Good day, and thank you for standing by. Welcome to the NTG Nordic Transport Group First Half 2026 Conference Call and Webcast. At this time, all participants are in listen only mode. After the speakers' presentation, there will be the question and answer session. To ask a question during the session, you need to press star one one on your telephone keypad. You will then hear an automatic 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 will hand the word to CEO of NTG Nordic Transport Group, Mathias Jensen-Vinstrup. Please go ahead.
Thank you, and welcome everybody to our conference call for the first half of 2026, and thank you for dialing in. My name is Mathias Jensen-Vinstrup, and I'm the Group CEO of NTG. I have Tinneke Torpe, our Group CFO, with me today. As always, we'll spend the next 15- 20 minutes taking you through our highlights and results for the second quarter of 2026 and finish off answering questions from the participants on this call. If we move on to the next page, we kindly ask you to read the forward-looking statements provided on the page.
On page number three, you see the agenda for this conference call which includes the highlights for the second quarter, a review of the financial performance of the group as well as each of our two divisions, the financial highlights and ratios, the outlook for the year, and finally, we open up for Q&A. Moving on to the highlights for the second quarter of the year for the group. We are generally pleased with the performance that we delivered. Gross profit increased by 8%, while adjusted EBIT increased by 23% compared to the same period last year. The performance was driven by strong organic growth across the business, supported by higher freight rates and continued market share gains, as well as the inclusion of the final month of the DTK acquisition, as we illustrate on the slide.
We continue to operate in an uncertain market with big regional differences, but on a headline basis, market conditions improved during the second quarter. Germany, however, remained muted activity-wise, whereas most other markets, in particular in the Nordic region, developed quite positively. At the same time, freight rates were impacted by higher fuel prices and capacity constraints, which led to higher rates and thus revenue across both divisions. Within the Road & Logistics division, an important milestone was reached during the second quarter with the completion of the TMS rollout in the southern region of Germany. While the implementation continued to affect operations and also working capital during the quarter, we are encouraged by the progress made, and we remain confident in the long-term benefits of the direction that we have set out.
Especially in light of the valuable experience that we gained during the first six months of the year, also the organizational strengthenings that we have made in preparation for the continued migration of our groupage activities. Within Air & Ocean, the restructuring and reorganization program progressed ahead of plan, and numerous initiatives have now been executed across the division, and we are gradually seeing these efforts translate into a lower cost base and improved profitability. Based on the performance in the first six months of the year, as well as our current view on the market, we have narrowed our full year guidance range for adjusted EBIT to between DKK 625 million and DKK 650 million. The range is being raised on the floor by DKK 25 million. On the next page, we summarize the financial highlights for the group.
In the second quarter, we realized double-digit growth organically and including M&A of 14.8% and 16.6% respectively. This was mainly driven by, as I mentioned before, higher freight rates across both divisions while solid volume growth and continued market share gains, particularly in the Road & Logistics division, also had a notable impact during the first part of the second quarter in particular. On the gross margin side, which decreased to 21.5%, the development reflected changes in our business mix as well as the impact of the higher freight rates in the Air & Ocean division. As we have communicated previously, increasing freight rates create revenue growth but typically dilute gross margins. The conversion ratio increased across both divisions, supported by operational improvements and cost-out initiatives, which drove the operating margin up to 5.4% during the second quarter.
Special items amounted to DKK 12 million in the second quarter and DKK 24 million for the first half of the year, primarily related to the restructuring initiatives that we are currently implementing within the Air & Ocean division. We turn to the Road & Logistics division on the next page. The division delivered yet another strong quarter and continued the positive momentum that we have seen over quite a few quarters by now. Growth in adjusted EBIT on an organic basis was 18%, supported by the higher freight rates, volume growth, and generally a strong performance across the majority of our entities. In particular, we did experience a very strong performance across the Nordic region, where several of our larger entities delivered strong and significantly improving performance and continued to take market shares.
As quickly mentioned before, Germany continued to be challenging. Activity levels were muted, and the rollout of the group TMS also affected operations and the results in the second quarter of the year. As I mentioned, we remain optimistic about the long-term prospects of the migration plan, not only in Germany but across our footprint. While there's still much work ahead of us, we continue to be confident in the long-term viability of the initiatives that we have set out across the division. If we move on to the Air & Ocean division on the next page, market conditions improved during the second quarter, with higher volumes on the container, on the ocean freight side, improving air freight demand and increasing freight rates across several of the key trade lanes.
Operationally, our main focus was on the reorganization and the strengthening of the division. We continue to accelerate this trajectory as we introduced earlier this year, which included right-sizing initiatives as well as multiple new hires and team strengthenings globally. Carsten, who joined us on April 1, has now been with us for four months, and he has already had a significant impact on the pace of execution, which is also starting in the very early days to show in the numbers during the second quarter. During the quarter, we also opened a new branch in Charlotte, North Carolina, which we expect to be the first of many, not only in the U.S. but across our footprint, both as it looks today and also how we expect to see it in the years to come.
We also benefited from an even stronger intercompany collaboration and trade lane development, which is completely in line with the ambitions that we laid out in our Route '27 strategy. Our focus remains very clear. We are building a stronger and more profitable Air & Ocean platform through a combination of leadership changes, cost-out initiatives, and commercial improvements. We are accelerating the investments in organic growth also as we move into the second part of the year. As I said, we started to see the first signs of effects on our numbers, as illustrated in the adjusted EBIT growth of 12.5%, which was mainly driven by the lower cost base.
With those words, I will now hand it over to Tinneke to take you through the detailed financial highlights.
Thank you, Mathias. Moving to the next slide, I will start with the special items. As Mathias already mentioned, special items amounted to DKK 12 million in the second quarter and DKK 24 million for the first six months of 2026. This related to the restructuring program in Air & Ocean, which has progressed ahead of plan. As we will continue this reorganization program, our expectation is also that special items for that reason will increase to a level of DKK 30 million-DKK 35 million for the full year of 2026, versus the DKK 20 million-DKK 25 million we originally guided.
Moving on to the net financial expenses. They amounted in the second quarter to DKK 31 million, compared to DKK 57 million in Q2 last year. When we look at that comparative year of 2025, this was mainly impacted by the elevated foreign exchange effects we saw from the U.S. dollar in the second quarter of 2025, as well as higher interest expenses. During the second quarter of 2026, net financial expenses returned to a level that we consider closer to what is a normal quarter for NTG.
Finally, I will address the tax in the P&L. Our effective tax rate amounted to 31.6% in second quarter, compared to 46.2% in the same period last year. We continue to be impacted by unrecognized tax losses in Germany. Although the impact was lower in 2026 than it was in second quarter last year, we still see an effect. We are pleased with the development, but the tax rate remains elevated, and there is room for improvement compared to our long-term expectations. This is a focus area for our group.
Finally, looking at our cash flow, our adjusted free cash flow amounted to DKK 225 million for the second quarter. It was slightly below same quarter last year, which was primarily due to contributions from our net working capital. The higher EBITDA that we delivered in second quarter was partly offset by a lower working capital inflow. But overall, we are very satisfied with the cash generation that the group generated in the second quarter. I appreciate if you switch to the next slide, where we now will be focusing on the balance sheet and the key financial ratios.
Returning back to the cash flow and the impact on the net working capital, the development in our net working capital during second quarter was primarily a reflection of a normal seasonality of our business, but also an element of timing. As some of you might remember, we made in the first quarter of 2026, an unusual early payment to a number of our hauliers ahead of Easter. This move of payments from April into March had a negative effect on working capital in the first quarter, while the reverse impact then reflected in our second quarter. This supported that we saw a positive cash flow in some of our net working capital. This was partially counter-affected by our implementation of the TMS system in Germany, which has caused some delays in our invoicing, and therefore had an unfavorable temporary impact on our net working capital.
As we are coming close to a finalization of the rollout in the southern region of Germany, we do expect that this unfavorable impact will gradually reduce over the coming months and will normalize most likely during Q3. If we then move on to our leverage and our net debt, our leverage ratio improved in the second quarter, and reached a level of 2.25x EBITDA, compared to 3.04x in the same period last year. This improvement was primarily driven by our rolling 12-month increase in EBITDA, but also offset partially by the ongoing share buyback program that has progressed during the quarter as well. Speaking of this program, it is running in accordance with plan.
During the first six months of 2026, we acquired treasury shares for DKK 75 million, and the program will be running until November, reaching a total amount of treasury share bought back of DKK 200 million. Finally, if we look at the return on our invested capital, our ROIC before tax reached 16.3% in second quarter, compared to 16.5% last year. Basically, on par year-on-year. The development that we've seen reflects that we have a higher average invested capital following the recent acquisitions, but also offset by an equivalent increase in our EBIT. That brings me to our outlook for full year 2026.
As Mathias has already mentioned, based on the performance of the first six months of the year, we have lifted or narrowed the guidance that we provide to a fully adjusted EBIT in the range between DKK 625 million and DKK 650 million, which is also an indication that we have, and we believe in a strong performance for the rest of the year. Our assumptions behind our updated guidance are broadly unchanged. We continue to expect positive developments during the remainder of the year from both divisions. We also foresee that we will be operating in a market characterized by elevated macroeconomic and geopolitical uncertainty. The higher freight rates that have supported our performance during the first half of the year are expected to moderate from the current levels during the second half of the year.
We do expect to continue to see transport volume slightly increase, but we also expect that the freight rates will gradually normalize as diesel prices will soften and available capacity returns to the market. At the same time, we are very focused on managing our cost base, and this is the background for why we have narrowed down the guidance. As I already mentioned, special items are in our recent guidance updated to end in the range between DKK 30 million and DKK 35 million. This reflects our accelerated pace of initiatives within Air & Ocean, and our ambition is to continue investing in strengthening both Air & Ocean's performance and also the long-term profitability.
Thank you, Tinneke. To summarize, as we've both alluded to, we are quite pleased with the development during the first half of the year and the second quarter of the year, and we are increasingly excited for what comes next.
With that, I'll hand the word back to the moderator to open the mic to questions from the audience.
Thank you so much. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star one and one again. Please stand by while we compile the Q&A roster. This will take a few moments. Now we're going to take our first question. Just give us a moment. The question comes line of Emilie Fung from Barclays. Your line is open. Please ask your question.
Hi there. Thank you very much for taking my questions. I have two, if that's all right. The first one I have is, as you mentioned in your outlook, you expect freight rates to normalize from 1H levels. How should we think about then the gross margin development year-on-year into the second half for both the Road and the Air division? Secondly, how much of that Road 13.8% organic growth in 2Q came from share gains, and should we expect these recent customer wins to also contribute more meaningfully in 3Q? Thank you very much.
On the expectations to the gross margin in light of a potential normalization of the freight rate environment, we do not see any reason to expect anything else than what we usually see in terms of the higher level of pass-through revenue that we see when the freight rates go up. Should the rates come meaningfully down, we would expect to see a positive impact on the gross margins. Now, I would say this effect is mainly clean on the ocean side, whereas on the road side during the second quarter of the year, it was kind of a mixed bag of effects being, one, a rather elevated spot market environment, two, a rather significant impact of the situation in the Middle East and the implied impact on the fuel prices, which also impacts both our revenue, gross margin, and gross profit.
As we mentioned, volume growth. Coming back to the volume growth questions, I would say that the composition of volume vis-a-vis price did change over the course of the second quarter, whereas the first part of the quarter was mainly characterized by both volume and price drivers with volumes, in the beginning, outweighing the price effect, whereas that ratio changed towards the second of the quarters. I would say with somewhat of a balanced impact, but with rates coming out as the biggest driver by some, but not a huge margin.
Thank you.
Thank you.
Now we are going to take our next question. The question comes from the line of Ulrik Bak from Danske Bank. Your line is open. Please ask your question.
Yes. Hello, Mathias and Tinneke. Thank you for taking my question. The first one will be on the rollout of the TMS system in Road. Could you perhaps provide some more details? When will it be fully rolled out? Also you mentioned that it weighed on results in H1. By what magnitude and what that negative impact might be in H2 and trying to grasp, what is the upside once this is fully rolled out? It would be great if you could comment.
Thank you, Ulrik. As we mentioned, we did complete the migration in the southern part of Germany, in the Baden-Württemberg area. The next stop is the western part of Germany, where we aim to be in a fully up and running state in the early days of 2027. As to the roadmap from that particular point forward, we are currently looking into which part of the Road & Logistics division to deploy the system next. We are fully committed to the system on the groupage side, but we do see a potential to investigate a potential broader application. We will get back to this when we convene in a broader group at the Capital Markets Day in November.
As to the financial impact, we should definitely expect to see a gradual improvement as we move further into the year. However, caveating that there is a rather pronounced seasonality pattern on the groupage side, in particular in Germany, with the summer holiday period kicking in as we speak, and also, a very low activity level towards the very late part of 2026. But on a like for like, on a cyclicality or seasonality perspective basis, we do expect to see improvements from this point forward. There is also a few effects as to how we adjust for the fuel key that comes with a delayed effect in Germany that will also provide some support for performance in the second quarter. And sorry, in the second half of the year.
All in all, we expect to see an improvement, but it will be a gradual improvement as we move further into Q3 and Q4.
All right. Perhaps just to follow up. If you decide to roll this TMS system out more broadly, could we see some more negative impact beyond 2026 on the operations?
We expect the adverse implications or the temporary adverse implications of migrating to the new TMS to reduce every time we move to a new location based on not only the experience and the lessons that we gain, but also because we have invested quite heavily in the organization that is taking care of the migration plan, both from a business perspective and also from an IT perspective. The lessons that we learned in the southern part of Germany, and we must admit it took longer than expected, but we are quite comfortable with us being able to avoid many of the pitfalls that we fell into during this part of the migration. And that gives us a rather high degree of comfort in these temporary adverse financial impacts reducing case by case or road out by road out.
Okay, thank you. A question about the restructuring in Air & Ocean. As we all know, you have attempted to restructure the Air & Ocean division at least once before, without too much success. Of course, now you have Carsten Trolle on board, and has done it before. What are you doing differently this time around in this restructuring phase compared to previously, that makes you certain that this time it will succeed?
The scope of the reorganization and strengthening of the entire organization is significantly different from anything we have ever done in the past. If you look at the number of employees in the division, we have previously, and as part of the DKK 20 million-DKK 25 million range on special items, expected somewhat in the range of 10%. Based on the progress that Carsten and his team made since he commenced his endeavors at NTG on the 1st of April, we do expect to see a bigger scope for these reorganization initiatives. We have been fairly successful, and we have seen a good momentum on also, not only right-sizing and initiating cost-out measures, but also investing in organic growth, in particular in the U.S., but also in Denmark where we made the announcement of a new person joining us.
We do expect the magnitude of cost savings to be significantly higher than in the past. It is this duality of taking cost out of the equation while simultaneously strengthening the platform that we have and investing in expanding the platform together with a very seasoned team of individuals, that makes us very comfortable and optimistic about the long-term implications, also from a financial side of this journey that we're on.
All right, thank you. My final question here on your guidance. You assume that freight rates will gradually decrease from the Q2 levels. For Road, can you perhaps just clarify where are spot rates currently and quarter to date compared to the Q2 average?
That's a good question. The spot rates differ market by market. We have seen a sort of moderation of the spot rates, in particular towards the end of the second quarter. We are seeing, I would say, in particular in the Nordic region, a rather stable situation on the capacity side. As we've mentioned before, and as Tinneke also alluded to, we do expect to see a further moderation and normalization of the rates as we move further into the quarter. Again, rates are composed of different components, right? There is the capacity side of the equation, and the related rate impact, but also the fuel impact.
It really comes down to an expectation of what will be the potential resolution, if any, to the situation in the Middle East, what will that impact the fuel prices, and how will that translate into the spot rates. In a net summarized version, the underlying market seems to be healthy, but there will be substantial fluctuations on the rate side if there is a normalization of the situation in the Middle East and the fuel prices.
Understood. Thank you so much.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad and wait for a name to be announced. Now we are going to take our next question. The question comes line of Lars Heindorff from Nordea. Your line is open, please ask your question.
Good morning. Thank you for taking my question. Follow up on the spots questions by Ulrik. How much of your volumes are spots, and also are there any particular areas or countries where you are more spot exposed? Also, given the comments in the report about fairly positive development in the Nordics and probably a bit more muted development in Germany, are there any sort of pockets or areas where you are enjoying particular headwind or have enjoyed particular headwind owing to those higher spot rates during the second quarter, and where we may also see some headwind as you mentioned, given a further sort of normalization of spot rates into the second half? That is the first one.
Thank you, Lars. Keep in mind that we sort of participate in the spot market from a buy and sell perspective. We can buy capacity or we can buy loads, if you may, if we have either loads but no capacity or capacity but no loads. It really depends on what side of the market that we position ourselves on. Now, I would say over the course of the past few years, we've really seen an uptick in what we refer to as controlled volumes on the road side, meaning recurring customers and not agents or the forwarders that are booking with us. We've always had an overweight, a significant overweight in Denmark, and ever since the merger of some of the entities in Sweden, we have seen a steadily increasing share of controlled volumes there.
If you look at sort of the dependencies on getting volumes from ad hoc customers, it is fairly low in the Nordic region. Now it expands as we move to some of the continental European full and part load operators. But we do see the same overweight of controlled volumes when we look at the groupage network. Of course, depending on which direction, is it import, is it export, where we mainly control volumes in the one direction and then work with either our own entities across border or different partners in the groupage network that we have built and acquired over the course of the year. It really depends on how you disseminate the spot market exposure, but the flexibility or the key for us is really to position ourselves based on the expectations that we have for the spot market.
If we expect prices in the spot market to be elevated, we want to position ourselves in a way so that we can leverage these higher rates, i.e., front-loading the capacity that we soft commit to so that we have the capacity that we can then deploy in the market to take the loads off the market that are being remunerated at an attractive price. It is a split that is changing all the time, but key feedback is that we are mainly a controlled volume business on the road side. [crosstalk].
All right, thank you. The second one on the situation south of the border in Germany. You talked about this TMS rollout. Just to be clear, you're doing this, if I understand you correctly, by location. Have you already rolled out TMS in ITC and SCHMALZ+SCHÖN? What is the status with those two in terms of the role of the TMS system? Also, I don't know if you can say how much they contributed within EBIT in the second quarter.
We do not do it by location, we do it by legal entity for technical and infrastructure reasons. What we did complete in the very early days of acquiring SCHMALZ+SCHÖN was the entity in Bautzen. What we did complete here in the second quarter was the largest activity and legal entity in Germany being in the Stuttgart region. ITC is up next for the migration, and that will again also be on a legal entity basis. From an EBIT perspective, it was a fairly modest contribution that the entire German market had on the Road side in the second quarter of the year.
Just, again, on the housekeeping question, how much of the Road volumes are groupage?
On the volume side, I think it is a rather difficult measure to have, and that is not something we have on the top of our minds, to be honest, Lars. But it is 30%-40% of our volumes by now.
Then a follow-up on some of your earlier comments on what Carsten is doing now and the development in the Air & Ocean division. Clearly, there is a lot of restructuring going on given the size of the special items. In terms of headcount and FTEs, do you expect that to remain stable in the Air & Ocean, or will this restructuring that you are currently conducting, will that lead to fewer people going forward? Because you had a comment early on that you expected to see cost decline going forward. Will that mean that we will see the other external cost and staff cost in combination will be lower in 2027 compared to 2026?
We do expect the number of employees in the division as well as the staff cost to continue to decline, although at a somewhat slower pace during the second half of 2026, yes.
Okay. Just a final one. Tinneke, maybe I didn't hear you well enough. It was on the net financials, sort of the run rate, because you don't carve out what is actually financial, sorry, what is the currency impact on the net finances in the quarterly report. What should we expect in terms of run rate going forward here?
We had this quarter, DKK 31 million, and that is DKK 30 million to DKK 35 million is what you should expect as run rate. The impact from FX during the second quarter of 2026 was rather limited.
Okay. All right. Thank you.
Thank you. Dear speakers, those are the questions for today. I would now like to hand the conference over to your speaker Mathias Jensen-Vinstrup for any closing remarks.
Thank you, everybody, for taking the time to join this call. Should there be any follow-up questions, please do not hesitate to reach out to our investor relations officer. Thank you and have a nice day.
This concludes this conference call. Thank you for participating. You may now all disconnect. Have a nice day.