Jens Lund: some of the first slides here. Later on, Michael will cover some of the other points on the agenda. Let's quickly go into it. We can start basically by, I think, the most important topic for many of you during the quarter. We can say that the service levels on Road are back on track, and the quality issues that we had are resolved. But of course, it has had the consequence that our synergies will be realized a little bit later on the Road side because we've had to have focus on solving those issues. In general, on group level, the GP is up 2.3%. When we made the business plan for acquiring Schenker, we said we were going to lose a certain volume or GP at the end of the day.
Jens Lund: Now, in Q3, it's really great to see that we're back on the growth trajectory when it comes to GP. On the EBIT side, we've grown significantly more because, of course, the synergies that we realize drives a higher conversion. I mean, at the end of the day, also the EPS has come up, and we're right now at 11.5% growth, so we also see that it trickles all the way down to the bottom. This has led to a situation where we are now going into Q4, so we've narrowed our guidance. We've done this, of course, because normally you start the year with a broader guidance, and now we have more certainty when it comes to the result. So the guidance is now between DKK 24 billion and DKK 25 billion in EBIT.
Jens Lund: If we look at the cash flow, we've delivered a solid cash flow here in the quarter, even if the freight rates are still elevated, not least on ocean freight. We've started the first share buyback program since we acquired Schenker. All in all, those were some of the highlights from Q3. Just wanted to say a few words on the integration as well. I think we are continuing as per plan. There's only a few countries outstanding, no major countries left on the integration, and much of the customer integration also done. So good progress on that one. Of course, we just talked about the issues that we've had on Road. That leads to a little delay in the realization of the synergies, so that will happen now and be finalized in 2027.
Jens Lund: Basically, the expected outcome and also the costs in relation thereto remain the same, but of course, a little bit delayed also on the special items into 2027. If we look at the financial highlights for the quarter for the group, I think the earnings growth we just talked about, and I think also that the GP has grown. This is something that we're very focused on here in the headquarter, that we add more value to our customers, and of course, then also that we convert that into a solid growth in the operational result. I would say that the A&S division has delivered as expected, and CL has delivered a very solid result, I should say. Then, of course, the Road results are clearly affected by the quality issues that we've had.
Jens Lund: The cash flow for the quarter, DKK 6.4 billion, and I had already talked about the revision of, or basically the narrowing of our guidance. That is really the financial highlights. If we look at A&S, I think one thing that is important, and we have also just added a slide on Global Products, that used to be part of the results for the divisions. Therefore, if you look here now, you will say, well, the gross profit has grown 0.2%, but if we adjusted for the GP that we have taken out on A&S, actually we have grown 2.8% year over year. That is always what happens when you move some of the volumes around, that it is a little bit blurry, what is the baseline and then what are the actual figures, and are they fully comparable? So we just added this information on the right side here.
Jens Lund: If we look at basically the conversion rate, so it continues to increase, and we are aspiring to get up to the 50% target. Also during the next year, we will definitely see an impact of the continued work we do on productivity. Then, of course, the EBIT margin also trending towards the 10%. If we look at air freight, we grew the GP 4%. Actually, during the quarter, we did shed still. We had had this where we sanitized the portfolio, and this actually continued a little bit into July. After July, basically, we have finished this. I would say the general trend on the air freight is that we have seen that the volumes into Europe still under pressure, and not least the volumes related to automotive. On the other side, of course, we have seen progress on the technology vertical, where we have grown our volumes.
Jens Lund: As you can see also, the yield at a very solid level, almost DKK 9,000 per ton. Overall, as I said, the GP has increased by 4%, so we are quite happy about that. If we look at the ocean freight, the GP has decreased by 4%, and yields a little bit down, and volumes also slightly down on the ocean freight. What we are working on right now is we are very much focused on the commercial activity in the ocean freight to make sure that we swing the trend round. I will say both for air and for ocean, we have seen that we are slowly getting into a situation where we have basically leveled out, and we should hopefully, during the next quarter, start to see the inflection point where we get growth. Yield is at DKK 4,100 at the end of the quarter.
Jens Lund: So basically, if you look over the cycle, it is more or less the same as we had Q3 2025. Basically, the composition of VAS and freight markup is also in the one-third, two-third range. So, one-third is the freight markup, and two-thirds is the VAS. Then we come to Road. Here on Road, we can see, not least on the GP, what impact the issues that we have had has on the GP in our company. I would say that the difference is probably, let us say, approximately one-third related to extra cost due to the quality issues, so they should go. Then the remaining part is actually that we lack volume in the network, so we need to have this commercial focus now that we have solved the operational issue. We have put that behind us.
Jens Lund: It's very important to get that message across that the quality in the network is solid. Now it's the commercial activities that we're looking into. When we look at the commercial activities, I think it's also important here to state that how this normally works is that you try to fix the quality issue first. Now that's solved, then what you want to work on is basically that you want to work on making the sales calls. Of course, in the beginning, when you have quality issues, it takes a while before you start the sales calls, so we started that in September here. Really intensified the interaction with the customers, building up the pipeline. Then once the customers, they accept our proposals, and here you have to remember that we have the strongest groupage network there is in Europe.
Jens Lund: It's not that we can't get the appointments. The customers, they do want to talk to us. Then basically, we've converted some of that, and then we will have to make the integrations if it's a customer that needs an IT integration before we go live. So that cycle will probably take at least 90 days. So what we sell right now will then come in, let's say, in 3 months. So, it has a delay impact. We can look at all the KPIs. NPS has improved, and just also, there's been some concern was there spillover on the NPS to other divisions. It has not spilled over, so they basically have a very solid NPS development in the other divisions. But of course, the Road Net Promoter Score has declined, but right now, it's actually, it's had the trough, and now it's increasing again.
Jens Lund: So that's really the status when it comes to Road. We just put some KPIs here, and I can tell you that normally, historically, the performance has probably been more in the 92% range. So having 94% in DIFOT is very solid. But as you can see, the trend line has been increasing all the time. We were concerned about, we were very happy in August when we saw the 92.4%, but we were concerned when the volumes come back after the summer holiday, whether it would be sustainable. And actually, it's proved that the initiatives we've taken have continued to improve the delivery quality. So that's really positive. So well done to the Road division, I would say. If we take the Contract Logistics, here you can see that we've actually grown the EBIT with 50%. If we exclude the properties, we've grown it with 42%.
Jens Lund: So a very, very solid performance. Two things have driven this performance. One thing is that we've continued to sanitize our portfolio and basically cleaning out business that don't deliver the desired outcomes. The other one is that we've seen that we've managed to compensate for all that volume we've taken out with new volume, in particular for the hyperscalers. So these two things in combination, they're really important. I think what is also important for you to notice that we see that basically the pace that we grow with the hyperscalers is going to continue. We can see the pipelines, they're very, very solid. So I think you should expect that the CL division will continue this journey that it's on. And of course, that's very positive because one of the things that we were criticized for was the low return on invested capital.
Jens Lund: And now you can see that there is a better connection. We are now at 10.9% on the return on invested capital. The comparable figure was 6.9%. So, of course, this growth in EBIT, but also the focus on the capital that we have deployed, it has really helped us a lot. I think that it would not surprise me if we managed to take, what can I say, another step up at year end, and it would make me very proud to trend towards the 15% that we had set as a target for the Contract Logistics division and take another step in the next quarter. So, well done to Contract Logistics on that. Then I will just say, last call, people, they were asking a few questions about this Global Products, and rightfully so.
Jens Lund: So we have just taken a slide and said, "Listen, what kind of activities is it that needs an enterprise approach so that it is not part of a country-based setup and that should have a life on their own?" So here are the products that we move to, what can I say, a separate structure. It is called Fairs & Events. This is where you have to have specialty knowledge for fairs, events, all these kind of things, and to have this knowledge across countries. This is very important. On the parcels, it is the same. We are 3PL on parcels. Also here, you need perhaps a more network approach in order to continue to develop that. Then, of course, the customs always quite important as well. Normally, it is part of a country-based setup, and we have decided to make an enterprise function out of that.
Jens Lund: This is then also so that we can serve the customer end-to-end. Also, the technology we have allows us basically to produce on the same platform, so kind of a single file system for all of that. So, these are some of the main services. Actually, we also have some supply chain engineering that we can do as well, add some value, and some 5PL capacity, but these activities are a little bit sort of smaller. So now I have said a lot, and it is time for you, Michael, to go through some of the numbers and other stuff in detail, so please have a go at it.
Michael Ebbe: Thanks a lot, Jens. I will immediately skip to the next slide here with an overview of our P&L for the first nine months of 2026. A couple of highlights on that slide that I would like to elaborate a little bit on. Of course, you can see that the revenue has actually increased 10.5% as a consequence of the rate environment and also to a certain extent the activity level. That has also have an impact on net working capital, which I will come back to in a second. Jens, you already touched upon the EBIT growth, which is also nice to see. But also, if you look at profit for the period, has actually increased DKK 900 million compared to same quarter last year, which is also good to see.
Michael Ebbe: The conversion ratio for the group, I think that is also worth highlighting, that we have increased from 27.9 to 32.6, driven by all the initiatives and the synergies that we have worked on. That is also nice to see that. Of course, the net interest costs is higher than last year due to the fact that now we have, you can say, the fully financing of the Schenker acquisition included for all the period, which we did not have last year, obviously. Jens, you already touched a little bit on it, but the EPS, now we actually can see that we are growing on a 12-month rolling. Our EPS has increased 11.5% compared to same period last year, and that is, for many, this is what it is about. I will go to the cash flow statement that we have.
Michael Ebbe: Also a little bit highlights on that one, starting out with the adjusted free cash flow, which amounted to DKK 6.4 billion in Q3. Look at the cash conversion ratio. Cannot promise that that will continue, but of course, it is nice to see that we can collect some money here with a cash conversion ratio of more than 128%. Net working capital slightly increased due to the freight rates. If you look at the ratio a little bit further down on the slide, you will see that the ratio is actually better than it was, you can say, at the end of last quarter. So we are grinding our way through it. We promise to reduce the net working capital, but of course, if we get more activity and higher rates, that will have an impact clearly.
Michael Ebbe: I also would like to highlight that we have actually on the gearing ratio, it is now 2.46. Actually, now we can only have one digit here, but it is 2.56. So during the quarter, since last quarter, we have actually reduced the 0.2 on the gearing ratio. Also worth mentioning is that since we started the integration, we have reduced net interest-bearing debt with DKK 12.6 billion as well. So all in all, I think it is nice to see these kind of numbers. Of course, we would like to have them even better, but it is positive. The cash flow and the current state of our financial situation has also led to the fact that we have started a launched share buyback this morning of DKK 1.5 billion. It is good to be back on that.
Michael Ebbe: I know that people are saying that we are still 2.5 on gearing ratio, but I would like to highlight that we have the journey, the path that we are on, where we have decreased our gearing ratio for the last couple of quarters. It is a positive trajectory that we are on. We do stay committed to the capital allocation policy, heading towards two times in the gearing, expectedly during 2027. Of course, the ambition is to do it in the H1 of 2027, but that is our aim. The reason also being for this start of the share buyback is that we have an obligation towards our share option program, and we have to buy back shares to be able to deliver on those obligations. That means that we have now, you can see on the slide here, that in 2025, there was not much share buyback.
Michael Ebbe: We will see we have these columns again with the share buyback, hopefully. I would also like to highlight that this is, like I have said also last quarter, we are now in a position where we every quarter assess according to our capital allocation policy, so that we have started. It is not necessarily, you could say that we will continue that journey, but of course, we expect that we will have solid cash flow going forward as well. Then, Jens, you already touched upon the next slide here on the guidance, where we have narrowed the outlook to between DKK 24 billion and DKK 25 billion, giving the slightly delay due to the Road integration, also have a spillover impact on the special items. We are slightly delayed on those as well. That is the overall number.
Michael Ebbe: Some of the assumptions, of course, we have some synergies that we have already realized last year, and then on top this year, DKK 4 billion more, and then we have the additional DKK 1 billion that we postpone into the next year. It is still a volatile world that we live in. It is highly uncertain about the, you can say, the macro environments and interest rates and so forth. That is of course also worth to bear in mind. In terms of Air & Sea and volume for the last quarter, we assume volume growth to be slightly below the market in Air & Sea, and also yield slightly below what we have in Q4. Our aim is still to deliver on GP growth. That is very important to bear in mind here.
Michael Ebbe: For the Road, I think you touched upon it as well already, and Contract Logistics, we also expect to continue the growth that we have seen so far. Of course, the tax rate will remain as 28% is still impacted by this integration that we have, and then we will be able to come back to a more normal tax rate later on. Back to you, Jens, for the key takeaways.
Jens Lund: Yep. Thank you very much, Michael. Just want to reiterate that Road operations are normalized, so we basically now can focus on the commercial activities that we are having. Of course, we can also then focus on driving the productivity up as well. These are the two key topics for the Road division, and for DSV also very important. Then, of course, the guidance, we talked about that, and then the share buyback program that we have launched as well. I think we have confidence in what we are doing. With that said, I think we should move on to the Q&A session, and then we can spend some time answering your questions. Please go ahead.
Operator: Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. In the interest of time, please limit yourself to one question. Anyone who has a question may press star and 1 at this time. The first question comes from Jaime Rowbotham from Deutsche Bank. Please go ahead.
Jaime Rowbotham: Morning, gentlemen. Thanks for taking my questions. I was just after a few numbers, please. In Air & Sea, how much of the 3% volume decline is deliberate revenue dis-synergies or sanitizing the portfolio versus the SME activity levels declining in the Asia to Europe weakness? In Road, could you quantify the amount of synergy shift to 2027, the amount of customer volume losses you have been seeing, and the likely amount of gains on property disposals for next year, for 2027? Thank you very much.
Jens Lund: That was a little bit more than one question, the way I counted, but we will try to answer them anyway. I think on air freight, if we look at the development over the quarter, we actually saw the largest decline in July, and that is then more related to attrition. I would say it has been more around the 0% to 1% situation in August and September. That was basically, what can I say, tapering off of this attrition. If I should say it is 3%, I would probably say that the 2 percentage points based on this sort of conversation that we are just having here would be the remaining part of the sanitizing, and then now we are hovering about the 0% to 1% decline of business in the air freight right now. That would be the answer to that one.
Jens Lund: I think on the Road side, we do see that it, what can I say, takes some time to regain that volume. It will happen during next year. But also to realize the synergies will take a little bit extra time. Approximately in the neighborhood of DKK 1 billion will be pushed into next year. Because not only Road is impacted, also the back office functions that have to support that journey, what can I say, will have to keep extra resources as long as it is not completed, the integration. When we look at the volume decline, we have probably seen a volume decline just shy of a two-digit figure on the group side in Road. So, it is something. When it comes to the properties, then we do not necessarily plan for any gains. But as you can see, there has been some this year as well.
Jens Lund: But we have none in the forecast.
Jaime Rowbotham: Thank you very much.
Operator: The next question comes from Patrick Creuset from Goldman Sachs. Please go ahead.
Patrick Creuset: Hi, Jens, Michael. In Road, normally seasonality in Q3 heavily skews to September. Would it therefore be fair to assume that most of the underlying DKK 300 million profit in Q3 in Road was made in September? Therefore, when we are trying to look at an exit rate from the quarter, to have an exit rate per month of somewhere north of DKK 200 million EBIT, would that be a fair way of looking at it? I do not know if it counts as a second question, but Michael, if you could just clarify your comments on Q4 Air & Sea yields, which I did not fully get. Thanks.
Jens Lund: I think I will answer the Road, Michael, you can answer the Air & Sea bit. I think normally on the Road side, we are of course always a little bit impacted by the summer holidays in July and August. You have a lot of fixed costs. You are quite right that the result produced on the Road side is basically then produced in September. Now you get two good months as well, October and November. We have also regained a little bit of volume, so that should also help the figures a little bit there. Then December is going to be a weak month. If I should model it, I would probably add, if you take the clean figure that we talk about, the DKK 300 million that you also had mentioned, I would see a slight improvement in the next quarter, but not a lot based on this.
Jens Lund: Where we add, because the sales cycle is three months. Let us say we have had quality issues before the summer holidays. The customers, they come back from vacation on 1 September. We are now convinced it is good. Then we start selling in September. Then the first impact of these sales efforts, they are in reality going to come maybe in December, but also in January, if you look at that kind of math. So it will take some time to fill the network up, but it is a strong network we have. So we get the sales calls, and we can see from the pipeline and the work that is being done that it does pay off. Then over to you, Michael.
Michael Ebbe: Yes. Thank you, Patrick. What you have to bear in mind here is the normal seasonality on the yield side, which we do see on the Sea side. Then also, you can say we have had congestion, which is being a little bit lower, and Suez is slowly opening up again, and that will, in our world, have an impact on the yields compared to Q3. On the Air side, there might be less downside in Air also, what Jens spoke about. We have peak season and also, of course, tight capacity. So, that is kind of some of the underlying assumptions to the thing that we also have written here in the outlook.
Patrick Creuset: Thanks.
Operator: The next question comes from Alex Irving from Bernstein. Please go ahead.
Alex Irving: Good morning. Hope all is well. I would like to talk about the move from CargoWise to Tango, please, in Air & Sea. I understand that a little better. How much of the Air & Sea volume is currently flowing through each of those systems? Especially, I noticed that your other external expenses in that division rose by DKK 100 million quarter on quarter from Q2 to Q3. Shouldn't they be falling as you move to your own IT infrastructure? Or how else can you explain this, please?
Jens Lund: I think today, we approximately produce in the region 20% to 25% of the volumes on Tango. It is predominantly the larger clients that we have on that platform, so the more complex ones. We have not started the move of any rollout yet. I think we have not indicated that to the market either, that that rollout would start. We have said that we would want to improve Tango, and it will also coexist with CargoWise for quite a while, so that we de-risk, what can I say, the rollout. The two systems, they coexist today. So that is basically what I can say on that.
Jens Lund: Then, of course, if you look at the cost. I think it is, what can I say, a development where we had seen the A&S division being a little bit under-allocated beforehand in the Schenker times, and now we have changed the allocation model to the DSV allocation model, and this is basically what impacts the figures. It can also be that now we have shifted a little bit more volume onto CargoWise, and as you know, that comes also with, what can I say, a very solid cost per transaction, so that impacts it a little bit.
Operator: The next question comes from Muneeba Kayani from Bank of America. Please go ahead.
Muneeba Kayani: Good morning. On Road, I just wanted to clarify your comment earlier, Jens, that one-third of the impact was additional costs and two-thirds related to volumes. Is that from a DKK 1 billion normal, and does that mean it is about DKK 300 million of Can you help quantify what was the additional cost? Was it DKK 300 million, and has that now totally gone away as we think about the Q4 performance? Then into next year, the synergies, what is the impact on synergies that you were expecting earlier versus now if the DKK 4 billion would have been the full EBIT bridge for 2027, and what has it come down to now if it is a mid-2027 full run rate impact? Thank you.
Jens Lund: I don't think we guide in full for 2027 right now. That will come a little bit later. But I can try to help with some information so that you can perhaps do some work. I would say if you look at the quarter, in particular July, was still impacted by a lot of express deliveries. Of course, when we got it cleaned up, there were still, in August, certain terminals that were not in what we call green. This is when you are above 92%. So you also had additional cost in August and also some in September, but of course, very little, and now it is totally gone. There is no extra, what can I say, cost because of bad quality. So we would estimate that this number would probably be between DKK 200 million and DKK 300 million.
Jens Lund: If you then look at a quarter, like this quarter, I would think that under normal circumstances, we should have made DKK 1 billion where we were. Then I think all the numbers, they add up if you strip out, what can I say, the property in this calculation. Then, of course, going into next year, now we have had to have all this focus basically on the quality. Then, of course, all the productivity initiatives, they have been slowed down, because the first thing you want to make sure is you have your delivery quality in place so that you have solid quality. So there are two tracks now. Now we drive productivity, so what does it cost to produce a shipment? Then, of course, we need more volume into the system. And these two things, they will be the main focus for next year.
Jens Lund: But I would say to drive the productivity up, it is something that happens quarter on quarter. It is a lot of activities. So what was my collection delivery cost? What is my productivity on the terminals? What is the utilization of the line hauls, et cetera? So these things you are working on with a very structured plan. It is the same team that solved the DIFOT that works with this. So I am quite certain that they will be able also to deliver on those tasks. Then on the commercial side, as I said, it takes some time for the sales cycle, and I would probably presume that it takes, to regain the volume that we have lost, it will probably take six to nine months into next year before we are at the same level as we were before we saw the attrition. So it takes some time, but we will grind our way through it.
Jens Lund: Basically, you can look at the Road integration in a way, I would say, as if you have almost lost a year, because now we start selling, and it can be that only at this time next year, we will be at the same place as we had originally planned for. So that should be the building blocks for your model.
Michael Ebbe: I think it is important to also, like you said, Jens, it is important to say that there are no changes in our commitment in terms of the plans and on delivery of the synergies. But as you rightfully stated, it is being delayed a little bit. But the overall thing that we planned for is still going to happen and take place.
Operator: The next question comes from James Hollins from BNP Paribas. Please go ahead.
James Hollins: Yeah, thanks so much. Just a couple of clarifications. I think there, Jens, I appreciate your color on the Road customer losses. If we go back to Michael's pre-close call, there seemed to be a suggestion that there may have been some bleed of customer losses elsewhere in the group outside of Road. And I think, Jens, you are saying today that did not happen. Perhaps you could clarify that for me. Thank you.
Jens Lund: I'm not really sure what exactly you're referring to. If we look at bleeder customers, the area where we normally would look at bleeder customers would be on the Contract Logistics, where you would have, what can I say, activities in warehouses that you operate that basically operate, what can I say, at a very low margin and sometimes even at a minus margin. This is basically also what we describe on the CL side, where we say all this loss-making business, all these things that are not delivering the returns that we require, this volume, we're basically terminating now. I think that's typically where we have that topic, and that's then part of the CL improvement that you take some business out that maybe loses money or has very low margin, and then you replace it with business that operates at a normal margin.
Jens Lund: This is in reality what you can see in the CL figures, and look at what an impact it has.
Operator: The next question comes from Jacob Lacks from Wolfe Research. Please go ahead.
Jacob Lacks: Hey, thanks for your time. On Air & Sea, when do you think the division can get back to market growth rates on volume now that we're largely through the integration? Thanks.
Jens Lund: We're growing GP already. I think this is very important to state that we do that. This is the most important metrics. Then, of course, the growth in GP, at the end of the day, it comes from two things. It comes from volume and yield. I think we've finished sanitizing, what can I say, the business. If you look at the yield uplift, it's been tremendous during the last year on the Air & Sea side. That's a job well done. On the volume side, we are hovering around, what can I say? It's basically plateauing now. We've come out of the trough, and we're basically at the inflection point. Whether that will then be in Q4 or as part of the normal tender season into Q1, I can't tell you, because we will have to see how it all pans out.
Jens Lund: This is basically how I would model it. If you're a little bit conservative, model it into next year, and if you're more positive, you can maybe think about a slight increase this year.
Jacob Lacks: Thank you.
Operator: The next question comes from Cristian Nedelcu from UBS. Please go ahead.
Cristian Nedelcu: Hi, thank you very much. Apologies to come back to some of these points, but I think most of us, in terms of synergies next year, we have around DKK 5 billion year-over-year incremental, 4 out of Schenker and 1 the other ones. It is not fully clear to me, roughly how much do we take out of Schenker? We take DKK 1 billion out, align with the special items that you moved, or more or less? Any type of color you could give us there. The second one, the bear argument on Road is if you exclude the express cost that you explained earlier, your run rate is somewhere around DKK 500 million clean EBIT per quarter. If I annualize that, I get to DKK 2 billion. If I do not get too much synergies next year, I could be at DKK 2.5 billion EBIT next year, or 3.
Cristian Nedelcu: Am I missing anything, any moving parts from this bridge? Probably just a short one. You mentioned, Jens, Air & Sea conversion ratio of 50%, the target. Do you believe in some of the quarters next year you can already be at 50% conversion in Air & Sea, or that is something more for 2028, 2029? Thank you.
Jens Lund: If we take the conversion ratio on Air & Sea first, I think it is if you look at how it has been increasing, then there is also, what can I say, plans for productivity improvements into next year. Whether we will hit the 50% mark or I mean, at the end of the day, we have a long-term 2030 target of 55%. So we will have, what can I say, to drive it past the 50%. We have not finished the rolling forecast in that detail and are 100% certain about it. But it will go towards the 50%, I can tell you that. Then I think on the Road side, we talk about, what can I say, the impact of what we are doing. I think basically if you look at these two things that are outstanding, you will have the operational basically improvements that we need to make.
Jens Lund: So that is kind of like one track. Then basically also on the commercial side, what is the impact of the volumes that we are missing? I think if we look into that, then to get an impact out of those two initiatives of DKK 500 million on top of what we have this year, that would be a bear argument. I would agree to that, as you said. That is the bear argument. I think just as we fixed the DIFOT, we can definitely improve the operational efficiency. If I look at the impact on the sales side, I also see that we can get the volume back into the system. Then if you try to model that, I am quite sure that using those assumptions, you will probably end somewhere else than the 2.5. But that is, of course, how you run your model that determines that. So, yep.
Michael Ebbe: And then just to clarify, if needed, on the synergies. I think we stated that last year, we had full year run rate of DKK 800 million. Then we have said that during this year, we expect at least DKK 4 billion. Now we say DKK 4 billion, and the remaining part would then come into 2027 as from 1 January. Now we say we delay it with DKK 1 billion, so that will, of course, come in later during the year in 2027.
Operator: The next question comes from Alexia Dogani from JPMorgan. Please go ahead.
Alexia Dogani: Thank you for taking the question. Just again on synergies, and you mentioned in the statement that you are committed to the DKK 9 billion of synergies, but there is a kind of offset, partly offset by cost inflation and investment in Contract Logistics. Could you just clarify the kind of magnitude of offset that you see? Then, I am sorry to also again clarify on the financial impact in 2027. At the CMD, you helpfully gave a slide 136, giving kind of the phasing. Obviously, now there is a delay. Are we basically saying the delay is DKK 1 billion, so DKK 1 billion moves from 2027 to 2028? Or is it a DKK 1 billion realization in 2027, and the remainder DKK 3 billion is in 2028? I think that would help everyone make sure their model is aligned with your plan. Thanks.
Michael Ebbe: Yeah. If I start with the last one first, the DKK 1 billion, which is delayed, that is, of course, fully impact from 2028. But we do expect that we will start, you can say, earlier, but the full run rate would be in 2028. That is clear for the DKK 1 billion. So
Jens Lund: Did that answer the question? Because I was
Michael Ebbe: Was that the answer, or was there another one? Sorry.
Alexia Dogani: Yeah, it was the net effect. Basically, you have added a statement
Michael Ebbe: Yeah
Alexia Dogani: that says
Michael Ebbe: Okay, yes, yes.
Alexia Dogani: The solution is DKK 1 billion, but there is an offset. What is the offset?
Michael Ebbe: Yeah. If you look at Contract Logistics for a start, then you would see that they have increased the EBIT of 50%, right? And they have also had a staff cost which is higher. So, I think you can look at that and then say this is what we do see. So, the expected synergies in the beginning, when we made the plan from CL, we have taken them out because the CL has grown the business. So, that will take that one out. And if you look at, I think it is the run rate is DKK 100 million on staff cost alone for this quarter. Secondly, that we do see inflation also on the other elements of the cost base. And if you, for instance, take 3% into that, I think then you have the building blocks to do it.
Alexia Dogani: Okay, thank you. And just to clarify one last point. A&S and Contract Logistics at the end of 2026 will have delivered your plan in terms of the financial impact. Is that right, for the synergies?
Michael Ebbe: Yes, you can assume that.
Alexia Dogani: Thank you.
Operator: The next question comes from Marco Limite from Barclays. Please go ahead.
Marco Limite: Hi, good morning. Thanks for taking my question. I have a follow-up on these synergy figures, because we are saying that in 2026, you guys are still planning to achieve DKK 4 billion synergies, so guidance is not changed, but Road is clearly lagging already in 2026. How are you going to get to DKK 4 billion despite Road being below? Does that imply A&S or CL ahead of the plan, or how do we get the DKK 4 billion weaker Road? Still related to that, I think this quarter is the first quarter where your total FTE number is now coming down quarter-over-quarter. I understand Contract Logistics is up. Nice to see organic growth is good. Why FTE is not coming down in A&S, for instance? Therefore, shall we expect FTE number basically not coming down anymore in A&S? Thank you.
Michael Ebbe: No, if you look at it from a total level, then you would see that we have reduced the number of FTEs with around 800 during the quarter, so white collar. I think that's at least what you need to look into. Then, of course, there is, if you look at the A&S, we also explained a little bit about the Global Products during the quarter. We have also had a, you could say, a move for some of those into that area.
Marco Limite: Okay. And on the DKK 4 billion 2026 despite Road being quite weaker than expected at the start of the year?
Michael Ebbe: Sorry? Again, it's a little bit difficult to
Jens Lund: The DKK 4 billion figure that was in the guidance was probably a little bit, what can I say, on the low side. Now you can say it's more accurate. It might be that we say approximately DKK 4 billion. Let's say that it might be a little bit less, which could also be the case, because as you say, the Road has been delayed slightly. I think we then decided to keep, what can I say, the same number instead of, let's say, writing DKK 3.750 or whatever the number could be. That's really how we've come to the guidance.
Marco Limite: Okay, thank you.
Operator: The next question comes from Lars Heindorff from Nordea. Please go ahead.
Lars Heindorff: Yes, morning. Thank you. On the Road division, to get back to that, I understand that you appear as quite confident of getting or regaining some of that volume that you lost. I mean, this is a fairly fiercely competitive market that you are operating in. I mean, will you be able to regain that volume without any kind of impact on your GP per consignment, that is, price or maybe payment terms, which will impact the cash flow? Maybe just a few comments on what exactly the path back to getting those and regaining those volumes. Then, as a follow-up on that also, I mean, the customer consignments as we enter into Q4, where is that compared to what you want it to be?
Jens Lund: If we look at basically regaining the volumes, our sales activities, the pipeline that we have, it is basically how we normally would conduct business within the various segments. So I should say that it is not like we go out, what can I say, with terms and conditions that are materially different, because then it has, what can I say, a longer-term impact. So we really have to go out and basically increase your sales activities, then that would normally lead to a certain conversion of your pipeline. So that would be that topic. If you look at the production cost, at least what we have planned for in our rolling forecast is that we should be able to lower our production cost between 5% and 10% on what we have due to inefficiencies in the network.
Jens Lund: It can be on collection delivery, it can be also, what can I say, the activities in the terminal, and then one of the major topics is also our line haul setup, where we can drive the efficiency somewhat up so that we can deliver on those outcomes. Let's say on the line haul, for example, I would believe that the average utilization we have is maybe around index 90, and we should definitely be able to drive that, let's say, 5% up, if you look at that. It can be other topics as well that we talk about, so the number of stops per route, et cetera, on the collection delivery bit.
Jens Lund: I would say these plans, they are all, what can I say, committed by the team, as I said, that solved the DIFOT, and they are now working actively on this, and we can already see some of the first things being executed. I am quite confident on that.
Lars Heindorff: Can I just follow up maybe on the cost side in Road? There is a sequential decline in staff cost into Q3, which is, I think, is that just caused by normal seasonality? I mean, it tends to be lower in Q3 or into the holiday season, and we should expect the staff cost to increase again into Q4?
Jens Lund: I think basically I am not 100% certain on that because the holiday accrual makes it very difficult to be 100% certain. I would more want the team to get back to you on that, but we take people out as part of realizing the synergies. I can tell you that on the FTE side. We continue that journey now on Road. But how the holiday accruals have sort of impacted Q3, it has a significant impact on it. I would not want you to make a mistake in your model, so please reach out to the team, then they will be able to give you the exact number.
Lars Heindorff: All right. Thank you.
Operator: Then the next question comes from Kristian Godiksen from SEB. Please go ahead.
Kristian Godiksen: Yes, thank you. Also a question on the Road part. Obviously there is quite a big of a delta to the DKK 2.5 billion for the Road EBIT in 2027, which was Christian's question, and then to your own DKK 6 billion that you communicated on the back of the Q2 numbers. I guess as you pointed out there, the main moving part is the trajectory on winning back volume. Just wanted to get some more feel on how comfortable you are on winning back the volume and at what potential discount in, yeah, pricing discount to win that back volume. It is just, I guess, on the basis, on the operating leverage being very high in the group, in the groupage part of the business, which I guess based on the underlying numbers for Q3 must have been loss-making as the FTL, LTL business has been marginally less impacted.
Jens Lund: Yeah, I think I have said it a couple of times now. What you do when you do sales is that basically you want to have, what can I say, basically the visits, you want to have the appointments with the customers. We can get those appointments so that we get the meetings. Then what we do when we speak to the customers, we can now explain them how the quality is. The quality is very high in the network. So we have very good product. It is the strongest network in Europe. So in a market, for example, like Germany, we have less than 5% of the market. So of course, there is a lot of volume you can go after that we are not in contact with. Then there are the existing customers that maybe have down-traded a little bit with us. They can now see the quality is back.
Jens Lund: And then, of course, there is the customers that have switched provider. We can see that on the segmentation, all the larger customers, they have stayed with us. So all the complex volume, they stay with us. So it tells us something about the quality of the network and the service that we provide. It is more, let us say, smaller customers that perhaps can operate in one or 2 markets that has a greater opportunity to choose another provider. So of course, this is a focus area for us that we now go and see those customers in those markets and make sure that we basically deliver on them. Then the sales cycle, I explained, it takes 3 months.
Jens Lund: But then you follow it in the pipeline how it is going, and you see the conversion on it, and then also some of these things, they lead to IT integration so that we need to be ready to exchange data with the customers in a digital format in an efficient way. So that is in reality sort of how we are doing. When I speak to the team, I see a lot of energy, I see a lot of activity in the pipelines and all these things. Yes, I think that we have the right product, and yes, I think that we can deliver basically on regaining the volume. I think that is what we are all working on. Yep. I think that was-
Kristian Godiksen: Thank you. Just to follow up on that, I guess. To your DKK 6 billion, if I wanted to make a bridge for that for next year, I guess it is the loss of volume in terms of the sales cycle and that, and then the delay of synergies. That is basically the 2 parts I need to deduct from the DKK 6 billion number. Is that the right way to think about it?
Jens Lund: Yeah, I would do it like this. I would say, listen, there is some less volume going in, and then basically the GP is a little bit too low in the beginning, and maybe also a little bit on the conversion, because of course, we have been delayed in harvesting the synergies. But there are 2 types of synergies in Road, you have to remember that. It is basically that we then merge the networks, close down the terminals, and take out the overlap. We are already very advanced on that, but of course, that has been slowed down due to the quality issues that we have had. We are now, I can just tell you, to give a bit of confidence, we have gone live in Poland, merged the 2 networks, for example, down there, big networks. There has been no issue at all.
Jens Lund: We've merged some of the big terminals in the network, and I think we've solved all those things. We were approximately 450 terminals when we were two companies, and of course, we have to go down now to 280 right now. So I think we are right now somewhat over 300. So we've definitely done a lot of the work, and I think we've taken learnings from the things we've done and made sure that we don't see quality issues.
Kristian Godiksen: Perfect. Thank you. And just maybe on the incremental margins too, when I model the volume part, is it fair to assume that an incremental EBIT margin would be around 50% for the groupage part of the business due to the operating leverage?
Jens Lund: That depends a little bit where you stand. Right now, of course, if you lack volume in the system, it's very high, the margin, but of course, over time, that will ease out. But I would say that additional volume in a groupage network definitely drives a superior conversion compared to what you're used to see. Yep.
Kristian Godiksen: Okay. Perfect. Thank you a lot.
Jens Lund: You are welcome.
Operator: The next question comes from Ulrik Bak from Danske Bank. Please go ahead.
Ulrik Bak: Yes. Thank you for taking my question. In terms of the targets that you presented at your Capital Markets Day of another DKK 9 billion in savings from IT and network optimization, how should we think about that given your comments about cost inflation partially offsetting the Schenker cost synergies and the delayed integration of Road? Should we also subtract cost inflation here, and how much should these targets be delayed? Thank you.
Jens Lund: I think we still shoot for completing what we need to do in 2030. I would say that that is definitely still the aspiration. I think if we look at now completing the Schenker, what can I say, integration till next year, we should be, what can I say, delivering a solid number that we then can build on with, what can I say, the DKK 9 billion that we are talking about. We will already start some of the initiatives next year, and we are in POC in many of them, and we will then drive the productivity up. Then, of course, you are quite right. Over time, we should see a little bit less cost inflation. We have actually seen quite a bit going into the Schenker transaction, and normally, we should try to offset some of that with productivity gains.
Jens Lund: I would really not want to now dilute the target of DKK 9 billion. That is kind of the feedback you can get on that.
Ulrik Bak: Much appreciated. Thank you.
Operator: The next question comes from Cedar Ekblom from Morgan Stanley. Please go ahead.
Cedar Ekblom: Thanks very much. Hi, guys. Just two quick questions from me. It seems that the recovery of profitability in the Road business is now very dependent on these customer wins, getting the volumes back with those express costs out of the system. I appreciate that you are talking about a sales cycle of sort of 3 months and needing 6 to 9 months to sort of fully recover those volumes. I get it takes time, but is there anything that you can give us in terms of how those sales conversations are going now to help us understand how that sort of minus 9 high single-digit volume decline is tracking as we move into January? I know that that will not help your Q4 volumes, but it would be good to just get a little bit of color on what those conversations sound like.
Cedar Ekblom: And then can you just talk about the year-on-year progression or lack of progression in your sea freight GP yield? You talk about a third being rate, two-thirds being value add. Rates are higher year-over-year, and that yield number hasn't really moved. Just a bit of color for what's going on in the underlying mix maybe would be helpful. Thank you.
Jens Lund: Yes. I think very good questions on that. What we look about ourself is, of course, you have different things you look at when you look at sales. The first thing is the NPS. So what's the customer perception of us? The NPS has bottomed out, and it's increasing. Just want to make sure there was a spillover concern also on the NPS, whether it had impacted our CL and our NC business. I would say they have more or less stayed the same, slightly down. So I would say not really an impact. On the Road side, of course, the NPS has been declining quite a bit. So now it's trough, it's coming up again, and we don't see any escalations from the customer. So I would say on the customer satisfaction, we're now coming back again towards the normal levels. This is the first thing.
Jens Lund: The next thing you want to do is you want to have leads, and you want to have sales calls. Right now, we can say that the number of sales calls is 2 to 3x up on what we normally do. So we have much more commercial activity when we go and see the customers. Then this normally feeds into a pipeline where you have different stages of the conversation. And then, of course, the closer you get to a contract, what can I say, the more value it has in the pipeline. So we can see that the pipeline now is much more solid than it's been before. So also that is going well.
Jens Lund: Then, of course, at the end of the day, you want to do an IT integration, and you want to get the volume in and see what is the actual volume that we get based on those efforts here. And that's sort of the KPIs that we are following. As I said, we are 2 to 3x up depending on which number of countries it is that we have on visits. I would also say that the pipeline is definitely showing that we have the largest pipeline that we've had since we acquired Schenker, the value of it, the qualified value of the pipeline. Yes, that would normally then convert into volume that you can see into the figures. This is how we steer it, if you look at under the hood.
Jens Lund: Then on the ocean freight, I think that you basically. We had 4,100 in the same quarter last year. Now we have also 4,100, I believe, this quarter. What we monitor is basically the VAS and basically the freight markup. Right now, it might be, normally we say one-third freight markup and two-thirds VAS. Right now, it might be that the freight markup is 35% or 36%, but it is in this ballpark that we are talking about. It, of course, means a lot of money when you are around the 4,000 mark there. I would say that we still see now the rates are fairly elevated, and I think they are definitely going to also provide for a good yield in Q4. We will then see what happens in the market.
Jens Lund: There has been so many speculations about the rates coming off, and I think the carriers have done an exceptionally good job at keeping them elevated. I think that is what I can say right now on the rates.
Cedar Ekblom: Jens, sorry, just to come back on your point on the customer points. All of those qualitative comments are very helpful. Is there any way to put quantitative metrics around that? Because I think that that is really the key to recovering profitability. The best pipeline since we closed Schenker, I mean, that is good to hear, but I do not know what that actually means in quantum, and like, two to three times more customer leads, et cetera. Is there any way to think about what volumes do in Q1, or is it just way too early to answer that question? Sorry to pause.
Jens Lund: No, that is fine. It is fine. Let us-
Cedar Ekblom: Feel like that is an important part.
Jens Lund: Yeah, but let us say we had index. I will try to make it just in some index numbers. Let us say we had index 100 in volumes. Now we have index 92. This is where we are at. Then that is not going to It might be that that will go to index 93, or if we are lucky, 93 and a half in Q4, and then the rest will have to be recovered in two to three quarters. This is what the value of all the words that are said means. Does that make sense?
Cedar Ekblom: That.
Operator: Ladies and gentlemen, this was the last question for today's Q&A. I would now like to turn the conference back over to Group CEO Jens Lund for any closing remarks.
Jens Lund: Thank you very much all for listening in. I think that we have had a good conversation about some of the important topics and good questions as well. So thank you very much for that. We will now focus on delivering the results for Q4. And in relation to that, I would really also to extend gratitude to our staff that have worked exceptionally hard in a very difficult period, not least in the Road division. So really well done to them. And I am quite sure that the whole team is very eager to deliver the outcome that we all look for in Q4. Thank you very much, and have a good day.
