Good day, and thank you for standing by. Welcome to the NTG Nordic Transport Group Full Year 2025 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I will hand the word to CEO of NTG Nordic Transport Group, Mathias Jensen-Vinstrup. Please go ahead.
Thank you. Welcome everybody to our Q4 and full year 2025 conference call. Thank you for dialing in. My name is Mathias Jensen-Vinstrup. I'm the Group CEO of NTG. I'll spend the next 20-30 minutes taking you through our highlights for the fourth quarter of 2025 and provide an update on the full year results, the outlook for 2026, and finish off with answering questions from the audience. On the next page, we kindly ask you to read the forward-looking statement provided in the slides.
If we move on to page number three, you see the agenda for this conference call, which as always includes the Q4 highlights for 2025, a review of the financial performance of the group, followed by each of the two divisions, a presentation of other key figures, and finally, our guidance for 2026. On page number four, you see the highlights for the fourth quarter of 2025. Overall, and in light of the challenges that we experienced throughout 2025, we did see an improved momentum towards the end of the year. Gross profit increased by 14.5% in the fourth quarter of 2025, driven by a combination of continued organic momentum across large parts of the group as well as contributions from our recent acquisitions.
That said, we did experience a normalization in Air & Ocean project volumes compared to the same period last year. This was expected, and it partly offset the underlying progress elsewhere in the business. If we exclude the decline in projects activity, the underlying gross profit also increased within the Air & Ocean division in Q4. If we move to the earnings, adjusted EBIT increased by 27.5% year-on-year in the fourth quarter of 2025, and the main driver here is the Road & Logistics division, where we continue to see both organic growth and a strong contribution from acquisitions, most notably DTK, who also performed very well in the fourth quarter of the year.
In addition to this, we also recognized a DKK 22 million earn-out reversal related to the ITC acquisition, which supported the EBIT development in the period. In connection with the release of our 2025 annual report, we also launched a share buyback program of DKK 200 million, the program will run until no later than the 9th of November this year. It is fully aligned with our approach to capital allocation and within the boundaries of our leverage framework. Finally, based on the performance so far and our current view on the market, we are guiding for full year 2026 Adjusted EBIT in the range of DKK 600 million-DKK 650 million.
This guidance assumes a broadly unchanged market environment and reflects both the progress we have made operationally and also a continuous continued focus on execution of the strategy as well as the cost consciousness initiatives across the group. If we flip to the next page, we turn to the financial highlights for the group. From a market perspective, the European road market generally remains subdued, and we continue to see muted demand and fierce competition, particularly in parts of continental Europe. That said, we are holding up very well organically relative to the market. In Air & Ocean, volumes continue to grow, although the mix is different from what we've seen in earlier periods, with less project activity and more general cargo, as I mentioned before.
If we take a look at the margins, the gross margin benefited from two main effects. First, we've seen lower average ocean freight rates, which structurally supports gross margins. Secondly, following the recent acquisitions that we made, we have a higher groupage mix and exposure within the Road & Logistics division, which also carries higher gross margins. Together, these effects supported the margin development. On the cost side, we did see a slight increase in the organic cost base, which is partly a result of the investments that we've made to support the business and also our integration activities and competencies across the group.
At the same time, this increase was partly offset by cost-saving initiatives across the group, but also in certain countries, and we remain very focused on cost discipline also for the future. Finally, the positive operating margin trend continued. This was obviously supported by the earn-out reversal related to the ITC acquisition, which had a positive effect. This development was partly offset by the impact from the normalization of project activity in the Air & Ocean division, again, as mentioned before, which had been at very elevated and extraordinary levels in the comparison periods. If we adjust for the ITC earn-out reversal, the margin for Q4 was 5.0% from an operating margin perspective.
Overall, we are satisfied with the margin development given the market backdrop. We remain focused on protecting profitability through elevated cost consciousness while continuing to execute on our strategic priorities, professionalizing the organization, particularly within the group in Germany and across the Air & Ocean division. We remain optimistic as to the coming year. On the next page, we turn to the Road & Logistics division. Again, if we start with the market environment, volumes were flat year-on-year. The trend has continued into January and February of this year. In other words, we are not seeing any meaningful recovery yet. However, we are also not seeing a further deterioration. The market remains competitive and subdued, but relatively stable.
Looking at earnings, Adjusted EBIT in the quarter was positively impacted by the ITC earn-out reversal of DKK 22 million as I mentioned before. That effect is clearly visible in the reported numbers. It's important to keep in mind when assessing the underlying performance in any event. Adjusted for the earn-out, the Adjusted EBIT in Q4 expanded organically by 5.3%. We are pleased with this development, particularly given the market backdrop and the flat volume environment. The development once again testifies to our operational capabilities within the Road & Logistics division. Finally, on pricing, we started to see the industry implementing freight rate adjustments during the fourth quarter of 2025.
There was no material impact of this in the Q4 numbers, but we expect the price increases, which we also introduced, to be fully reflected over the course of 2026, supporting earnings as volumes normalize over time. Overall, the Road & Logistics division continued to demonstrate resilience and a solid performance, and we remain focused on the German integrations while positioning the business for any potential market recovery. On the next page, we turn to the Air & Ocean division. Again, from a market environment perspective, the conditions remained rather volatile throughout the fourth quarter of the year. This has been a consistent theme for some time now, and while volumes did increase in the fourth quarter, visibility certainly remains limited.
As we move into 2026, rising geopolitical tensions, not least in the Middle East, and that adds another layer of uncertainty to the market environment that we are facing and acting within. If we look at the rates, ocean freight rates remained below last year's levels and continue to experience a downward pressure. We're also seeing a capacity entering the market, which is weighing on pricing. With the conflict in the Middle East, there may be or there may become certain rate support if the situation continues. Air freight rates were impacted to a lesser extent, but the overall rate environment remains challenging across both the air and the ocean mode.
As mentioned earlier, results from the project organization were lower than in Q4 of 2024. This was fully anticipated and also communicated in previous conference calls. It does explain a meaningful part of the year-on-year comparison within the Air & Ocean division. If we adjust for the effects of the AGL earn-out reversal in 2024, as well as the project activity normalization, both Gross profit and the Adjusted EBIT increased in 2025. In the fourth quarter of 2025, Gross profit also increased, while EBIT was slightly down compared to the same period in 2024, due to mainly muted activity in the U.S. and in the U.K.
Overall, Air & Ocean continues to operate in a challenging market environment. Our focus remains firmly on improving the organic growth through strengthening of the organization, opening of new markets and branches, but also cost discipline to adapt to the realities of the market that we are seeing at the moment. We flip to the next page, we turn to the key figures. Net working capital was positively impacted by seasonality during the final quarter of 2025. We typically see It is to provide a tailwind on the working capital.
Regardless of this development, we still work on and aim to bring our net working capital down even further, especially in the U.S. and Ocean business, even though we did see a significant decline compared to December 2024. This remains a focus area for us, and we continue to work with the collection and dunning procedures all across the footprint of the company. Overall, we are comfortable with the balance sheet position and the cash flow development, and we remain committed to a disciplined capital allocation going forward, which also includes the introduction of a DKK 200 million share buyback program, as I mentioned in the beginning. Finally, on the last slide, you see the full year outlook for 2026.
Based on our performance so far and our current view on the market environment, we are guiding for a full year Adjusted EBIT in the range of DKK 600 million-DKK 650 million. As we've communicated consistently, this guidance assumes a broadly unchanged market environment. We're not building in any meaningful market recovery, but neither are we assuming a further deterioration from the current levels. The range that we provide reflects solid execution in the Road & Logistics division and the challenging market environment in Air & Ocean, but also a continued focus on the cost discipline across the entire organization. In addition to the full year outlook guidance for 2026, we also guide for special items in the range of DKK 20 million-DKK 25 million.
These special items relate to the strengthening and the reorganization program that we have launched already within the Air & Ocean division, which kicked off towards the end of last year in the U.S. The objective of this program is to align the organization with the current market environment in line with the ordinary course of business, but more importantly, to strengthen our focus and investments in organic growth for the future. It's important to emphasize that these special items costs are non-recurring in nature, and it's part of a global strategic review, mainly aimed at elevating organic growth and the conversion ratio within the Air & Ocean division in its entirety. This concludes the presentation from our side. Moderator, please open the lines for questions from the participants.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take the first question. From the line of Emilie Fung from Barclays. Please go ahead.
Hey, thank you for taking my question. Just one question to start with. With the price increases in Road, how much is already implemented, and what should we expect is still to come? How can you give any color to how sticky it's been across the regions? Are you able to quantify what type of level of price increase we should expect within 2026, and when it should start to show in the numbers? Thank you.
The price increases introduced in the Road & Logistics division were mainly implemented in the first two months of 2026. Based on sort of the general behavior in the market, we have seen a rather solid reception of the price increases. And the stickiness of the increases seem to be, you know, at least in line with the best cases that we have seen in the past. There seems to be support from the customer's perspective, not least given that this has been a general move in the market and not something we have been the sole provider of.
Okay. Thank you.
Thank you. As a reminder, please press star one and one to ask a question. It's star one and one to ask a question. There are no further questions at this time. I would like to hand back over to Mathias Jensen-Vinstrup for closing remarks.
Well, thank you, everybody, for dialing in. Please do not hesitate to reach out to our investor relations for any questions that may pop up. I'm sure we'll be meeting a lot of you during the next few days on the road. Thank you, and have a nice day.
This concludes today's conference call. Thank you for participating. You may now disconnect.
Welcome everybody to our Q4 and full year 2025 conference call. Thank you for dialing in. My name is Mathias Jensen-Vinstrup, and I'm the Group CEO of NTG. I'll spend the next 20- 30 minutes taking you through our highlights for the fourth quarter of 2025 and provide an update on the full year results, the outlook for 2026, and finish off with answering questions from the audience. On the next page, we kindly ask you to read the forward-looking statement provided in the slides. If we move on to page three, you see the agenda for this conference call, which as always, includes the Q4 highlights for 2025, a review of the financial performance of the group, followed by each of the two divisions, a presentation of other key figures, and finally, our guidance for 2026.
On page number four, you see the highlights for the fourth quarter of 2025. Overall, and in light of the challenges that we experienced throughout 2025, we did see an improved momentum towards the end of the year. Gross profit increased by 14.5% in the fourth quarter of 2025, driven by a combination of continued organic momentum across large parts of the group, as well as contributions from our recent acquisitions. That said, we did experience a normalization in our ocean project volumes compared to the same period last year. This was expected, and it partly offset the underlying progress elsewhere in the business. If we exclude the decline in projects activity, the underlying gross profit also increased within the Air & Ocean division in Q4.
If we move to the earnings, Adjusted EBIT increased by 27.5% year-on-year in the fourth quarter of 2025. The main driver here is the Road & Logistics division, where we continue to see both organic growth and a strong contribution from acquisitions, most notably DTK, who also performed very well in the fourth quarter of the year. In addition to this, we also recognized a DKK 22 million earn-out reversal related to the ITC acquisition, which supported the EBIT development in the period. In connection with the release of our 2025 annual report, we also launched a share buyback program of DKK 200 million. The program will run until no later than the 9th of November this year.
It is fully aligned with our approach to capital allocation and within the boundaries of our leverage framework. Finally, based on the performance so far and our current view on the market, we are guiding for full year 2026 Adjusted EBIT in the range of DKK 600 million-DKK 650 million. This guidance assumes a broadly unchanged market environment and reflects both the progress we have made operationally and also a continuous continued focus on execution of the strategy as well as the cost consciousness initiatives across the group. If we flip to the next page, we turn to the financial highlights for the group. From a market perspective, the European road market generally remains subdued, and we continue to see muted demand and fierce competition, particularly in parts of continental Europe.
That said, we are holding up very well organically relative to the market. In Air & Ocean, volumes continue to grow, although the mix is different from what we've seen in earlier periods, with less project activity and more general cargo, as I mentioned before. If we take a look at the margins, the gross margin benefited from two main effects. First, we've seen lower average ocean freight rates, which structurally supports gross margins. Secondly, following the recent acquisitions that we made, we have a higher groupage mix and exposure within the Road & Logistics division, which also carries higher gross margins. Together, these effects supported the margin development.
On the cost side, we did see a slight increase in the organic cost base, which is partly a result of the investments that we've made to support the business and also our integration activities and competencies across the group. At the same time, this increase was partly offset by cost-saving initiatives across the group, but also in certain countries. We remain very focused on cost discipline also for the future. Finally, the positive operating margin trend continued. This was obviously supported by the earn-out reversal related to the ITC acquisition, which had a positive effect. This development was partly offset by the impact from the normalization of project activity in the Air & Ocean division, again, as mentioned before. Which had been at very elevated and extraordinary levels in the comparison periods.
If we adjust for the ITC earn-out reversal, the margin for Q4 was 5.0% from an operating margin perspective. Overall, we are satisfied with the margin development given the market backdrop, and we remain focused on protecting profitability through elevated cost consciousness while continuing to execute on our strategic priorities, professionalizing the organization, particularly within the group in Germany and across the Air & Ocean division. We remain optimistic as to the coming year. On the next page, we turn to the Road & Logistics division. Again, if we start with the market environment, volumes were flat year-on-year, and the trend has continued into January and February of this year. In other words, we are not seeing any meaningful recovery yet.
However, we are also not seeing a further deterioration. The market remains competitive and subdued, but relatively stable. Looking at earnings, Adjusted EBIT in the quarter was positively impacted by the ITC earn-out reversal of DKK 22 million, as I mentioned before. That effect is clearly visible in the reported numbers. It's important to keep in mind when assessing the underlying performance in any event. Adjusted for the earn-out, the Adjusted EBIT in Q4 expanded organically by 5.3%. We are pleased with this development, particularly given the market backdrop and the flat volume environment. The development once again testifies to our operational capabilities within the Road & Logistics division.
Finally, on pricing, we started to see the industry implementing freight rate adjustments during the fourth quarter of 2025. There was no material impact of this in the Q4 numbers, but we expect the price increases, which we also introduced to be fully reflected over the course of 2026, supporting earnings as volumes normalize over time. Overall, the Road & Logistics division continued to demonstrate resilience and a solid performance, and we remain focused on the German integrations while positioning the business for any potential market recovery. On the next page, we turn to the Air & Ocean division. Again, from a market environment perspective, the conditions remained rather volatile throughout the fourth quarter of this year. This has been a consistent theme for some time now.
While volumes did increase in the fourth quarter, visibility certainly remains limited. As we move into 2026, rising geopolitical tensions, not least in the Middle East, are expected to influence global trade patterns, and that adds another layer of uncertainty to the market environment that we are facing and acting within. If we look at the rates, ocean freight rates remained below last year's levels and continue to experience a downward pressure. We're also seeing a capacity entering the market, which is weighing on pricing. With the conflict in the Middle East, there may be or there may become certain rate support if the situation continues.
Air freight rates were impacted to a lesser extent, but the overall rate environment, remains challenging, across both, the air and the ocean mode. As mentioned earlier, results from the project organization were lower than in Q4 of 2024. This was fully anticipated and also communicated in previous conference calls. It does explain a meaningful part of the year-on-year comparison within the Air & Ocean division. If we adjust for the effects of the AGL earn-out reversal in 2024, as well as the project activity normalization, both gross profit and the Adjusted EBIT increased in 2025.
In the fourth quarter of 2025, gross profit also increased, while EBIT was slightly down compared to the same period in 2024, due to mainly muted activity in the U.S. and in the U.K. Overall, Air & Ocean continues to operate in a challenging market environment, and our focus remains firmly on improving the organic growth through strengthening of the organization, opening of new markets and branches, but also cost discipline to adapt to the realities of the market that we are seeing at the moment. We flip to the next page, we turn to the key figures. Net working capital was positively impacted by seasonality during the final quarter of 2025.
We typically see it is to provide a tailwind on the working capital. Regardless of this development, we still work on and aim to bring our working capital down even further, especially in the U.S. Air & Ocean business, even though we did see a significant decline compared to December 2024. This remains a focus area for us, and we continue to work with the collection and billing procedures all across the footprint of the company. Overall, we are comfortable with the balance sheet position and the cash flow development, and we remain committed to a disciplined capital allocation going forward, which also includes the introduction of a DKK 200 million share buyback program, as I mentioned in the beginning.
Finally, on the last slide, you see the full year outlook for 2026. Based on our performance so far and our current view on the market environment, we are guiding for a full year Adjusted EBIT in the range of DKK 600 million-DKK 650 million. As we've communicated consistently, this guidance assumes a broadly unchanged market environment. We're not building in any meaningful market recovery, but neither are we assuming a further deterioration from the current levels. The range that we provide reflects solid execution in the Road & Logistics division and the challenging market environment in Air & Ocean, but also a continued focus on the cost discipline across the entire organization.
In addition to the full year outlook guidance for 2026, we also guide for special items in the range of DKK 20 million-DKK 25 million. These special items relate to the strengthening and the reorganization program that we have launched already within the Air & Ocean division, which kicked off towards the end of last year in the U.S. The objective of this program is to align the organization with the current market environment, in line with the ordinary course of business. More importantly, to strengthen our focus and investment in organic growth for the future.
It's important to emphasize that these special item costs are non-recurring in nature, and it's part of a global strategic review, mainly aimed at elevating organic growth and the conversion ratio within the Air & Ocean division in its entirety. This concludes the presentation from our side. Moderator, please open the lines for questions from the participants.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take the first question. From the line of Emilie Fung from Barclays. Please go ahead.
Hey, thank you for taking my question. Just one question to start with. With the price increases in Road, how much is already implemented and what should we expect is still to come? How can you give any color to how sticky it's been across the regions? Are you able to quantify what type of level of price increase we should expect within 2026, and when it should start to show in the numbers? Thank you.
The price increases introduced in the Road & Logistics division were mainly implemented in the first two months of 2026. Based on sort of the general behavior in the market, we have seen a rather solid reception of the price increases. The stickiness of the increases seem to be, you know, at least in line with the best cases that we have seen in the past. There seems to be support from the customer's perspective, not least given that this has been a general move in the market and not something we have been the sole provider of.
Okay. Thank you.
Thank you. As a reminder, please press star one and one to ask a question. It's star one and one to ask a question. There are no further questions at this time. I would like to hand back over to Mathias Jensen-Vinstrup for closing remarks.
Well, thank you everybody for dialing in. Please do not hesitate to reach out to our investor relations for any questions that may pop up. I'm sure we'll be meeting a lot of you during the next few days on the road. Thank you. Have a nice day.