDS er at de er ekstremt afhængige af konjukturerne

At økonomien er blevet forringet til ugunst for DFDS's forretningsområde  fremgår også af dette interview om det aflyste opkøb af Ekol:

https://shippingwatch.dk/Rederier/article17617394.ece

DFDS Q3 2024 INTERIM REPORT - WORKING THROUGH HEADWINDS

ANNOUNCEMENT NO. 80/2024

Q3 2024

Revenue up 11% to DKK 8.0bn Organic growth was 4%

EBIT reduced 11% to DKK 785m

Adjusted free cash flow of DKK 396m

CO2 ferry emission intensity lowered 1.6%

Outlook 2024 (updated 1 November 2024)

EBIT of DKK 1.5-1.7bn

Revenue growth of 8-10%

Adjusted free cash flow of around DKK 1.2bn

“Despite market headwinds, we continued in line with our organic growth ambitions to protect and grow volumes in Q3 on the back of our network strength,” says Torben Carlsen, CEO.

CEO’s comments

Q3 was as expected a challenging quarter. The European slowdown in demand and manufacturing that began in Q2 became more widespread in Q3. Instead of a rebound in Q4, we are now expecting a further slowdown in the rest of the year.

Despite the market headwinds, we continued in line with our organic growth ambitions to protect and grow volumes in Q3 on the back of our network strength. This did not, however, translate into earnings growth as price and margin pressures were intensified through our exposure to the automotive sector, the Baltic region and eastern Europe, and the new Brexit border checks that are holding back food exports to the UK.

Our Q3 result was therefore lower than expected and following our revised view on Q4 market demand, the 2024 earnings outlook range was lowered.

We remain committed to moving our green transition forward even though this entails extra costs in the short-term. Strengthening customer service and operating efficiency through standardisation and digitisation are also strategic priorities.

Ferry increased volumes in tough market

Our freight ferry network achieved 4% organic growth in Q3 which was overall in line with our expectations. Pricing continued however to be impacted by overcapacity in some network regions. The organic passenger volume growth was 2%, and we’re pleased to report that our new route network across Strait of Gibraltar had a successful high season.

Logistics challenged by market slowdown 

A large part of the Logistics’ network continued in Q3 to perform on level with 2023, especially the UK/Ireland network. Earnings pressures did however increase further in Q3, not least in full-load (FTL) markets, and this is expected to continue in Q4. A set of specific actions are being taken to mitigate headwind impacts and improve earnings. The Nordic Cold Chain turnaround is in addition still expected to be completed by year-end.

Capital distribution

We continue to return excess capital to shareholders. Our share buyback program has year-to-date returned DKK 380m to shareholders besides the dividend of DKK 168m.

Outlook 2024 

The EBIT outlook range is narrowed and lowered following a Q3 result below expectations and a weaker market outlook for Q4. The adjusted free cash flow outlook is changed to around DKK 1.2bn from previously DKK 1.5bn.

Fra DFDS investor relations 

Jeg er enig med Hans. F.eks. har Tyskland været i recession i et stykke tid, og i England lider de under brexit. Så det skal nok være værre før det bliver bedre end nu. Det tror jeg også man forventer hos DFDS selv. De har jo lige solgt Oslobåden, og i sidste uge fandt de en eller anden grund til ikke at gennemføre opkøbet af det tyrkiske logistikfirma Ekol. Begge dele tyder på, at man forventer en tid, måske 2-3 kvartaler, med økonomisk tilbagegang, og at man kan købe billigere senere. I øvrigt kan selv et mindre fald i omsætningen få overskuddet til at forsvinde.

Nå jeg er en boomer igen men selskabet har selv været ude og nedjustere. Kig dig omkring i Europa det er ikke fordi det går specielt godt.

EBIT 2024 outlook range lowered to DKK 1.5-1.7bn from DKK 1.7-2.1bn

Adjusted free cash flow 2024 outlook is changed to around DKK 1.2bn from
around DKK 1.5bn

DFDS’ EBIT outlook range for 2024 is revised following results below expectations driven by mainly a more widespread slowdown in Europe than previously expected as well as intensified competition in northern European land transport markets and the Mediterranean freight ferry market.

The current market conditions are expected to continue for the rest of the year whilst a rebound in activity was previously expected for the rest of the year.

The termination of the share purchase agreement to acquire the international transport network of Ekol Logistics, announced earlier today, may moreover in Q4 2024 entail some financial impact.

As a consequence of the above, the EBIT 2024 outlook range is lowered to DKK 1.5-1.7bn from previously DKK 1.7-2.1bn, and the outlook for the adjusted free cash flow is changed to around DKK 1.2bn from previously around DKK 1.5bn.

The revenue growth 2024 outlook is changed to 8-10% from previously 8-11% as revenue from Ekol Logistics was previously included in the revenue outlook.

DFDS’ Q3 2024 interim report will be released on 7 November 2024 at around 7.30am CET.

DFDS 2024 OUTLOOK LOWERED BY MARKET SLOWDOWN AND TRANSACTION TERMINATION

EBIT 2024 outlook range lowered to DKK 1.5-1.7bn from DKK 1.7-2.1bn

Adjusted free cash flow 2024 outlook is changed to around DKK 1.2bn from
around DKK 1.5bn

DFDS’ EBIT outlook range for 2024 is revised following results below expectations driven by mainly a more widespread slowdown in Europe than previously expected as well as intensified competition in northern European land transport markets and the Mediterranean freight ferry market.

The current market conditions are expected to continue for the rest of the year whilst a rebound in activity was previously expected for the rest of the year.

The termination of the share purchase agreement to acquire the international transport network of Ekol Logistics, announced earlier today, may moreover in Q4 2024 entail some financial impact.

As a consequence of the above, the EBIT 2024 outlook range is lowered to DKK 1.5-1.7bn from previously DKK 1.7-2.1bn, and the outlook for the adjusted free cash flow is changed to around DKK 1.2bn from previously around DKK 1.5bn.

The revenue growth 2024 outlook is changed to 8-10% from previously 8-11% as revenue from Ekol Logistics was previously included in the revenue outlook.

DFDS’ Q3 2024 interim report will be released on 7 November 2024 at around 7.30am CET.

Selvom DFDS er kommet med en nedjustering, så mener jeg at det efterhånden er blevet en overreaktion.

Vi er nu nede på en kurs, som for ca. 10 år siden. Er også pænt oversolgt.

Samtidig kan jeg se at "eksperten" Jens Løgstrup, som ofte er i millionærklubben, stadig ejer 0,6 % af virksomheden, og

har tænkt sig at beholde.

Samtlige rederiaktier er også på en pæn nedtur, så på ettidspunkt, tror jeg at der kommer en modreaktion.

Hvad er  jeres tanker om DFDS i dag.

Jeg HAR købt for nogen tid siden, men er selvfølgelig træt af kursen i dag.

MVH

Bjarne