Thank you. Welcome to our Full-Year 2020 Webcast Presentation. Thank you very much for dialing in. First, I need to ask you to read page two carefully. Then let's move on to page number three. Here you see the presentation team for today. My name is Michael Larsen. I'm the Group CEO of NTG Nordic Transport Group. With me today, I have Christian Jakobsen, our Group CFO. If we flip to the next page. Here you see the topics that we intend to go through on the presentation today, including an overview of key highlights during the year, a review of the financial performance for the group and for each of the divisions. A presentation of the outlook for 2021. We'll then end the presentation with a Q&A session, where the line will be open to questions from the audience.
Let's move on to page number five. These are the highlights for the full-year 2020. 2020 was an eventful year, both internally and externally. I will not dwell too much on the COVID-19 situation, as I believe you're all aware of its implications. There's no doubt that it did have a significant impact on our business in 2020. That is also why I'm very pleased that we managed to deliver a net revenue in line with 2019, while seeing profitability as measured by adjusted EBIT increase by 25%. The profitability increase was driven by a number of factors, which Christian will come back to shortly, but one of them was the corporate overhaul we completed in 2020 that resulted in restructuring, close down, or divestment of non-performing activities in Germany, Sweden, Switzerland, Estonia, Vietnam, Australia, Croatia, and Turkey.
The increasing profitability was also supported by a positive development in the former Gondrand activities, following significant restructuring in both 2019 and 2020. The activities contributed positively to adjusted EBIT in the third and fourth quarter of the year. Despite the uncertainty and turbulence, we managed to complete three acquisitions and establish four greenfield startups in 2020, which strengthen our existing footprint across Europe and also in the U.S. 2020 was also a year of change internally as the management team was reorganized when I joined as Group CEO back in May. Peter Grubert joined as Executive Vice President in October, and Søren Holck Pape was announced as the CEO of the Air & Ocean division in November last year, and Søren started in NTG in January this year. With these additions, the management team is now officially complete.
For the year 2021, we expect a net revenue in the range of DKK 5.5 billion-6 billion and an adjusted EBIT in the range of DKK 300 million-350 million. It should be noted that visibility is lower than normal, and these range reflect an increased level of uncertainty. We then move on to page number six. Here we have provided an illustration of the historical financial performance. 2020 was off in terms of growth as net revenue remained constant compared to the year before. The development was driven by a negative organic growth due to the general activity decline that was offset by the acquisition of Ebrex, Saga Trans, and TB International.
What is worth noting, though, is that we managed to increase the margin by 100 basis points to 4.9% in 2020, driven by a combination of an increasing gross margin and conversion ratio, primarily driven by the Road & Logistics division, but also the Air & Ocean division towards the end of the year. The strong operating performance resulted in an all-time high adjusted free cash flow. Christian will now take you through the financial performance in a more detailed manner. Christian, if you would please.
Thank you, Michael. If you flip to page seven, please. As Michael mentioned, we are generally very pleased with the financial results for 2020 that we believe illustrate our agile business model. On page seven, you see the main highlights for the group. Net revenue remained constant at DKK 5.3 billion, and this growth of a decline in organic growth of 4.9%, offset by an equivalent positive impact from the acquisitions of Ebrex, TB International, and Saga Trans. The negative organic growth was driven by a decline in activity in the existing business of that accounted for minus 3.1%, and the discontinuation of low-performing activities of minus 2.4%. Startups had a partially offsetting effect of 4.7%. adjusted EBIT increased 25% to DKK 261 million in 2020, corresponding to a margin of 4.9%.
In the fourth quarter alone, we generated an adjusted EBIT of DKK 82 million, corresponding to a margin of 5.8%. I'll dive into the contribution from each division shortly. Before doing so, I would like to highlight Gondrand for the last time. Gondrand positively contributed to the year in both the third and fourth quarter, with DKK 1.8 million and DKK 3.8 million respectively. Gondrand has now been restructured, integrated into our existing activities, and we will not report on the performance in the former Gondrand activities from Q1 2021 and onwards. Of course, we will continue with the work. Then if we move to page eight, then we have presented the Road & Logistics division. Net revenue in the division total DKK 4.3 billion, representing a growth of 3.7% compared to 2019.
The growth was primarily driven by the effect of acquisitions, which more than offset the negative organic that was primarily driven by the restructuring, close down, and divestment of low-performing activities in Germany in 2020. The close down and divestment of activities in Czech Republic and Italy in late 2019. adjusted EBIT increased 36% to DKK 247 million, corresponding to an operating margin of 5.8%. In the fourth quarter alone, adjusted EBIT total DKK 74 million corresponding to a margin of 6.7%. This is an extraordinary achievement by the division. The increase in adjusted EBIT was primarily driven by a gross margin increase of 3.9% in improved prices due to the pandemic, driven by improved prices due to the pandemic-induced bottlenecks on certain trade lanes, an inflow of new customers in the Nordics, a favorable development in the direct costs and the acquisition of Ebrex.
The increased conversion ratio driven by restructuring and efficiency initiatives completed during the year. If we flip to page nine, we have presented the Air & Ocean division. The division realized a net revenue of DKK 1.1 billion corresponding to a total growth of -12.8% compared to 2019. A combination of COVID-19 and the significant overhaul of the division took its toll on the growth in 2020, and the contribution from the existing businesses was -12.8%, while close down, divestment or restructuring of non-performing activities in Germany, Switzerland, Estonia, Vietnam, Australia, Croatia, and Turkey in 2020, and Italy and Czech Republic in 2019 contributed with -2.5%. Startups in the U.S. had partly also an effect of 2.5% in 2020. Adjusted EBIT decreased 50.1% to 12 million, 100 million corresponding to an operating margin of 1.1% and 2.0% respectively.
The decrease was driven by declining gross margin due to the challenging market condition and mix effects, and a negative contribution from startups in the U.S. in the first six months. The decline was partially offset by turnaround in China and improved performance in Sweden, Finland, and the Netherlands. Because of the deteriorating performance in the division, significant restructuring and cost-saving initiatives were implemented. These initiatives started to materialize towards the end of the year, and the division reported an increase in operating margin and conversion ratio despite a gross margin contraction in Q4. Following the redefined focus on core activities within limited number of geographies and the introduction Søren Holck Pape as the new CEO in the division, we expect the division to be able to return to growth and increased profitability in 2021.
If we flip to page 10, we have presented some of the key figures. In the top left, we see that the net working capital decreased to DKK -208 million by the end of the year as a result of our very strict cash management. We have an impact of payment schemes from certain public support programs of around DKK 10 million at the end of the year. The increase in adjusted EBIT and decline in net working capital, specializing costs, and purchase of property, plant, and equipment contributed to a strong cash flow generation that was approximately three times higher in Q4 compared to the year before. In the bottom, you see that the net interest-bearing debt excluding our effects of IFRS 16 that went further into negative territory and total DKK -196 million by the end of 2020.
If we flip to page 11, we have the full-year outlook. We expect a revenue in the range of DKK 5.5 billion-DKK 6 billion corresponding to a growth of approximately 3%-13%. On adjusted EBIT, we expect a result between DKK 300 million-DKK 350 million corresponding to a growth of 15%-34%. As Michael mentioned, the guidance remains subject to more uncertainty than usual, and we base on a range of assumptions as provided on the slide, including a stable recovery and gradual reopening of countries following COVID-related lockdowns. We also do not expect material changes in trade patterns. That was all what we have prepared for you. We will open for the Q&A.
Thank you. Ladies and gentlemen, we'll now begin the question- and- answer session. As a reminder, if you wish to ask a question, please press star and one on your telephone keypad. The first question comes from line of Marcus Bellander from Nordea. Please ask your question.
Thank you. I have a handful of questions. If we start with Q4, I noticed that revenue in Air & Ocean, was up about 30% quarter-on-quarter. Was that mainly driven by higher freight rates in ocean or what's going on there?
Yeah. It definitely has had its impact, but we also saw that some of the scale advantage the big guys have on the ocean, that is at the moment to a less degree than what we saw earlier. We are at the moment competing of some customers that we were not able to get before, for example, from China to Western Europe and to the U.S. It's a mix both of that. We had a couple of countries, Sweden and Finland, who did particularly good in the Q4. It's a mix of more things.
Okay. That's interesting. Why do you think that is? Why is the bigger guys' scale advantages diminishing now?
I think that the carriers are not that dependent on the big guys at the moment. They are maybe not offering them the same conditions as before. We are at least seeing that we were getting some space, which one of the big guys had problems getting. That is, I think, the market condition at the moment.
Okay. Thank you. I'm just curious, it looks like minority is in Q4, constitute a slightly bigger share of net profit than it has done in the past few quarters. Is there anything extraordinary there or what level should we expect going forward?
We can say that, in particular our Polish and the business in the Netherlands did extremely good where they have a relatively high minority. The problems are countries are sitting in group and that's why that we have this. We also see that the startups are gaining traction and they are also normally. That negative impact they have on the minority interest, that's also being lower. There's a lot of wheels moving on that one.
Okay. Understood. If we move on to your guidance for 2021, I'm a little puzzled, I guess, about the revenue and EBIT guidance. I had imagined that revenue would be, or you would guide slightly higher on revenue because my thinking was that fuel prices are up, freight rates are up, you've made some acquisitions, and supposedly you'll also grow organically in 2021, yet you're only guiding for, I think it's 7% or 8% growth in revenue. Is there anything that's sort of holding it back?
If your revenue had been DKK 5.3 in 2020 and the mid-range of the future, then it's DKK 5.7. That's close to 10%. Please also remember we will have a full-year effect of the close down. That means that we will see that some of this, the last thing we closed down in end of 2020, that will also have an effect, but not as significant an effect as we saw that. I think we have guided a decent growth in the revenue.
All right. Your EBIT margin guidance which on the other hand was pretty strong, or at least it seemed like that to me. The midpoint of the EBIT guidance range and the midpoint of the revenue guidance range implies, I think it's 5.7% EBIT margin, which would obviously be a very strong print. You're keeping your midterm EBIT margin guidance at 4%-5%. Does that mean that 2021 will be completely extraordinary in terms of profitability, or are you warming up to a revision of the midterm EBIT margin target?
We do not see 2021 as a special year. You can put in what that concludes. There are two things. Midterm guidance is also something which is based on more years. In some years you can maybe be above, and sometimes you can be below. You have this, that we didn't come over in 2020. In my point of view, you should reach one target before setting a new target. Of course, we will look at things when we know where we will land in 2021.
All right. Understood. I'm looking forward to that. Next question about Gondrand. I know we'll stop talking about it in a little while, but I'm just wondering how much more there is to do when it comes to that turnaround, because you phrased it in a way in the announcement that made me think that there was a lot of improvements still to harvest. I think you wrote that the impact of the restructuring initiatives are starting to materialize. If you could add some color on that.
I fully believe that there's still a lot of potential to work with. Now we have created stable platforms all around, and now we are ready to build on these platforms and work even more with them. Even though that we have reached a level where they are bringing positive EBIT to the group, then of course we still believe that there's a big potential in that part of the business also.
Okay. That's good to hear. Finally, last question, just on net working capital. The net working capital has been very low for three quarters now. Is this a new normal, or should we expect it to reverse at some point, during 2021?
Definitely. You also know that, for example, Easter will come on a very bad timing for our net working capital this year, then I will expect that our net working capital will worsen a little bit. We see that in general, as we have always said, we do believe that we will come closer to zero. That is the situation. I think you also know that we're fighting this trend every day, and we will definitely do that.
We have also already been visiting some of our suppliers to see whether they would be interested in giving us more days. This is an ongoing battle where the customers want more days, and we try to move it over to our suppliers. We will not be able to keep the net working capital on that page forever. We will probably see some higher net working capital throughout the year. That is my expectation. Yeah, unfortunately, I can't give you an exact figure on that.
No, of course. That's great. This has been very helpful. Thank you very much.
Thank you. The next question comes from line of Michael Rasmussen from Danske Bank. Please ask the question.
Yeah, thank you very much, and well done, guys, on some very good results here. A couple of questions from my side. I think I'll take them one by one. First of all, on the Air & Ocean division in 2021, can you give us a little bit more insight into how you think of the improvement both in growth and also in terms of margins, just for modeling purposes? On that division, do you guys consider giving both air and ocean volume and yields?
I think that for our expectations, that's also what we have seen for the first couple of months, which we of course have to put into our guidance. We see the trend in the Air & Ocean division keeps moving. We expect that the volumes and turnover will be higher. We also see that at the moment that our margins are going up. On this, something special will happen on the market, then we do believe that we have a stronger position after we did this overhaul of the division. We have many strong countries that will perform. That is definitely our expectation.
On the volumes and yields?
I think that the volumes will increase and the yields also a little bit.
Okay, do you guys consider giving that out on a quarterly basis?
No, not for the moment. We still consider that to be this. I wouldn't expect that to be before in 2022. Now Søren, he wants some things a little bit different than what we have done. To be able to compare two years and show the development, then I would expect that we will start giving it out from 2022.
Do you have any numbers that you could share with us? Maybe GP per ton for Air?
I would rather not.
Okay. Moving on to the Road division. Now, you mentioned, Christian, that you had a pretty good first couple of months in Air & Ocean. Do you see something similar in Road? When we look at the bridge data, the road toll data, when we look at Danske's freight forwarders index, it seems like you've had a pretty good start to 2021 here. Also in combination with that, are you seeing any gross margin pressure from your sub-suppliers in the Road division, please?
We definitely see that. I must say, I am impressed by where you can find all the data, because you are spot on with your analysis with the volumes. We are definitely seeing that, and we were also a little bit cautious when we had these discussions, where will we be? Confirmed our guidance based on that. We do see a good start on 2021 on the volumes.
If you then, of course, some of the building, because of the very cold climate in the Northern Europe, of the building material, they have been slower than anticipated. We do see good volumes, and we also see that the market pressure will come a little bit. We are seeing that our hauliers are expecting that the diesel price will, due to the fuel prices, then we will see a bigger market pressure. Probably not a little bit later in the year. That's at least my expectation.
Great. Okay. Just jumping back on the Air & Ocean division. You mentioned Søren Holck Pape is now well on the way, and he's got big plans, it sounds like. We're really looking forward to that. On the M&A side, it's been a while since you've done M&A in that division. What is Søren's experience on the matter, and what are you thinking here? Are you thinking from a group perspective that you just want the division stabilized, and then you'll start to add on M&A and just do M&A in the Road & Logistics? Is Søren just ready to kind of move full speed ahead, both fixing the underlying business as well as doing M&A?
Søren has been a part of NTG now for 55 days. I believe that we'll give him a couple of days more before he has made a full picture of how the Air & Ocean division looks. He's working really hard, no doubt about that. I have a huge expectation. I think before we start talking about that, we need to give him a couple of days more to make his own impression about what we need and what we're going to do in the Air & Ocean division.
That's great. I'll give room now if another analyst have any questions, or I'll jump back later.
Thank you.
Thank you. Dear participants, once again, if you wish to ask a question. The next question comes again from Michael Rasmussen from Danske Bank. Please ask your question.
Oh, okay. I'm back again. Just in order so I understand it fully, on slides eight and nine, where you did the divisional breakdown of Q4, well, both Q4 and full-year actually, in terms of revenue growth. Am I missing something or where is currency impact in those bridges?
We don't put that into the bridges.
If revenues, for example, in Air & Ocean is down by 7.5% total, then FX must have had some impact on that, or is it something I'm missing here?
We do not put that in. You have to realize that this FX is always difficult because you can have one country working in FX, but actually paying everything in dollars. The FX is something which we put into our tool. We do not show what the FX effect would be.
Okay. That basically is a little bit in each of these breakdowns, yeah. Could you give us an update on the pads? Where are we in terms of performance status? Anyone wants to exit or move on? Or if you could just give us kind of the general pads run through.
Right. We do not see any big movements on our pads. It's pretty stable with the partners. Of course, some of the close downs, there were some partners which have left it, but that's what we have chosen. We have not seen any significant partners wanting to leave us. Of course, we have a huge rotation that I think that is quite normal. Nothing big to report on that.
Great. Okay. The four greenfield startups, is that new pads or?
Yeah, that's new pads.
That's new pads. Okay. Just to get clear on that. Great. I think that was all from my side. Yes. Thank you very much.
Yes. Feel free to call us.
Absolutely.
Thank you. Dear participants, once again, if you wish to ask a question, please press star and one on your telephone keypad. Dear speaker, there are no further questions at this time. Please continue.
Okay. I think that was all from us. We will go back and work hard to deliver some good results for the first quarter. Thank you very much for listening.