Operator: Good day, and thank you for standing by. Welcome to the NTG Nordic Transport Group Q3 2026 conference call and webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star, 1 on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question, please press star, 1, and 1 again. Please be advised that today's conference is being recorded. I will now hand the word to CEO of NTG Nordic Transport Group, Mathias Jensen-Vinstrup. Please go ahead.
Mathias Jensen-Vinstrup: Thank you, and welcome everybody to our Q3 2026 conference call, and thank you for taking the time to listen in. My name is Mathias Jensen-Vinstrup, and I am the Group CEO of NTG. I have Tinneke Torpe, our Group CFO, with me today. I will spend the next 15 to 20 minutes taking you through our highlights and results for the third quarter of the year, and by the end of the presentation, we will wrap it up with questions from the participants. If we move to the next page, we kindly ask you to read the forward-looking statement provided in the slide.
Mathias Jensen-Vinstrup: If we move on to the agenda page, you see the items that we will be going through today, including the highlights for the third quarter, a review of the financial performance of the group, followed by each of the two divisions, the financial highlights, as well as the outlook for 2026, and then also our newly introduced medium-term financial targets before we move to the Q&A. If we move to the next page, to the Q3 2026 highlights, when we reflect on the quarter in its entirety, we are generally satisfied with our performance, particularly within the Nordic and Dutch Road & Logistics businesses, and not least within Air & Ocean, where we continue the momentum of previous quarters, which highlights the first benefits of the reorganizational initiatives and the strengthenings completed over the last two quarters since Carsten joined us.
Mathias Jensen-Vinstrup: In the third quarter, Air & Ocean delivered its strongest quarter this year, and Road & Logistics continued to perform well despite a German market still lacking behind the rest of Europe. Based on the performance for the first nine months of the year and our current view on the market, we have upgraded our full-year guidance on the operating profit before special items to between DKK 660 million and DKK 685 million from previously DKK 625 million to DKK 650 million, so an uplift of the midpoint of exactly DKK 35 million. During the quarter, we also completed our DKK 200 million share buyback program, which we announced back in March this year.
Mathias Jensen-Vinstrup: We are very pleased to launch our new medium-term financial targets, where we target a conversion ratio between 28% and 30% and a return on invested capital, including goodwill and before tax, of more than 20% within a three-to-five-year horizon. If we move to the next page and dive further into the numbers, organic growth for the group was 15.5% during the quarter, which was primarily driven by higher freight rates and decent activity across both of our divisions. Currency effects had a positive impact of 0.4% during the quarter. The gross margin continued its downwards trajectory because of higher pass-through revenue from increased freight rates across both divisions.
Mathias Jensen-Vinstrup: On the operating margin side, we continued to improve profitability driven by the Nordic road business and improved performance within the Air & Ocean division, which, as I mentioned before, was supported by slightly higher volumes and freight rates, but also the organizational changes and the restructuring initiatives that we have completed over the last couple of months. Altogether, these were the main drivers of the conversion ratio increase to 26.5% compared to 24.4% during the same period last year. Special items amounted to DKK 10 million in the quarter and DKK 34 million for the first nine months of the year. As we have communicated before, these primarily relate to the restructuring activities within the Air & Ocean division.
Mathias Jensen-Vinstrup: For the full year, we expect special items in the range of DKK 50 million, which reflects not only the ongoing reorganization of Air & Ocean, but also the restructuring of the German Road & Logistics activities in the wake of the efficiency improvements that are enabled by the rollout of the new transport management system. We move to the next slide and turn to the Road & Logistics division. The division delivered another solid quarter and continued to perform well despite a mixed market backdrop. Organic EBIT growth was 9.4%, driven by performance across the Nordic region, as well as a positive contribution from our Dutch road activities. We look at the market, the market conditions remained broadly favorable outside of Germany, as freight rates continue to be supported by elevated fuel prices, but also capacity constraints.
Mathias Jensen-Vinstrup: In line with previous quarters, the German market remained challenging in Q3 of the year, but we did make further progress on adapting our ways of working, on strengthening the commercial activities, and addressing the cost base once again. In particular, we further strengthened the management team in Germany with a new CEO and a new COO who joined during the quarter. Together with the rest of the team, they have already accelerated the implementation of initiatives aimed at improving operational and financial performance. Our focus remains on supporting profitable growth, improving operational efficiency, and strengthening the long-term competitiveness of the German business, but it will take time and it will require further actions, but we are slowly moving in the right direction.
Mathias Jensen-Vinstrup: If we flip to the next page, turning to Air & Ocean, it is fair to say that we are quite pleased with the performance of the division in Q3 of the year. During the quarter, market conditions remained supportive. Global container and air freight volumes continued to grow, and ocean freight rates eased somewhat due to increasing capacity, whereas air freight rates remained elevated, supported by geopolitical disruptions and higher fuel costs. From an operational perspective, we continued to execute on the priorities outlined earlier this year, which includes maintaining a dedicated commercial focus, strengthening collaboration across our network, signing additional key hires globally to further strengthen the organization, and last but not least, we continue to see increasing benefits of the actions that have already been taken earlier in the year, including the cost-out initiatives, leadership changes, and the greater commercial collaboration within the division.
Mathias Jensen-Vinstrup: These efforts altogether translated into a significant improvement in financial performance compared to the same period last year, with organic EBIT before special items up by two-thirds, driven by higher activity and the organizational adjustments, and a conversion ratio up by almost 10 percentage points, which represents the strongest level in 2026. As part of our growth ambitions, we also expanded our footprint in the US with the opening of 2 new offices in Nashville, Tennessee, and Dallas, Texas, respectively. Overall, we are encouraged by the progress made during the quarter, and we continue to see positive momentum across the organization as we look to the future. With those words, I will hand it over to Tinneke for a detailed review of the financial highlights.
Tinneke Torpe: Thank you, Jens. If we flip to the next page, then I will start with special items. As Jens already mentioned, special items amounted to DKK 10 million for the quarter and DKK 34 million in the first 9 months of the year. Those special items reflected the ongoing reorganization we had in our Air & Ocean division, as well as the restructuring of our German Road & Logistics business. We continue to invest in these initiatives, which are aimed to strengthening our performance, improving efficiency, and supporting long-term profitability, which is also why we have adjusted our guidance on special items to DKK 50 million for the full year 2026. If we move on to the net financial expenses, then our net financial expenses reached DKK 29 million in the quarter, which compared to DKK 50 million in the same quarter last year.
Tinneke Torpe: This reduction was predominantly driven by lower foreign exchange rates, but also impacted by lower interest expenses. Overall, our net financial expenses remained at a level that is both in line with what we would consider as a normal quarterly run rate. If we then turn to our taxes, then the effective tax rates for the quarter reached 23.5%, which compared to 33% in the same period last year. This lower tax rate was positively impacted by an adjustment to our accrued taxes in the US, which were made in the quarter. Finally, our free cash flow amounted to -DKK 30 million in the quarter. This development was predominantly driven by higher net working capital in our Air & Ocean division, which reflected the strong growth that we've seen.
Tinneke Torpe: It was partly offset by a stronger EBITDA generated during the quarter. Overall, we remain satisfied with the underlying earnings development as well as the cash generation for our business. When we look at our balance sheet and our key financial ratios, as mentioned, the net working capital increased during the quarter and it ended at just below DKK 200 million. This development was driven by higher activity and increased receivable in our Air & Ocean division, again, reflecting the strong growth that we have delivered during Q3. Our leverage ratio improved to 2.33 times EBITDA, which compared to 2.77 in the same period last year. It was, however, slightly higher than in Q2 and was predominantly driven by the higher net working capital.
Tinneke Torpe: The improvement compared to last year reflected the increase in our earnings over the last 12 months, partly offset by the higher net working capital and the completion of our share buyback program. Speaking of the share buyback program, we have completed this as planned. In total, we have repurchased DKK 200 million during 2026. Finally, looking at our return on invested capital, our return on invested capital before tax ended at 16.6% compared to 18.0% last year. This decrease reflected a higher invested capital base following the acquisitions completed in recent years, as well as the increased working capital investment, and was partly offset by the continued improvement in earnings delivered in 2026.
Tinneke Torpe: If we turn to the next page, as Mathias Jensen-Vinstrup already has mentioned, based on the performance we have delivered in the first nine months of the year, we have upgraded our full-year EBIT guidance to the range of DKK 660 million to DKK 685 million. The assumptions behind this upgrade guidance remain broadly unchanged. We continue to expect positive development across both divisions, supported by gradually improving market conditions. For our Road & Logistics division, freight rates are expected to remain around the current levels, while we in our Air & Ocean division expect freight rates to gradually decline as capacity returns to the market. The macroeconomic and geopolitical uncertainty remains elevated, and we continue to monitor the developments closely. Furthermore, we have also increased our expectations to special items to DKK 50 million, as already mentioned.
Tinneke Torpe: This is both the finalization of the reorganization in Air & Ocean division in Q4, as well as restructuring of our German Road & Logistics business, which is accelerating in the last quarter of the year. Overall, we are pleased with the development during the quarter and the first nine months of the year, and we believe that NTG is well-positioned heading into the last quarter.
Mathias Jensen-Vinstrup: Thank you, Tinneke. So, before we open the line for questions, turning to the final page, we would like to briefly introduce our medium-term financial targets, as alluded to by the beginning of the presentation. The targets reflect our ambition to continue to improve profitability and returns across the group over the coming years, as we are targeting a conversion ratio between 28% and 30%, and a return on invested capital, including goodwill and before tax, of above 20%. The targets are based on organic developments, and therefore exclude the impact of potential future acquisitions. At the same time, value-accretive M&A remains a key part of our strategy, and it is expected to contribute in addition to these targets as we look to the future. We believe these targets reflect both the opportunities available to NTG and the progress that we continue to make across the organization.
Mathias Jensen-Vinstrup: We are looking much forward to discussing these targets, as well as a number of these strategic priorities in more detail at our upcoming Capital Markets Day on 18 November 2026. With that, I will hand it back to the moderator and open the floor for questions, please.
Operator: Yes, of course. Thank you so much. Dear participants, as a reminder, if you wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. This will take a few moments. Now we are going to take our first question. This comes to the line of Emilie Fung from Barclays. Your line is open. Please ask your question.
Emilie Fung: Oh, thank you very much, and thank you, Mathias and Tinneke. I have three questions, please. The first one on Road & Logistics, it is maybe a few parts, but could you please just explain a bit more about how you see the Nordic volumes and rates trading so far in Q4, and whether you still see share gains being part of the story? Also on Road & Logistics, if we look at the German performance, you speak about improvement towards the end of the quarter. Is this only due to operational efficiency gains and the right-size cost base, or is there also underlying market improvements there? Then on Air & Ocean, I mean, how much of that Q3 improvement that we see came from gross profit growth versus the restructuring of lower costs, and how sustainable is that 22.6% conversion that we see in this quarter?
Emilie Fung: Lastly, if we look at your guidance, what it implies for Q4, what are the main variables you could give us some color on for where we end up, whether it be the bottom or the top end of the range? Thank you very much.
Mathias Jensen-Vinstrup: Thank you, Emilie Fung. As to the Nordic Road & Logistics business and what we see in terms of volumes and rates as we sort of move into or further into Q4, I would say over the course of the first nine months of the year, we have seen a shift in the split between volume and price-driven revenue growth. Whereas in the beginning of the year, we did see the majority being driven by volume growth, at least on a year-on-year basis. Whereas, as we move to Q3, that has been shifted to a greater degree of price growth vis-à-vis volume growth. We expect to see this trend continue as we move further into the fourth quarter.
Mathias Jensen-Vinstrup: From a rate perspective, I would say, one of the main drivers of the rates has been the fuel, which continue to be at a somewhat high level compared to the same period last year. We are also seeing some effect, although to a lesser extent, from the capacity constraints. In terms of the German Road & Logistics business and whether the efforts and initiatives that are focused on operational efficiency gains or we see market improvements also, I would say the majority of the progress or non-financial progress that we are making relates to operational efficiency gains. In terms of market improvements, that is, I think, not something we see trickling down into our business yet. As to market share gains, we are yet to see the return on the investment that we are making in the commercial organization as we speak.
Mathias Jensen-Vinstrup: On the Air & Ocean side, in terms of how much of the uptick is driven by sort of market tailwinds vis-à-vis restructuring initiatives, I would say that it is a combination of both. The market has clearly been supportive, particularly in air freight, but we are also seeing benefits from a higher degree of intercompany trades. We are also seeing a slightly lower cost base compared to the same period last year. As to the guidance variables, I would say the biggest components are probably the activity in the Nordic region, including the development of the spot rates in particular as we move further into the quarter, and then also the development in the German activities, which in holiday months is notoriously low activity-wise. Given that groupage comes with a higher cost base, that is certainly not the best periods of the year for such a business.
Mathias Jensen-Vinstrup: I hope that sort of addresses your questions, Emily Fung.
Emilie Fung: Yes, thank you. If I could just have one quick follow-up. You mentioned the capacity constraints in the Nordics. How are you seeing that in terms of, you say it is to a lesser extent, but could it extend to next year, or do you think that the haulier capacity could adjust quite quickly as we have seen in the past, or whether, yeah.
Mathias Jensen-Vinstrup: No, listen, I think over the last couple of years probably, we have been aware of the fact that there is a lack of drivers, which is the main bottleneck from a competitive perspective. We are seeing more and more drivers retire, and sort of the deficit compared to the demand projections. The market continued to increase over time. So I think it is a structural phenomena that we are experiencing in Europe. We are not seeing any sort of mitigating actions from a political perspective. Quite the contrary, I would say. So, at the time of speaking, I would expect that to continue as we move into 2027 and potentially also beyond, to be honest. Of course, it is an equilibrium, right, between supply and demand.
Mathias Jensen-Vinstrup: I would say what we are seeing right now and the reason why capacity constraints are not sort of a huge driver of the rates compared to the fuel is that even though demand is healthy, I do not think we have seen an explosion or a boom as such. I do think that any increment to the demand from a positive perspective will trickle down into prices immediately, more so than supply adjusting. So that is probably my final-
Emilie Fung: Great. Thank you. Thank you very much, Mathias Jensen-Vinstrup.
Operator: Thank you. Now we are going to take our next question. The question comes from the line of Kristian Godiksen from SEB. Your line is open. Please ask your question.
Kristian Godiksen: Yes, thank you. Just a couple of questions from my side initially. First of all, in relation to your midterm targets, I am just wondering, just to make sure, how to think about M&A in relation to this? Acquisitions, will they be supportive to the above 20% ROIC target post-synergies, and hence be the hurdle rate for acquisitions? That would be the first question.
Mathias Jensen-Vinstrup: That is definitely the idea. I mean, by the end of the day, that target will include everything that has been in the books by more than 12 months. That is how we report on M&A. Yes, we strive for a return on invested capital of the entire company of more than 20%, which over time will include M&A. Now, do we think that within the first 12 months of a deal being closed that we will be able to get there? That is not necessarily the case. But yes, over time, this is the return that we expect to generate also when we take M&A into account.
Kristian Godiksen: Okay. Clear. Then also on the midterm targets, the potential in the conversion ratios, you are just giving one number for the group part of it. I guess, can you maybe comment a bit on the potential? I guess obviously the upside is greatest in Air & Ocean coming from the lowest level, but also, based on the business mix or the way of the business, how they are structured, I think they should also have the highest potential. Just wondering if you could comment a bit on the conversion ratio between the two businesses, and then also whether there is a cap in the time period since it is a range target and not an open-ended target, or how to think of it.
Mathias Jensen-Vinstrup: In all honesty, there is some elasticity baked into, in particular, the conversion ratio targets from two perspectives. One, we provide a range, and two, we do not do any explicit sort of quantitative guidance on a divisional level. That is completely intentional given that a lot is happening at the company right now. There are a lot of moving parts. While they are all pointing in the right direction for the future, how quickly each initiative will evolve vis-à-vis the other, that is extremely difficult to say. Now, if we sort of look at the 28% to 30% and reflect a little bit on where the two divisions are coming from, as you mentioned, there is no doubt the Road & Logistics division is coming from a much higher baseline. Also from a baseline which, in the future, will continue to be experiencing a drag from the German activities.
Mathias Jensen-Vinstrup: Now, of course, we expect that drag to be smaller, but it will be a drag. So, I would say from an upside perspective, in particular compared to Q3, it is Air & Ocean where we see the biggest upside potential. Now, by the end of the day, the conversion ratio of the group is a weighted average of the two divisions. So, an uptick in Air & Ocean at the current size of the business will have a smaller impact than when we continue to grow that business over time, where hopefully the weighted average will be pulled in an upward direction. So, I would say, the group activities, at least in Germany, it will be a drag on the conversion ratio, and on the road side, it will probably be slightly lower compared to the range or the top end of the range.
Mathias Jensen-Vinstrup: On the Air & Ocean, that could potentially be above that range.
Kristian Godiksen: Okay. Then maybe just finally within the Road & Logistics part of the division, how should we think about the mix in, as you pointed out, in relation to the groupage versus the FTL/LTL business? Is that taken into consideration in the targets, or is that as is? So, it depends on also where you will grow organically in terms of when we are to evaluate you in the coming years, basically.
Mathias Jensen-Vinstrup: I mean, in terms of the organic growth, we sort of, in line with pretty much every period since the IPO, we do believe, which is a firm sort of target, that we want to grow, outgrow the market, and the market being sort of proxied by European GDP growth on Road & Logistics and global GDP growth on Air & Ocean. So, that sort of notion continues to prevail as to the growth now. In terms of the weight, I think it depends a little bit on how you measure it, right? I mean, do you measure it by revenue, GP, EBIT, volumes, et cetera? But just looking at EBIT, we do aim for Germany to compose a higher share of earnings over time. That is unquestionable.
Kristian Godiksen: Is that baked into the target then, or is that And maybe just to be sure, is groupage dilutive on a conversion ratio? Obviously, it comes with a higher gross margin, but is it dilutive on a conversion ratio versus FTL/LTL, or is it somewhat the same?
Mathias Jensen-Vinstrup: Well, if we talk about groupage Germany, there is no doubt that it is fairly dilutive to the conversion.
Kristian Godiksen: Yeah. I was more thinking about in the targets, how it is baked into the targets or on the overall, as a structural basis, what should the conversion ratios be between the two segments within Road?
Mathias Jensen-Vinstrup: Narrowing. I think that is the guidance that we are able to give, Kristian.
Kristian Godiksen: That is the guidance. Okay, so it is still small, still lower for groupage, right?
Mathias Jensen-Vinstrup: Correct.
Kristian Godiksen: When you narrow, just to understand. Yeah. Okay, perfect. Thank you, Mathias.
Operator: Thank you. Now we are going to take our next question. The question comes from the line of Ulrik Bak from Danske Bank. Your line is open. Please ask your question.
Ulrik Bak: Yes. Hello, Mathias and Tinneke. Also a couple of questions from my side. I will take them one by one. Firstly, I want to revisit the Germany performance, because as far as I can see, revenue declined 11% year-over-year in Q3, which is a weakening compared to H1, where it was broadly flat. This is despite the quite large positive impact from higher diesel prices in Q3 this year versus last year. Could you please just talk about what drove that weaker development in Q3, both versus last year, but also the deterioration compared to H1?
Mathias Jensen-Vinstrup: Yeah. I think first and foremost, when reflecting on the revenue development vis-à-vis the diesel price, there is a much greater lag in when we adjust the fuel surcharge in Germany compared to, in particular, the FTL/LTL business in the Nordic region. So, it came with a delayed effect, and that effect was further diminished by generally declining volumes, I would say. I think one of the biggest drivers of the development in Germany in the third quarter of the year was a very slow summer holiday period. I mean, in the southern part of Germany, that is particularly in August, and it took a little while, I think, probably two weeks into September before the wheels started to turn again.
Mathias Jensen-Vinstrup: As mentioned quite a few times, with a high fixed base, a cost base, that just materializes directly in not only, but also on the bottom line. I would say if we look now, there is no sort of significant downward spiraling trend on the shipment numbers. So, I would say it was definitely a weak summer holiday period, and then just a generally muted activity and an unsatisfying performance. It is not like a sort of convex downward spiral.
Ulrik Bak: All right. Just to clarify, the German revenue that we can see in your report, what is the split between Road & Logistics and Air & Ocean?
Mathias Jensen-Vinstrup: That is a good question. I do not have the exact split on this, but on top of my mind, and we can revert to you on this, I would say it is 20/80.
Ulrik Bak: Understood. This negative revenue growth, I acknowledge that it was due to a weak summer period, but when would you expect to return to positive growth given the rollout of new TMS systems and whatnot? When would you expect to return to positive territory?
Mathias Jensen-Vinstrup: Well, I would say, TMS can do a lot of good things. Unfortunately, it does not convince customers to come on board. That is a commercial effort that we have been investing in quite substantially, but only recently. As I mentioned during the presentation, we are planting a lot of seeds also in order to return to growth, not only on a like-for-like basis in terms of the customers that we have in the portfolio, but also actually starting to add new logos to that particular portfolio. But it is a long push, and it will take time, and that is also reflected in the medium-term financial targets that we discussed.
Ulrik Bak: Understood. Then a question on your capital allocation. Leverage was 2.3x EBITDA at the end of Q3. The DKK 200 million buyback program has concluded without you initiating a new one. In this context, what leverage range are you comfortable with operating in for doing new M&A?
Tinneke Torpe: Well, you can say that as long as we have a leverage ratio above 2, then we are focusing on delevering, still allowing ourselves quite a bit of flexibility for doing M&A. We can go up to 3.5x if need be, if the right opportunity arises. When our leverage ratio comes below 2x, then we also start looking into doing share buybacks.
Ulrik Bak: Okay. But is this a signal that you are not initiating a new one? Is that a signal that you want to pursue M&A more actively going forward?
Tinneke Torpe: I don't think it's going to necessarily be either or. At this point in time, we do not have any concrete plans of initiating a new share buyback, but we are not ruling out the possibility that it could occur, and we are definitely, as always, interested in doing M&A and are continuously looking for the right opportunities.
Ulrik Bak: All right. Thank you. No further questions.
Operator: Thank you. Now we are going to take our next question. The next question comes from the line of Peter Ajose-Adeogun from Morgan Stanley. Your line is open. Please ask your question.
Peter Ajose-Adeogun: Thank you. Good morning, Mathias, Tenna. I think I have three. The first one is just around Germany. You mentioned Germany improving towards quarter end. Was that broad-based customer demand, or was it specific contract wins? Has it continued into Q4 on an increasing basis? Maybe just some color around that would be great. That is the first one.
Mathias Jensen-Vinstrup: Okay. Hi, Peter. I mean, as I mentioned, there is no significant commercial momentum as of the time speaking. The rebound in volumes in the wake of the summer holiday period was more volumes returning to a normalized basis, more so than any net increments.
Peter Ajose-Adeogun: Okay. Helpful. Second question was just around Air & Ocean. You mentioned better inter-company collaboration. What does that mean commercially? Is it more freight retained within your network, or is it cross-selling, better procurement? Just maybe if you could give a bit more color around the nature of that collaboration.
Mathias Jensen-Vinstrup: Sure. It is a good question. It is actually, in particular, I mean, it is all three, in particular the first two. So we keep more freight within the network. So, we sort of keep more of the FOB charges on usually the import collect shipments. Then it is trade lane development, so selling across countries to customers from a one-stop shop perspective. Then on the procurement side, I would say we did strengthen our procurement setup quite significantly, more decentralized than in the past. We are entertaining fairly interesting conversations with many of the steamship lines and also airlines, but that is yet to materialize in our results.
Peter Ajose-Adeogun: Okay, thank you. Helpful. Then, just the last one from me was just on, I mean, I am conscious that you are growing off a bit of a disrupted earnings base, you could say. There are few tailwinds in there, like fuel, driver shortages is perhaps more structural as things stand. Just in terms of where do you think this all nets off into 2027 from a road perspective in terms of maybe fuel starting to come down, driver shortages will probably be ongoing, and then you have the German normalization as well. Is that kind of enough to kind of offset maybe the tailwinds you have seen in 2026?
Mathias Jensen-Vinstrup: I would say if we keep everything else constant, then fuel returning to the pre-Middle East war will have a negative impact on our financial results. That is inevitable, I would say. So, in order to mitigate such a potential normalization short term, we would need to continue what we are doing, addressing the cost base, and improve performance in Germany. To the extent that demand picks up, capacity remains sort of inelastic, that could potentially soften the blow, if you may, from a significantly declining fuel price, should that occur.
Peter Ajose-Adeogun: Thanks, Mathias. Maybe just one extra one. Just on Germany, I understand that you still have things to do around the TMS. You also mentioned that with customers, what TMS will not do is just put customers into the system automatically, right? I think one of your competitors is also talking around trying to rebuild volumes on their groupage business. Maybe just practically, could you just speak around what are some of the things you are doing or can do better to increase that commercial viability for your groupage business? That would just be interesting.
Mathias Jensen-Vinstrup: Yeah, no, it is a good question. It is very similar to what we are doing on Air & Ocean, I would say. Get on the road, go out, visit the customers, and be intelligent in which customers that we go to visit. So, our groupage setup compared to the rest of the pack, or at least the larger part of the pack, is a more flexible groupage setup. So, it is not overly squared in the sense that we do not take ugly goods, as we refer to them, or goods that come in different forms and shapes, or where there are different service requirements, or there are different requirements in terms of flexibility that would not necessarily fit into a more automated and less human touch setting. So, that is really how we will do it.
Mathias Jensen-Vinstrup: That is how we did it in the past, not only in the acquired entities, but also in the legacy NTG entities, focusing on the customers with a higher touch need, the customers with the different types of goods, and then go out there to sell it. That is the strategy. It is a little bit back to basics, really, compared to where we were, and it is completely similar to what we are doing on Air & Ocean right now. But in order to do that, we need the people, and we need the people to be on the road, and that is what we are investing in as we speak.
Peter Ajose-Adeogun: Thank you, Mathias. Very clear.
Mathias Jensen-Vinstrup: Thank you, Peter.
Operator: Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. Now we are going to take our next question. The question comes line of Lars Heindorff from Nordea. Your line is open. Please ask your question.
Lars Heindorff: Yes, morning. Thank you for taking my questions as well. The first one is on the net working capital. Tinneke, you point out it is quite a bit of a tie-up here in Q3. Maybe you could put some more words on it. Is this solely caused by the restructuring and the development in the A&O, or is there something in Road & Logistics as well? Also maybe a sort of a path towards normalization of the net working capital. Thanks. That is the first one.
Tinneke Torpe: Yeah. As mentioned, it is predominantly in our Air & Ocean business in the US that we have seen an uptake in the receivables. We have had a small incline in our DSO of a couple of days as well, but it is the activity growth that we have seen that is driving it. We also have an impact from our Road & Logistics business in Germany with the rollout of Translogica, where we, as mentioned in connection with the H1, we saw that there were some delays in the invoicing. Those have partially been picked up, but there is still a drag that we expect will be burned in Q4. I, you can say, following up diligently to ensure that that will happen.
Tinneke Torpe: When it comes to the normalization of our net working capital, then we do expect it to move down towards zero again, which has been, you can say, historically the level where we've been able to balance our trade receivables with our trade payables. However, the dynamics of the Air & Ocean division are slightly different from Road & Logistics, and therefore, it might be that over time, as Air & Ocean grows, that we will start seeing it slightly coming up from zero.
Lars Heindorff: But is it doable to keep it around zero, given that the growth strategy that you're about to embark on, and which has clearly sensed that you were aiming for in Air & Ocean, which typically ties up considerably more net working capital compared to the road business?
Tinneke Torpe: As mentioned, no, it's not going to be around zero. What we expect will happen is that there will be an increase from Air & Ocean on the receivable side, but at the same time, we are also working on strengthening our procurement, which will lead to credit terms being improved, and at least partially be able to offset the unfavorable impact from increased receivables.
Lars Heindorff: Okay. All right. Thank you. Then on the rollout of Translogica, we've been talking about it earlier. If I recall correctly, you're done with Schmalz+Schön, and in the process of doing it in ITC, is that correct?
Mathias Jensen-Vinstrup: Sort of 90% correct, I would say.
Lars Heindorff: Okay.
Mathias Jensen-Vinstrup: I think as Tinneke alluded to, there are still tweaks and bugs to be fixed in Stuttgart. But correct, we are working in the Ruhr area to go live on Translogica, and we expect to do that sometime during Q1 2027.
Lars Heindorff: How much of your volumes in Germany are now on Translogica?
Mathias Jensen-Vinstrup: That is a good question. I would say around one-third, a little bit more on Translogica as we speak, moving up to around about a half, a little bit more than a half once we go live in the Ruhr area.
Lars Heindorff: Okay. The aim is, just to get it clear because I cannot recall those numbers, is the aim 100%, or how should we think about this?
Mathias Jensen-Vinstrup: Yes, the aim is 100%.
Lars Heindorff: Okay. Timeframe for the remaining then, 50, when you are done with the Ruhr district?
Mathias Jensen-Vinstrup: That depends on the exact go-live date in Q3, as well as the sort of seamlessness of the hypercare period.
Lars Heindorff: Okay. All right. On Road & Logistics, thanks for the insight into the split between volumes and prices. Obviously, diesel floater moves quite a bit. Now we are getting towards the end of the year. Typically, that is the contract season, and you start to sort of reach out to customers and talk with them about the contract for the coming years. Maybe, I do not know if you can give any kind of insights. It was also earlier in one of the earlier questions alluded to that you have a larger competitor which is struggling a little bit. Have you seen any price pressure in the market, or these high spot prices, could that perhaps lead to an increase in contracts for next year? Or how should we think about sort of the development in terms of the contract rates into next year?
Mathias Jensen-Vinstrup: I mean, I would say, most prices in a contract are excluding fuel, right? Then there is a separate fuel mechanism. So I would say, trying to lock in rates at the current fuel levels or not locking in rates would not really matter because there is a variable adjustment mechanism for that. So I think, the dynamic that plays out right now is more customers looking into on the base rate, if you may, disregarding fuel, would it be favorable now to lock that in, i.e., go in a tender for a year or 2 years? Or would it be beneficial to sort of wait and see how the market will pan out?
Mathias Jensen-Vinstrup: While there is definitely different decisions as to the matter, the underlying structural sort of lack of drivers, I think, is seen as most customers as a good time to actually start engaging in tender discussions, at least in Q4 anyway. As to the price pressure, I would say, when capacity is short, the price pressure is more upwards than downwards. That is sort of the preliminary intelligence that we have from the market as we speak.
Lars Heindorff: All right. Thank you.
Operator: Thank you. Dear participants, just a quick reminder, if you wish to ask a question, please press star 11 on your telephone keypad. Dear speakers, we will just give a moment for our participants. Dear speakers, there are no further questions for today. I would now like to hand the conference over to your speaker, Mathias Jensen-Vinstrup, for any closing remarks.
Mathias Jensen-Vinstrup: Perfect. Thank you very much for taking the time to join the conference call today. Thank you for the questions, and we look forward to seeing you on the road. Thank you.
Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
