Thank you very much and welcome to this conference call. I'm joined by Karina Deacon, our CFO, and Søren Brøndholt Nielsen, our Head of Investor Relations. We are obviously very pleased to deliver both a strong Q3 result and a profit upgrade to now between DKK 4.8 billion and DKK 5 billion EBITDA. We are seeing a slowdown in growth in some markets, but we are meeting this possible challenge with a very strong balance sheet, a low CapEx outlook, and strong operation. In recent years, we've been tested by Corona, Brexit, supply chain bottlenecks, geopolitical tensions, including the war in Ukraine, and tougher competition on key routes. This quarter's result again demonstrated our resilience. This resilience builds on our business model that is focused on moving goods in trailers by road, ferry, and rail, and moving passengers traveling by car.
Trailers are versatile, fast, and carry a very broad range of goods, industrial parts, automotive, forest, and metal products, fast-moving consumer goods, meat, seafood, et cetera. This means that we transport goods consumed on a daily basis in Europe. Of course, a slowdown will lower volumes. Trading will continue at a high level for the vast majority of the goods in our network. Our passengers are, post-COVID, looking again as a stable segment, which at least previously has proven counter-cyclical as shorter trips are favored in challenging times. With those introductory remarks, let's take a closer look at the quarter.
Page 3, the headline, strong Q3 moves our return on invested capital above our 8% target, and our financial leverage is back in our target range of 2x-3x net debt to EBITDA. In Q3, the freight ferry demand held steady, but the growth picture became a little more mixed. Logistics EBITDA met the threshold of DKK 1 billion EBITDA for the last 12 months. Our passenger high season was stronger than we had expected and actually, in financial terms, 11% above the 2019 pre-COVID results. As mentioned, the ROIC is now exceeding our target with 8.4%, and our financial leverage is back in our target range of 2-3.
You can see that we saw a 64% growth in revenue this quarter and an 88% growth in EBITDA with a ferry and logistics outlook as you can see to the right. Sorry, our last 12 months to the right. Turning to page four. Where did the EBITDA come from? Well, a strong recovery in passenger and an improved logistics results. Ferry freight EBITDA increased 13% to now DKK 741 million for the quarter, especially up in the North Sea and Mediterranean. Whereas Channel facing a general market turn down and also a different competitive situation was lower.
The passenger recovery contributed with an additional EBITDA of DKK 569 million compared to DKK 52 last year. Logistics EBITDA was up 91%, which comes from improved cost coverage, strong performance in our so-called old DLGS logistics units, and then the contribution from the acquisition of HSF and ICT. With this, I turn over to Karina for more details on the revenue.
Yes. Thank you, Søren. On Slide 5, we have showed the build up of the revenue growth of the 64%. As mentioned, we saw the strong recovery of pax volumes here in the high season of Q3 with the return of passengers on all routes. If you look at the average, we were at the index 85 compared to the pre-COVID time in 2019. That was an increase up from the 71, which was the index for Q2. A strong return here in the high season. If we look at the Baltics, they were even above 2019 on index 109. We have the pax routes on the Oslo-Copenhagen and the Amsterdam-Newcastle at index 94.
Clearly, uh, with the competitor on the channel, uh, the channel return was not as high, uh, but still on index eighty-one. In, uh, in ferry freight, uh, the overall volume was negative by seven percent, mainly due to the channel. I'll come back to that. But, uh-With, uh, with more or less stable, um, uh, rates, then that was not what drove the, uh, the increase in revenue. It was attributable to the oil surcharges, uh, as the low sulfur price, uh, the MGO, as we call it remains significantly up compared to two thousand and twenty-one. In, uh, logistics, uh, we saw the, uh, continued organic growth, uh, around twenty percent, uh, from the increased activity. We have, uh, started various logistic solutions and increased the custom clearance.
Of course, also the impact of the price increases, including the surcharges that we have talked a lot about during the year. Finally the HSF and ICT, which we will now show in respect of HSF for the last time because they were included from the 14th of September 2021. If we turn the slide to slide six on the P&L. We have talked a lot about the revenue and EBITDA already, so a few other items to focus on. Depreciation, in line with what we've seen during the year, an increase of DKK 106 million in the quarter. Compared to last year, there was the acquisition impact which accounts for about DKK 60 million.
We also had the effect of the two GSIs that we have, the RoPax we have deployed in the Baltics, as well as some additional charters made since last year. Good news to see that the increase in EBITDA also trickled down to EBIT, which almost tripled to be just below DKK 1 billion. That brought the EBIT margin to 13.4%, significantly up from 7.5% in the third quarter of 2021. If we look at finance costs, they were up. The interest rate gave a slight increase also with the higher interest and debt of DKK 40 million.
The remaining difference was due to currency adjustments, where we saw some gains in 2021, whereas we had some losses in 2022, so the net effect of that was quite decent. All in all, it meant that the profit before tax up 224% to DKK 863 million. If we turn the page to slide 7, a few words on the balance sheet and cash flow. Operating cash flow up 16% to DKK 1.3 billion, and that's despite the seasonal negative impact on working capital from the prepayments from customers on the passenger routes.
Adjusted free cash flow was DKK 85 million after inclusion of the purchase of the vessel on the Felixstowe route and also the acquisition of Lucey Transport Logistics, which took place right at the end of the quarter. We've talked about the ROIC now at 8.4%. As you know, we have for quite a while now seen it below our target, not least due to the lack of passenger earnings. With the passenger earning coming back for the high season, we are now above our target. I think it's also worth mentioning that we've also talked a lot about BU Med driving it down, but in this quarter, they actually increased up to now 7.2%. Our full target is definitely in sight.
Net interest-bearing debt up compared to the third quarter of 2021. Due to the strong earnings, we saw the improved leverage that Torben talked about. As of Q3, we were at 2.9, so down from 3.7 at year-end. With our recent updated outlook, I take a little bit of a chance, but I hope and I trust that we will go even a bit lower when we come to the end. On slide eight, we have included a few remarks relating to our current debt and the debt structure. If we exclude the lease obligations, then we are looking at an interest-bearing debt right now of DKK 11.6 billion.
Generally, we have a debt with variable interest, but we use interest rate swaps. Currently we have about 40% of our debt with the fixed interest rates. The composition of the debt has changed somewhat during the year, and we are in the process of changing it further. The large acquisition facility we had or the SFA we had relating to the acquisition of U.N. Ro-Ro is currently being refinanced. It expires in June 2023, so we are extending that. We continue to have good support from our five core banks who participated in the SFA back in 2018. We have them on board again for the refinancing which is expected to be completed shortly and definitely before year-end.
We also had the repayment of DKK 1 billion of bonds in September. It was replaced by a bridge facility which runs to the end of 2023. There will be more refinancing to be done in 2023. We will consider to use the recently obtained investment grade rating and potentially issue bonds, but of course it depends on how the bond market looks in 2023. Going back to the results. A few words about the development in ferry on slide nine. We saw an overall increase of more than DKK 600 million in the ferry division, and that improvement came from all units, but mostly, of course, as we mentioned now from the return of passengers.
North Sea up 45% after growth in revenue and lower operating costs. Despite volumes more or less in line with 2021, they reported a significant earning growth. Mediterranean continued to improve results. They went up 31%, and that was driven by 7% higher volumes. We've been so used to seeing double digits, so 7% is perhaps not seen as strong as we normally view it. They were impacted by some fires in the Trieste area that impacted the operation in the harbor. It was comforting to see that in October, they were back at double digits volume growth again.
On the Channel, we saw a significant improvement in earnings, but all of it related to the boost in contribution from passenger activities. We have a very tough competition on the Channel, as we talked about before. With a market decline, which in the third quarter was 6%, it gets very difficult to have improved earnings, which we also didn't see. Turning to slide 10 on the Bulk. It's fully as expected, volumes down. They were reported 19% down, and that is more or less the same as we saw in Q2, so it seems to have found a stable level. The passengers, they were increasingly returning and they, together with lower operating costs, contributed to the overall increase in EBITDA.
Last but not least, the passenger business unit, they improved earnings significantly. Both on the OFC and the Amsterdam-Newcastle, we saw people returning. They were index 95 and 93 respectively. Not least important, both routes had higher revenues per passenger both in terms of the sea fare, but also on the onboard spend. On slide 11 on logistics, almost doubled the EBITDA, of course, with the acquisition impact from HSF, but also by growth and higher margins in the old DFDS business. On the Dry Goods, they were up DKK 51 million after increased activity, for instance, the custom clearance and logistics solutions that I mentioned. Also after improvements of most of the activities in Nordic and Continent.
We've had some areas in 2021 which we need to focus on turning around, and we did that successfully, and that's reflected in the increased EBITDA overall here. Looking at Cold Chain, up DKK 90 million, and of course, it's driven very much by HSF. The existing Cold Chain business in U.K., Ireland, they were on level with Q3 2021. They continue to be impacted by lower volumes in the seafood business in Scotland. If we look at the HSF business in Nordic and Continent, they both improved, and we are pleased to see that the integration continues as planned. We have now a runway effect of synergies of more than EUR 7 million of the EUR 10 million we expected.
We did the first large system migration here in Denmark with success here two weeks ago. They went on our Frontline logistics system, and on this Monday, they went on live on our new ERP platform, both with great success. That was a significant milestone for us. With those words, I will hand back to you, Torben.
Thank you very much, Karina. On page 12, we continue our strong drive to complete or to engage in the green transition. We reduced our ferry emissions 4% this quarter on the back of a number of actions, sailing slower one of them. We are this month testing biofuel on our route from Vlissingen to Immingham. It's going well. Yesterday we launched our first e-trucks in Ghent together with the participation from the Belgium Prime Minister. We'll deploy in Ghent across Ghent and Gothenburg another 20 trucks the coming two months. This year we produced so far 1 million kilowatt of electricity from solar panels. This will triple in 2023 based on the installations that we have made.
Let us turn to page 14 and the 2022 outlook. The revenue is now expected to be around 45%. As you know, we pass on fluctuations in oil costs and due to the higher costs here, our revenue is also increasing. The EBITDA range is raised from DKK 4.4 billion-DKK 4.8 billion, which was what we raised it to in August, to now DKK 4.8 billion-DKK 5 billion due to the stronger than expected Q3 result that Karina just provided some details on. The investment outlook is unchanged.
On page 15, some of our key current priorities facing some clouds in the horizon in some markets, we of course continue to adapt our capacity to such changes as we always do. We are and have been focused on organic growth, retention of customers, growth with our customers for some years, and we're getting traction with larger industry solutions that we'll continue to focus on. We will also continue our inorganic growth, both through M&A possibilities, but also initiatives as you've seen recently in the contract logistics, custom services, et cetera. We'll continue making sure that cost increases that we face is also reflected in the pricing we have with our customers. We continue our green transition projects, some of those I went through just before. This was what we wanted to tee off with before handing over for questions.
Thank you, sir. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by 2. If you're using speaker equipment today, please lift the handset before making your selection. Anyone who has a question may press star followed by 1 at this time. The first question is from Dan Togo Jensen of Carnegie Bank.
Yes. Hello, good morning, and congrats with the strong results in this environment. Trying to understand a bit the North Sea here. You have more or less flat volumes compared to last year. Still, you improved EBITDA by DKK 130 million. Can you make a bridge here for us? How much of this is relating to the bunker spreads, for instance? How much is, so say, underlying structural improvements that you can take with you into 2023? Thanks. That would be the first question.
Yes, good question, Dan. Yes, there is of course some favorable movement in the different oil types and the spreads between them and many of the ships we operate on the North Sea have scrubbers that can benefit from this. That is part of without being able to tell you exactly how much that is a part of it. A significant part comes also from our pricing discipline. We have introduced different mechanisms for standards in the ports and other elements in the pricing to make sure, as I also mentioned in one of my bullets, that we align the increases we see in cost with our customers.
There, when you look at Q3 last year, those elements were not all in place. We have, you can say, caught up with some of those elements. I cannot give you a percentage, but a significant piece of the improvements we believe are something that can be repeated in 2023.
Yes, because we also today saw that October volumes are in decline on freight right now. It's just how to understand what are the levers, so to say, heading into 2023. From where we are now, do you see that passengers are back for good, or could passenger volumes be hit by a recession, or do you see that as more resilient in a recession scenario?
We don't know, of course, because it is a special situation right after COVID, where people have some money, obviously, for traveling. Now some people facing very high energy costs and cost of living. So far we have seen very strong comeback as Karina Deacon also demonstrated with the percentages. Those who are back pay more for the tickets, they spend more on board. Will that change? Possibly some decrease in demand. When we, and I know that's some years back, but for the financial crisis, we actually saw this countercyclicality in this passenger business because people maybe normally traveling longer distances, chose the nearer ferry traveling.
Sorry, transport-oriented passengers, I also suspect that we have a little more resilience than we even saw back then.
Okay. Just one question more relating to your credit rating here. What are the financial metrics to keep your investment grade? Is that aligned with the 2x-3x net of EBITDA? Has it changed here? What, sorry, what should we look out for? What would be the guidelines for your financial leverage going forward to apply to and to maintain your credit rating?
Yeah, that's a good question. It was obviously something we also wanted to have full transparency around because what we have always said, and what we maintain, is that our target is 2-3. If a particular acquisition makes strategic sense, we can also go above that if we think that's right from a value perspective. It was important for us to make sure that it wouldn't mean a downgrade in case we did that.
Without sort of having been promised a specific number, in our dialogue with Scope, we have made sure that we have the flexibility that even if we for a period of time is above the target range, we will still maintain. The most important for them was that management and the board actually showed that we mean it when we say we wanna be in that target range. I think we have justified to that at the moment.
Their investment grade decision is also based on the 2-3 times net of EBITDA.
Well, we shared with them the numbers that we've also shared with you and our expectations for the future. Having that dialogue, they felt confident that, yes, we are going to be within that target range going forward.
You can of course say that compared to when we had those discussions, we have overperformed significantly so. You know, of course they are an independent entity, and they will have to do what they do. We've been very clear in our communication that this is our target, but that there will also be deviations potentially in shorter periods. They looked carefully into our ability to then restore leverage and obviously came to the conclusion that we were able to do that.
Thank you.
The next question is from Michael Vitfell-Rasmussen of Danske Bank.
Yes. Thank you very much for taking my questions. First I would like to continue in the M&A side of things, yeah. Maybe you can just discuss a little bit, kind of from a strategic point of view, how important is it for continued growth for your business in the Med that you actually get your hands on Ekol? That's my first question. My second question is on the implicit Q4 guidance. When I calculate the EBITDA momentum that you need to achieve, it's rather wide. It's almost between flat year-over-year and up to 23%. If you can just discuss the assumptions in either ends of those ranges that we need to look for.
Finally, also kind of looking forward, if you could just talk a little bit about the business on the Channel, now with increased competition and volumes going down, how do you protect or maybe even grow your earnings from here on? If you can just share a little bit on what we should see you guys doing here. Thank you.
There were enough questions for the rest of the call, Michael. No, but thanks. I can start and then Karina can maybe talk to the outlook part but the Ekol possible transaction fits nicely into our wall strategy we like to operate routes where we also have logistics, call it cargo control, stay close to the market, can offer these end-to-end solutions. We are performing very strongly in Turkey today without owning Ekol. So, you can say there is not an immediate change of the situation by us owning them. We have a long term contract with them
In the long run, it fits nicely with our overall strategy and would be an important piece in that puzzle to replicate in Turkey what we do in the other markets. Let me talk to the Channel, and then Karina can talk to the outlook question. Channel is obviously the most challenging situation we have right now. As Karina mentioned, the market has dropped by 6% this quarter. We see signs of that drop continuing. It's a mix probably of still some change from accompanied to unaccompanied traffic that has taken place with the lack of drivers and where there is probably also some inertia in them moving it back, even if drivers get more accessible over the next quarters.
There's this general trend that we've seen for a long time. Of course, the British economy is impacted post-Brexit and probably also impacted more than other economies. Although we don't see any significant impact on our unaccompanied groups at this stage, and they are of course then as a consequence of the other remark, probably benefiting from this move to unaccompanied. What are we doing about it? Well, we had taken the strategic move even before we saw this market downturn and before we saw the new competitive situation to coordinate our offering better with the P&O operator on the Channel to see if we can have a stronger product offering vis-à-vis the Tunnel.
That's the customer side. The other side of that cooperation is that we are able to reduce number of sailings while maintaining the same schedule for the customers or a similar schedule. We have, during this quarter, reduced sailings by four per day and also increased the crossing time by, as I recall, 13 minutes per crossing. Doesn't sound like a lot, but it has a lot of impact on our fuel consumption. Those two elements is probably approaching a EUR 10 million saving in operational cost, which at least will mitigate what we are seeing on the market side. Karina, do you want to talk?
Thank you.
Sorry.
Yeah, the outlook in Q4, I follow of course your numbers, Michael. As always, when we give a range, we base it around the midpoint of that range. The obvious question is what could bring us below that. We have recently seen this actually a little bit unexpected production stop on some of the automotive production sites where we've seen for a period of time a rather stable position. That is something that caused a little bit concern after the October numbers came out. How much impact will that have the coming two months?
Also the Channel, in September and in October, it's been the market declines of around 10% and it is uncertain what happens there. It is basically to accommodate for what if things, they don't pan out as we hope for, then we could see towards the lower part of the range.
Okay. Thank you for that clarification, Karina.
The next question is from Ruairi Cullinane of RBC.
Yes. Good morning. I have a question on fuel spreads, and I was interested on how you expect these to trend and whether you've been able to hedge any of this tailwind into next year. Secondly, on Turkey. Turkey seems to be a nearshoring beneficiary, and you mentioned that October freight volumes were back up to double-digit growth in October. Would you be able to give any indication of what level or range of freight growth you're planning for in that business unit next year?
Yes. Hi Ruairi. The spread is very volatile. In terms of how we then see it versus next year, we think that we are able to maintain a spread similar to this year. Yes, right now it has been relatively high, but during the year it has been at different levels. The way we procure and hedge will mean that we don't see a huge difference in 2023, at least with the knowledge we have today. Could there be a small negative impact? Probably, but not something that changes the outlook for 2023. The other question was Turkey growth.
There, from our largest customers, we hear very positive signals also for 2023. Maybe not double digits, but definitely approaching those levels. Whether their insight is better than economists or other people is hard to say. What our customers hear from their customers is a continued strong support of Turkey. Also in terms of where you place your production. Turkey is benefiting from lower energy costs than Germany, for example, for car producers. We've seen some car manufacturers moving from Germany to Turkey when they have shifted production patterns. Of course, Turkey will continue to enjoy cheap energy costs compared to some of the European countries.
Great. Thank you.
The next question is from Ulrik Bak of SEB.
Yes. Hello, Torben Carlsen . Also a couple of questions from my side. I'll take them one by one. The first one is on the DFDS Channel segment. The market share for freight has declined through Q3 while P&O's market share has increased. In that context, is DFDS market share in September representative for the market share going forward, or is there still some potential for P&O to recoup some of the lost market share after what happened in Q1 and Q2? Also for Irish Ferries' sake, it seems as if their market share has plateaued during Q3, but is there potential for them to gain further market share in 2023, as they now have three ferries and therefore will be better equipped to compete for cargo contracts? That would be my first question. Thanks.
I'm sure everybody has ambitions to do a little bit better than they do currently. We are quite confident with our market position and the products we offer. Of course there can be swings from month to month. We don't see significant market shares catch up from either of the two other ferry competitors. They have been operating with Irish Ferries, the three vessels for a while now, and P&O have been back in full shape also. We will fight for our market shares, of course.
Yes, the full run rate effect of P&O, which were out most of Q2, and Irish Ferries, as far as I know, they entered with the second ferry in March and the third ferry in May. The full run rate effect for 2023 obviously should be negative, or am I mistaken?
Full run rates for 2023 will be negative for us versus 2022, of course, because P&O was out for two months almost. When you look at the most recent months, then we believe that things have normalized.
And, and the-
We are just on the half of the ferry markets.
Understood. Also in terms of contracts, which, I guess, are negotiated at the moment, do you see any significant change or no decrease in pricing on those contracts given the lower volumes and increased competition?
It's too early to conclude on that. It's obvious that consumers, of course, or customers try to benefit from whatever market position they see or market situation. We're quite confident going into those negotiations. It's obvious that with lower capacity in the market, it's not price increases that we are most likely to see.
Understood. A question on North Sea. Obviously your volumes were flat in Q3, and now for October they have been declining. Looking into 2023 and with what we hear about the U.K. economy, how should we think about the volume development? What are you planning for? Also considering that the automotive segment may rebound a bit, but on the net effect, what are your expectations of the North Sea?
Again, it's very, very difficult because our customers are not able to say exactly what will happen in 2023. As Karina mentioned before, we still see automotive manufacturers struggling with missing parts. Many of them have backlogs in the order books of nine-12 months. I guess on automotive, we are thinking that it will be if there will be a slowdown, it will be relatively limited because there are these backlogs to fill the production lines for the next two-three quarters, which is probably where the downturn could be most severe. We are not seeing any systematic reduction in volumes on the North Sea routes.
We don't have indications from customers that they are seeing changes to that situation.
Okay. My final question is also on your leverage, which is back in the target range.
You stated that you are now ready to pursue growth opportunities, and just in that context, what is the latest status on your dialogue with Ekol? Also, what are your CapEx expectations over the next 12 months?
I can take the Ekol part, and then Karina can comment on the CapEx. Well, when we say we are ready for growth, I think nothing has changed in our mindset. We have, through the crisis, made various acquisitions. Of course, now we are entering a potential recession with a very strong balance sheet where we are, where we want to be in terms of our leverage. With regard to Ekol, as I also one of the other questions, we have now filed with the competition authorities to understand whether this is a deal that can be made and when we, within the next 3 months or so, hopefully get an answer to that. We'll see if then a deal can be made.
Regarding CapEx, we have said before that maintenance CapEx is around DKK 1.4 billion-DKK 1.5 billion. We've not put a conclusion to how much we will have as CapEx in 2023. There is a little bit of flexibility, so when we see the prospects for our earnings, we can also decide whether we wanna hold something a little bit back or whether we think that we need to spend it all. A little bit too early to tell, but we don't have any significant CapEx lined up that we have to do on top of this normal maintenance.
Understood. Thank you so much. No further questions from my side.
The next question is from Lars Heindorff of Nordea.
Yes, morning. Thank you for taking my questions. The first one is regarding the Logistics Division. I don't know if you could share the organic growth both on revenue and EBIT line for the third quarter, please, if you strip out the recent acquisitions. Certainly also on logistics, there's been these talks about a lot of price increases in terms of road freights, both in Denmark, Scandinavia, also across Europe. Maybe a few words on the pricing environment there. Thanks.
I can start with the first part of it and the organic growth in, you said the top line is around 20% in the logistics business.
Excuse me, madam. I'm sorry to interrupt you. Could you speak a little bit closer to the microphone? We can't hear you very well.
There's a background noise, yeah.
Yes, sir, I muted that line. Go ahead, please.
Yeah, that was better. I'll repeat my answer then on the organic growth on top line in logistics around 20% and on the EBITDA a bit more than that.
On the pricing environment, it's a very dynamic environment where we have had to catch up with the increases that we saw, particularly Q3, Q4 2021, but ongoing with the new E.U. regulations on drivers. Very dynamic. For us, the important part is that we're able to not lose out in that part. Margins, I think, should stay more or less the same. Q3, there were some elements that dragged them down, so hopefully we can be a little bit better. The main focus is really to make sure that we are dynamic enough with the changing cost pictures that we see in logistics.
There we've had some good practice the last year, so we're quite confident that we can keep up with it.
All right. Thank you.
Ladies and gentlemen, if you would like to ask a question, please press the star followed by one on your touch-tone telephone. We have a follow-up question from Michael Vitfell-Rasmussen of Danske Bank.
Yeah. Thank you. Just two quick follow-ups. We didn't really spend a whole lot of time talking about duty-free. Can you maybe discuss a little bit on if you see that case unfolding as we talked about a few quarters ago? Just secondly on costs. You know, you seem to manage very well so far, but I guess planning for 2023, just trying to get an understanding in terms of how much fat is there that you potentially could cut in the organization. Have you implemented hiring freezes or anything like that? Thank you.
Let's start with the last. We don't have fat in our organization. I don't know how your organization look like, but we constantly adapt to the situation. A big part of our cost is of course our capacity, so our ferries, our trailers, our trucks, and there we have some levers that I also mentioned in the beginning. Of course, if we see areas where demand is shifting downwards and if we have people leaving, we may not rehire as fast as we would have done. We have open positions, some of them strategic to ensure our digitization. We continue all of that. Could there be open positions where we say, well, given the macro situation, let's be a little more cautious here?
That's happening and it almost happens without Karina and I communicating it. Of course we have had those discussions. There's not a major cost-cutting exercise around the corner in DFDS. We will adjust as things develop. Right now of course with the best quarter in our history, the focus is on if we have to transition to a slightly lower growth scenario than we've been used to. The first question.
I can talk about the duty-free. Overall, the answer is we're pleased, it's going well. As you might recall, we had high expectations going into the high season because of what we saw the drivers were spending. We also said that we need to see how that pans out. After over the summer period, we probably had to admit, okay, maybe we had been a little bit too optimistic. We lowered expectations, or our people at the Channel lowered the expectations. That being said, we've actually seen it come back again when the many families and children and coaches with teenagers and et cetera, were replaced with more normal transportation needs.
We are in a good position, and if we can have a spread around the EUR 15-EUR 17, that's a good level and that's where we are right now.
That sounds great. Thanks for clarifying that.
Welcome.
This concludes our Q&A session, and I hand back to Mr. Carlsen.
Thank you very much, and thank you very much everybody for joining the call and the very good and challenging questions. With our financial leverage back in our target range, we feel we are well positioned to adapt to a more challenging market environment should that come. We're also well positioned to pursue opportunities to strengthen and widen our network. We look forward to speaking to you again soon. Again, thank you and have a good day.