Today, and thank you for standing by. Welcome to the Nordic Transport Group third quarter 2025 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 stat one one on your telephone keypad. You will then hear the automated message advising your hand is raised. To withdraw a question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Mathias Jensen-Vinstrup. Please go ahead, sir.
Thank you, and welcome everybody to our Q3 2025 conference call, and thank you for dialing in. My name is Mathias Jensen-Vinstrup, and I'm the Group CEO of NTG, and I have Christian Jakobsen, our Group CFO, with me today. We will spend the next 20 minutes- 30 minutes taking you through the highlights for the third quarter of 2025 and finish off with answering questions from the callers. If we flip to the next page, we kindly ask you to read the forward-looking statement provided in the slide. On page number three, you see the agenda for today's conference call, which, as always, includes the quarterly highlights, including a short M&A update, a review of the financial performance of the group, followed by the two divisions, a presentation of other key figures, and finally, our outlook for 2025.
By the end of the presentation, the line will be open to questions from the audience. If we flip to the next page, you see the key highlights of the third quarter of this year, during which both divisions achieved double-digit growth in gross profit, driven by organic performance and contributions from our recent acquisitions. Despite a quarter characterized by challenging market conditions across modes and geographies, adjusted EBIT increased by 40% year-on-year on the back of organic growth in mainly Denmark and Sweden, but also in the Netherlands, the Baltics, and in Switzerland, as well as continued positive impacts from the acquisition of DTK. The integration of DTK is close to finalized, with only minor synergies yet to be realized, which is expected no later than by the end of this year, that is, some seven months after closing of the transaction.
In Germany, market conditions continued to impact both Schmalz+Schön and ITC during the third quarter of the year. As communicated in previous updates, Schmalz+Schön's performance remains aligned with the broader market trends, reflecting persistent macroeconomic challenges within the German logistics industry. At the same time, ITC continues to face difficulties adapting to the current market environment, and the teams are working diligently to recover the grounds lost during the initial months of our ownership. We are collaborating with the German and local management teams to implement commercial and operational enhancement initiatives, aiming to position ITC for a recovery. An organizational restructuring has been completed to ensure that the appropriate competencies are in place within key roles going forward.
Nonetheless, it's important to acknowledge that the recovery process for ITC will continue, and the journey ahead will focus on upgrading the digital infrastructure and executing coordinated commercial initiatives to regain market shares in Germany. Based on the results for the first three quarters, we have narrowed the full-year guidance for 2025 to between DKK 560 million and DKK 590 million, which Christian will get back to later in the presentation. Before Christian presents the divisional and group financial results, I would like to take a moment to recognize the dedication and hard work of our teams and colleagues worldwide who've continued to safeguard customer service and profitability despite continued challenging market conditions. A commitment and adaptability that, as an example, has been fundamental to our consistent outperformance of the broader market from an organic growth perspective within road and logistics.
With those words, I will hand it over to Christian, who will take you through the financial results for the third quarter of the year. Please go ahead, Christian.
Thank you, Mathias, and also a warm welcome from my side. Before jumping into the financial, I just want to confirm that we, as promised, are now live with the generic pilot of the new groupage system. From my side, I want to thank everybody who has been a part of this hard work. It was a journey, and we will start implementing the next in Q1 2026. If we take a closer look at the financial highlights for the third quarter, net revenue for Q3 came in at DKK 2.941 billion representing an increase of 28% compared to the same period last year. The growth was primarily driven by acquisitions, which contributed 30%, while organic growth was slightly negative at -1.2%, mainly due to the lower average Ocean freight rates. Currency effects were marginally negative at -0.8%.
Gross profit increased by 44% to DKK 657 million, and the gross margin improved by 2.4 percentage points to 22.3%. This improvement was mainly the result of lower Ocean freight rates and a higher share of groupage and warehousing coming from the German acquisitions. Adjusted EBIT came in at DKK 160 million, up 40% year-on-year. The increase was primarily driven by the DTK acquisition and the organic growth in the road and logistics division. The operating margin improved by 0.4 percentage points to 5.4%, reflecting stronger performance in the underlying road and logistics business, especially in Denmark and Sweden. If we look at the market environment, the European road market remains subdued with muted demand and continued pressure on freight rates.
That said, we are starting to see some stabilization following a prolonged period of decline, and we expect to see rate increases in selected markets during Q4 2025 and Q1 2026. If we go to the road and logistics division, market condition remains subdued, and we continue to operate in an environment with low visibility and have not yet seen any material changes in market demand. Market volumes were essentially flat year-on-year, but we are starting to see some stabilization after a prolonged period of decline, while the overall environment is still characterized by high competition and muted demand. Net revenue for the division increased by 47% to DKK 2.296 billion in the third quarter, with organic growth of 6.8% and acquired growth of just over 40%, primarily from the DTK, Schmalz+Schön, and ITC acquisitions. Currency effects were marginal at 0.3%.
Gross profit was up 57% to DKK 511 million, and the gross margin improved by 1.4 percentage points to 22.3%. This improvement was, as mentioned before, mainly driven by the higher groupage and warehousing exposure from our German acquisitions, which typically carry higher gross margin. Adjusted EBIT for the division increased by 48% to DKK 139 million, and the operating margin improved by 0.5 percentage points to 6.1%. The positive development in adjusted EBIT compared to last year was driven by both organic growth and by contribution from recent acquisitions. In particular, we saw a strong performance in Denmark and Sweden, which has dropped at the lower activity in the U.K. If we look at the verticals, the automotive segment remains under pressure and continues to negatively impact our results in Q3. This trend is expected to continue through the remainder of 2025 and into 2026.
If we move to the air and Ocean division, the market environment in air and Ocean remained volatile in the third quarter, with ongoing uncertainties surrounding U.S. tariffs and continued changes in market announcements. Ocean freight rates stayed below last year's levels and continued to be under pressure as additional capacity entered the market. Air freight volumes were also impacted, although to a lesser extent, and air freight rates were slightly down year-on-year. Net revenue for the division decreased by 13%, primarily driven by lower average freight rates, reduced volumes, and normalized project activity. Organic growth was down 18%, while acquired growth contributed 9%, coming from the Schmalz+Schön and Freighting acquisitions. Currency effects were negative at -3%. Despite the decline in revenue, gross profit increased by 12%, and the gross margin improved 5.1 percentage points.
This improvement was mainly due to lower average Ocean freight rates and the positive contribution from our recent acquisitions. The gross profit growth reflects the shift in our business mix, with general cargo activities replacing last year's higher project activity. Adjusted EBIT for the division decreased by 19%, as the high margin project volumes seen last year were replaced by lower margin general cargo activities in Q3 2025. The operating margin decreased slightly to 3.3%, and the conversion ratio was down to 14.4%, reflecting the lower contribution from the project volumes. We flip to the next page and have a closer look at the key figures for the third quarter. Net working capital was negatively impacted by the seasonality and elevated levels within the air and Ocean, and we saw a negative development of DKK 90 million compared to the previous quarter, but in line with last year's quarter.
Cash flow for the third quarter was affected by the net working capital development, with adjusted free cash flow totaling DKK 1 million. If we look at the balance sheet, net interest-bearing debt, excluding IFRS 16 leased liabilities, was DKK 1.2 billion at the end of the quarter. This increase in net debt and gearing ratio compared to last year was driven by the acquisition completed during the last year, including Schmalz+Schön, DTK, and ITC. Return on invested capital before tax declined to 18% compared to 25.5% last year, primarily due to the impact of the acquisitions and the higher capital base of these following these transactions. In summary, while we continue to see the effect of seasonality and acquisitions on our key financial metrics, we remain focused on disciplined net working capital management and maintaining a strong balance sheet.
If we flip to the last page, we have narrowed our guidance, as Mathias mentioned, based on the result during the first quarter of the year. We have narrowed it to DKK 560 million-DKK 590 million. Taking the top of the range reflects the current market, where we saw muted development across all modes. A cautious view on Q4 that we are already halfway through. We continue to anticipate an unchanged market environment for the remainder of 2025, characterized by a soft macro environment and consumer sentiment. I will hand the word back to Mathias for the closing remarks.
Thank you, Christian. This concludes our presentation. Moderator, please open the line to questions.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one ono on the top of the keypad and wait for your name to be announced. To withdraw a question, please press star one and one again. Listen while we compile the Q&A queue. This will take a few moments. Now we are going to take our first question. It comes from the line of Kristian Godiksen from SEB. Your line is open. Please ask your question.
Thank you. Good morning. A couple of questions from my side. Just maybe if you could add a bit of flavor to the narrowing of the guidance towards the low end, actually, this is based on the fact that actually it's a pretty strong Q3 numbers, especially within the road and logistics part of the business. That would be the first question. Secondly, interested on your view on the question you mentioned as well, that you expect some selected price increases during Q4 and this year and Q1 next year. Can you maybe speak somewhat more about that? What should we expect? I believe we've seen high single-digit price increases announced. What's the expectation we should have on what prices will actually come through in actual rates?
Thirdly, maybe if you could put a bit more flavor on your choice of the new GMS system within the groupage, when do you expect that to be fully implemented? As I heard you, you will start the implementation in Q1. What kind of EBIT contribution on an annualized basis should we expect once it is fully implemented? Thank you.
Yes. If we look at the narrowing of the guidance, please remember that with the acquisition of the two German companies there, our seasonality has changed somewhat. We will definitely see a good October and a pretty good November. Due to the higher fixed costs that you have in a groupage organization, December, where they close down in the middle of December, you will see an awful December. That is definitely what you can say, the challenge with the high fixed cost in a groupage setup. On the price increase, if we look at the price increases in general, I think a lot of our competitors have been out in the market, and obviously also us, where we are being pushed by the whole years. Because they will either have to have price increases or they will run into bankruptcy.
We are a little bit in the same situation as we saw last year. Yeah, we are still in the early days of the price increases. We do not know how much the market will affect us, but we will have to see. In general, our industry has to have some price increases because we cannot simply absorb the price increases that we have to pay towards the whole year. On the new TMS system, the new TMS system, it is actually a full pilot that we started here Thursday. It is running, and we had the first bookings coming through. We also took a smaller entity to do the test on. It is like we also did with CargoWise.
The pilot is always you think you've done everything to prepare yourself and thought of everything, but you know in reality when you come live, then there will be something which you didn't sort of. Therefore, it's always good to start with something that is less complicated if there's something. It seems to run smooth. Obviously, we are just, as I said, we were live Friday morning. It's not that we have a lot of test data or live data yet, but it seems to be running smoothly. Confirming also that the big project we have in Fellbach on the first quarter that we should be prepared for. We expect that we can talk more about that when we are live with the annual in connection with the annual report.
Okay. Thank you. Just a couple of follow-ups. If I may challenge you a bit on the reasoning for the narrowing of the guidance, when you mentioned that December is with the new German entities coming in, that is, you have a higher fixed cost base in that regard. I acknowledge that, but I guess that was also the case in connection with the Q2 results. That is not something that has changed between Q2 and Q3. Maybe some flavor on that. I guess on the price increases, I hear what you say and agree, but I was just wondering whether you could maybe potentially be a bit more optimistic this year based on volumes having, if not improved, then at least not declining to the extent they were and have stabilized.
It seems like there is a bit more positive optimism in expectations, not least in Germany. Hence, you could argue that you could be a bit more optimistic on how much of the price increases that will actually come through. Thank you.
Are you asking me to be more optimistic? I mean, we need to see it coming through, and we do not want to sit and promise you something that we cannot deliver. We would rather say that we are doing all we can, but I cannot sit and promise you that we will see an uptick in the gross margin. Obviously, we are under pressure, and I think you also see some of our bigger competitors being under pressure. I will not sit and promise you a lot on the effects of the price increases, but it is necessary. Still, looking at Q2, the groupage business is more and logistics business is more hit by lower volumes in soft months.
That means that instead of full and part loads making a smaller profit, you will typically see that logistics and groupage will deliver a minus in the smaller months. If the volumes are a little soft, they will be hit harder. Therefore, you will see that our strong months will keep being very strong, and the soft months will be weaker than what we are used to see in the legacy entity.
In addition to the effects of the groupage activities, it's also fair to state that from an Ocean perspective, we do expect a lower activity in the fourth quarter compared to our expectations during the second quarter, given that we've seen some sort of front-loading of volumes given the elevated uncertainty in the market in general.
Exactly.
The lower volume within the groupage network, say, sequentially between what you expected in Q2 and expect now, is that due to market expectations, or is that the pickup in volumes in your German acquisitions that are the main reason for that?
Maybe we should give room for the next ones, but we are seeing in general that the German market is softer than the Nordics at the moment.
All right. I'll jump back. Thank you.
Thank you. Now we're going to take our next question. It comes to the line of Lars Heindorff from Nordea. Your line is open. Please ask your question.
Yes. Morning. Thank you. Also, I'll limit myself to seven questions. The first one is on roads. Quite impressive organic growth in the third quarter. Can you maybe help us explain how you achieved that? As usual, I'm interested in the split between what is volume, what is price, are there anything else in there just to get a sense for the development? That's the first one. Thank you.
I mean, we do not provide the exact split between price and volume. What we are able to say is that it is mainly, I mean, the organic performance as mentioned in the introductory speech is driven by Denmark and Sweden. In both countries, we have seen quite a big uptick in volumes also, in particular in Sweden, which came from a lower point in 2024. They have continued the positive momentum from the second quarter and from the first quarter into the third quarter, really taking market shares all across the board. From a net customer inflow perspective, we have seen quite a positive tailwind across the Danish and Swedish entities, in particular the two biggest ones being the road entities.
Okay. On Ocean, I mean, the earnings in that division have been sort of tagging along with the development of markets in general. I mean, you still have a subscale. I think that's not a secret. You have exposure, too much, still exposure to the spot markets. The question is basically, what should we see here? I know you're doing some stuff in terms of how you organize your cargo, but if we assume that the sea freight market will be under pressure well into next year because of structural oversupply in the container business, I mean, what should make the earnings in Ocean actually recover? Or will there be a recovery?
Also, as an add-on to the Ocean part, can you maybe indicate—I am not sure how precise you want to be—but indicate how much impact the project business that you do not have this quarter, how much actually is that of a swing factor?
No. On the latter question first, the sort of the sign in front of the growth development in EBIT would be different had we sort of excluded the project-based business. It is quite a big swing factor. If you look at the underlying business or the business excluding the project activities, it would be a sort of satisfactory development from a percentage perspective. By the end of it all, it is the bottom line that matters, everything included. Looking at the Q3 numbers, we delivered a 14.4% conversion ratio and a 3.3% EBIT margin in the Ocean division, which is, even despite the sort of insufficient scale, not satisfying. We do expect that the markets will continue to be and perhaps be slightly more challenged as we move further into Q4 and into 2026.
This will necessitate an even greater focus on the cost base also to make sure that we protect what we have and also strive to optimize the business from a 360-degree perspective. It will be challenging as it looks right now moving into 2026 on an Ocean perspective.
Mathias, I mean, does that mean that we will see that the cost base will decline on a quarterly basis as we head into next year?
I mean, everything is up for analysis and investigations as we speak. We will do everything we can to protect the earnings that we have, but also drive further growth in the volumes even in challenging markets. The cost base needs to come down within the division in order to improve the results no matter what happens in the market.
All right. Thank you. I'll jump back in again.
Thank you. Now we are going to take our next question. The question comes to the line of Ulrik Bak from Danske Bank. Your line is open. Please ask your question.
Yes. Hello, Mathias and Christian. Also, a couple of questions from my side. First on road and logistics, I was just wondering if you could elaborate a bit more on the two German acquisitions, both the current state of them and perhaps also if you have insight into their customers, the volumes, how they have trended versus one quarter ago. Also, if you could guide us in any way about the earnings contribution from Schmalz+Schön and ITC over the coming 12 months. Because this year, looking at the M&A contribution, I assume that most of it comes from DTK. It is roughly neutral contribution to EBIT this year. If you can guide us in somehow to what you expect for the coming 12 months there. Thanks.
No, happy to do so. I mean, from a Smart Insurance perspective, the customer portfolio continues by and large to be fixed. I mean, there's always a little bit of a churn, but nothing significant at all. We are also adding new customers to the portfolio. In terms of the larger accounts within the Smart Insurance family, we are very optimistic about the long-term collaboration with one account in particular. What we have been seeing and sort of continue to see is a muted activity level, and there's no immediate signs of recovery within Q4. We do see what could be a turning point in terms of order intake expectations as we move into 2026. From a Smart Insurance perspective, it's steady at a low level.
As Christian mentioned, we do have quite a big milestone as we move into 2026 in terms of the migration onto the new groupage system in the biggest entity within the Schmalz+Schön family, in addition to the live pilot that we have in the eastern part of Europe already. From an ITC perspective, the situation is fairly constant from a customer portfolio perspective compared to the second quarter and what we discussed back then. There is no doubt that the road to recovery is longer and more difficult than is the case from a Schmalz+Schön perspective. The groupage system that we will launch in the southern part of Germany in the beginning of 2026 will also be applied in the ITC universe.
We do expect to see sort of so far externally unquantified productivity improvements similar to what we believe is sort of market-conform when upgrading the digital infrastructure of an entity. That is my five cents, Ulrik.
That's great. Thank you. Yeah. Sorry, Christian. Go ahead.
Should I give a little on the expectations? As Mathias mentioned, we will see some productivity improvements with the new system. We always see that the first three months, there will be no improvements. Afterward, we can definitely take more shipments per employees within the systems. That means the sales guys should definitely go out and find some more. If we look at the contribution, we also took some measurements on the cost side within the German organization. That should also improve the results compared to where we are this year.
Okay. Could you quantify that in just the restructuring cost? Just remind us.
No, but I think you have seen that our special license were a little higher than what we originally announced. Somewhat, it's obviously coming from that we lost some customers within the ITC. Therefore, we have closed the terminal in Sweden and moved it into Fellbach. That cost saving is, I'm not sure I'm giving you a quantified, but that cost saving will obviously affect us positively next year.
All right. Question on the price increases that you mentioned will be faced in Q4 and Q1. Which markets are you increasing prices on or attempting to increase prices? You mentioned that you are being under pressure from higher haulier costs. Is this just a measure to cover costs, or could it also be a source of earnings growth?
The price increases will, similar to previous periods, mainly be applied within Denmark and in Sweden, the two biggest markets. It will also be applied sporadically in Germany given the circumstances and the situation that we are facing there. It will, similar to previous periods, also be a very sort of diversified rollout plan, taking the different entities, markets, trade lanes, and customers into account. The percentages will range from low to high single-digit numbers in this case.
Understood. Is this just to cover cost, just to repeat?
No. I mean, basically, Ulrik, it is to ensure and safeguard capacity, right? We do believe with the limited sort of elasticity of supply, if you may, we do believe that having capacity in case of a market rebound, if and when it occurs, will be crucial to ride the wave of a potential uptake. In order to safeguard that capacity, we need to pay more than what is the case today. In order to be able to do that, the price increases will be a necessity. Basically, it is a little bit of a reactive approach to ensure that we have the capacity and can continue to service customers if and when volumes will rebound. That is when we do see the sort of more proactive benefits of the increases. By the end of it all, we do believe it is about securing capacity.
Understood. Thank you so much.
Thank you. Now we're going to take our next question. It comes to the line of Emily Fong from Barclays. Your line is open. Please ask your question.
Hi. Good morning. Thank you very much for taking my question. I just have two questions. First, following on from an earlier question on the full-year 2026 trends you see in Air and Ocean, could you discuss perhaps your view into the full-year 2026 road dynamics? What are the main moving parts you see with respect to the German recovery, pricing, the groupage TMS system? That is the first one. The second one is that some of your American competitors have been discussing AI and its impact on the forwarding sector. What is your view on this? Thank you very much.
No, thank you for the questions. I mean, in terms of the expectations for 2026, as a starting point, we prefer to comment on that in connection with the publication of our guidance for that particular year. Given that we only guide on 2025 at the time of speaking, we will limit ourselves to the commentary on 2026. From sort of a dynamics perspective, though, I do think that you can sort of split up the two divisions, in particular the road division into the full and part load activities, which is mainly sort of Nordic-based. Then sort of what is south of the border being the groupage activities. On the Ocean side, similar to the impact in the third quarter, you can split it up to the general cargo activities and the project-based activities.
There is no doubt that the full and part load activities seem to be recovering quicker than what is the case for the groupage activities. We do have hopes and expectations and plans for sort of idiosyncratic initiatives within Germany, in particular on the groupage side, to elevate performance, as Christian alluded to, both from a cost-out perspective but also from a productivity perspective as we continue to migrate onto the new groupage platform. On the Ocean side, it looks challenging, in particular as the capacity continues to come online within Ocean freight in particular. On the project-based activity, we continue to be at the normalized level that we are seeing also this particular year. I do not know if you have anything to add.
If I should give a short on the AI?
Yes, please.
On the AI, we are also working on the AI. At the moment, we have on the back office part, we already have a lot of AI running. It can lot, but definitely have AI running. We also now are on the front side looking at the AI on the booking platforms and will have already some projects that will go live within the next three months. We will definitely also see an improvement on our productivity due to the AI. This is definitely also a theme in our organization.
Thank you. Thank you. Now we're going to take our next question. The question comes to the line of Dan Togo Jensen from DNB Carnegie. Your line is open. Please ask your question.
Yes. Just a few ones left for me here. Maybe some color on how the Q3 progressed, starting point and exit point. Because I understand you're being cautious on Q4 due to seasonality, as you mentioned, etc. It seems like you're underlining that things are muted at the moment. Did the exit of Q3, was it weaker than the entry, so to say? You come out of Q3 on a more soft note. That would be the first question. Second question, maybe a bit on the business case for ITC now. I think you originally planned for around EUR 13 million in EBIT, including synergies, etc. Where do you see that now? Basically, has this halved potentially, or where are we on the map here? Then maybe just some color on the 19 main special items. I understand you are closing down a site here.
How many FTEs are made redundant here? Just to get some sort of understanding of the potential impact from this. I know there was a question alluding to this before, but maybe some color on maybe how many were made redundant in that connection. Thanks.
If we look at the seasonality, then we saw, and that was maybe also that in particular in Germany, that the holidays were a little later. In average, I think when I asked Chat or co-pilot, then the average was one week later that was moved into August. We were actually a little bit better in July than anticipated. August was weaker than anticipated. I think September was spot on. We did not see a lot of movements within the quarter except from the holidays. It is not that we saw that we came out very strong or something like that. We came out strong, but we also anticipated that with September being one of the strongest months within our road business.
On the ITC acquisition and business case, I mean, we did communicate in connection with closing of the transaction, I believe, at least in connection with signing of the transaction, an expectation of EUR 10.8 million as sort of the expected contribution on an IFRS basis to the group. I mean, right now, as also alluded to and communicated in the second quarter of the year, we are sort of fluctuating around the break-even levels on a month-by-month basis. That is the new baseline that we are working from and rebuilding from going forward. Now, if and when the market improves and the activity improves, in particular because of the cost structure and the fixed component of the cost structure, we do expect there to be a decent upside.
The EUR 10.8 million expected initially is quite a lot higher than a potential run rate of that particular part of the German business going forward.
If you look at the special items, I mean, most of it came from Germany. If you look at Sweden, where we closed the terminal, we still have some offices there. There we spent, I think it was EUR 680,000, so a little over DKK 5 million on that for the quarter.
That is cost that are exiting. Is that the way to understand it?
That was the cost of closing down the terminal activities. It is subleased, and then you have the difference between what we are paying and subleased. Then you have the termination of the people that we had to terminate.
Are there anything feeding through to Q4 on special items? Will there be a part left there?
Not on Sweden. That's the.
Okay. But there would still be special items in Q4? Is that how to understand this?
That is to be expected, yes.
Okay. Thank you.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad. Now we're going to take our next question. Just give us a moment. It comes to the line of Lars Heindorff from Nordea. Your line is open. Please ask a question.
Yeah. Hi again. Thank you. Just a few follow-ups. The first one is on ITC. Clearly, the most troublesome of those acquisitions that you made. But see, as you alluded to, a bit of upside if you can get these things right. How are you now with the closure of Sweden? How far are you into that restructuring process of ITC? What I'm trying to get at here is risk of revenue loss going forward. I mean, this is people business. Have you done the redundancies that you need to do? Are there risks if you need to do more that you will lose more revenue? And hence, perhaps also with the share fixed cost, that that will pull in the other direction. Yeah, that's the first one. The second one is on M&A. I mean, we need to touch a little bit on that.
Leverage still fairly high. I mean, do you feel comfortable now, also in light of the two recent acquisitions in Germany, to go out and make acquisitions either in road or in CNL? What's sort of your thoughts about the M&A part of the story?
On the ITC question, I mean, the biggest risk set aside a deterioration of the market in general is naturally the loss of customers going forward. That's where all of our focus rests and where our efforts primarily are focused on. We are, by and large, done with the reorganization from a sort of staff perspective and all the new competencies that were needed in order to start preparing for and actually executing on the turnaround and the recovery of the ITC business is in place right now. That doesn't mean that it's a quick fix.
A big portion of the uptick from an earnings perspective will also be at the introduction of the groupage system. The risks prevail in terms of customer losses, but we are diligently working on meeting with and engaging with all of these customers. Also, as was the initial idea with the German acquisitions, we are pushing for and promoting the services across Germany and not just within the Ruhr area of the country in this case. From an M&A perspective, the focus remains on Germany for the time being for all of our colleagues within the road and logistics division. From an air and Ocean perspective, as we have communicated before, we are keen on and interested in doing air and Ocean acquisitions subject to leverage allowing and subject to us staying below the 3x.
However, as we also communicated, the market looks challenging as we move further into Q4 and into 2026. This may give rise to sort of a bid-ask spread challenge similar to what we did experience in 2023 when the sellers were sort of extrapolating from COVID levels and we were extrapolating from significantly lower levels from an earnings perspective. That is kind of where we are right now. We are in a bit of a waiting position on the M&A side, and we use the period until any potential opportunity would materialize to deliver.
Just on the deleverage part, if you do not do, let's assume that you are not going to do any M&A, how much further down do you need the leverage to come before you will start doing share buybacks?
That's a good question, and it's a case-by-case evaluation. We definitely need to come down further, and I guess we need to be trending in the lower end of the 2-3 range before we engage in share buybacks.
All right. Thank you.
Thank you. The speakers are done for the questions for today. I would now like to hand the conference over to Mathias Jensen-Vinstrup for any closing remarks.
Thank you, everybody, for the questions. Thank you for dialing in. Please do not hesitate to reach out to our investor relations officer in case of any follow-up questions or meeting requests. Thank you and have a nice day.
This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.