DFDS AS

CSE:DFDS

Q3-2025 Earnings Call

[Operator]

Ladies and gentlemen, welcome to the DFDS Q3 Report 2025 Conference Call. I am Hillie, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Torben Carlsen, CEO. Please go ahead.

[Torben Carlsen, executive]

Thank you very much. Good morning, and welcome to DFDS's Q3 2025 Conference Call. I am, as usual, joined here by Karen Boesen, our CFO; and Søren Brøndholt, our Head of Investor Relations.

It has been an eventful morning. On this call, we will focus on the Q3 report, the cost reduction program, and the assumptions behind the outlook change for 2025 that mainly relate to uncertainty about Q4. With regard to the Board's initiation of a search process to find my successor, we'll try to not make that a focus in today's call. I'm, of course, sad to be leaving DFDS. I have truly enjoyed every minute here. Let me emphasize also that I am still at DFDS. I'm staying until a successor is in place, fully committed, obviously, to my responsibilities and dedicated to support DFDS throughout the CEO changeover and also, of course, the initiation of our cost reduction program.

What's important is that we are staying on the transition course. We made further progress on the logistics boost projects in Q3. Our new Mediterranean price model raised rates in September. And our third focus areas, the Turkey and Europe South turnaround, progressed, but with less pace than expected also in Q3. But let's start with putting it all into perspective on Slide 3. There, you see our pathway to a higher level of financial performance. We launched as part of our first outlook for the year, 3 focus areas that we needed to resolve in 2025. Our logistics booth projects, 810 areas with challenges in our logistics network, adapting our Mediterranean ferry network to a new competitive situation, and then the turnaround of our newly acquired Tukee and Europe South business.

We are now with the challenges we've had in primarily the 2 latter focus areas, adding a cost reduction program to the effort. It will have a DKK 300 million impact in 2026. It will, unfortunately, mean a reduction of around 400 mainly office positions, assisted with a number of specific cost reductions that we are carrying through. To implement the program, we foresee one-off costs of around DKK 100 million during Q4.

Moving to Page 4, just a repetition of our overall strategy of moving together towards 2030, which is about, as you know, unlocking network value. A lot of that is about organic growth. Green transition is still there. During this quarter, we've signed off for the SBTi targets and now have 24 months to get a pathway approved, a pathway that is not too dissimilar to what we already have planned. And then, of course, a cash flow focus to bring our leverage down through debt reduction, non-core asset review, and specific net working capital initiatives.

Moving to Page 5, a little talk about the macro backdrop and market situation. Geopolitically, you are as informed about this as us, but still some turbulence, U.S., China seems to be a little more support for Ukraine and Europe in the war from waged by Russia. And the German spending, we are not seeing the impact yet. EUR 1,000 billion program, but we expect that to come late next year. So market growth is still very slow, and we expect that to continue in Q4. Luckily, the meat export ban following the foot and mouth disease have eased, and we are almost back to normal in terms of volumes. We see some oil spread increasing, also quite a volatile market, as I'm sure you all have noticed.

Competition-wise, then Turkey Europe market is volatile. We've seen intensified competition during Q3 on the Italian corridor. And we've seen attempt that now seem to succeed to start a route by a different competitive group from Turkey to France and Spain that will presumably impact us in Q4.

On the continent Road market, where we've talked a lot about oversupply, we see a move towards normalization of the balance between supply and demand, also helping in our general boost and turnaround of logistics performance in Europe. We have entered a space charter agreement with TT Line, which gives us a better balance between supply and demand in that market, but also access to new markets and higher frequencies for our customers. We've seen some additional freight ferry capacity in North Sea South, which obviously can have some spillover effects on our routes, primarily from Rotterdam to [ Phoenixstow ], which is also part of the Q4 uncertainty.

Moving to Page 6. staying the transition course, some September positives. The Q3 results are on level in the Ferry division. The Logistics division, excluding test, so the Türkiye and Europe South new network performed well above '24, in line with what we have previously communicated. The Test business was below expectation, primarily an extended seasonal dip affecting August caused this delay, but also some continued issues with rail performance and problems in accessing enough visas for our drivers.

In terms of cash flow, Karen will come back to that, but we have a negative adjusted cash flow for the quarter, but this is driven by the high season passenger reversal of prepayments and then a yearly ETS payment where we during the year, received the money from our customers. Three focus areas, logistics boost projects on track, further improvements coming in Q4. The new pricing model in the Mediterranean has been launched, and we see increasing rates per meter. The test turnaround continued progress, but not at the targeted pace. So a lowered Q4 outlook due to the uncertainties of primarily the 2 of the 3 focus areas. Rest of network looks stable. We are -- have implemented, will implement various asset sales in Q4 to strengthen the cash flow. And then as mentioned, we launched a cost reduction program that will not have a positive effect in Q4, but will accelerate the transition to improve performance for 2026.

With that, I will hand over to Karen. So please turn to Page 8.

[Karen Boesen, executive]

Thank you, Torben, and good morning, everyone, on the call. Turning to our revenue first. We continue to see growth in our revenue, again, driven by inorganic additions. So the addition of our BU Test and organic growth was slightly negative when you clean out for the acquisition. Slightly positive story on our passenger revenue from the existing business channel and Baltic where we are slightly up. However, overall, a negative impact on the revenue by the loss of the TerifaTanjvill route and the Oslo Copenhagen route compared to last year.

Great Ferry, obviously down because of the situation in the Biomed and the competition there. However, some positive impact from our new route, the Jersey route, the Spain route, and the Egypt route. Overall, logistics on par, that overall takes us to the revenue of the quarter of DKK 8.3 billion. Turning to Page 9, the income statement. EBITDA down following the challenges we face, 7%. Depreciation up, which is all activity driven really by adding the UTS and other new activities, taking us to the EBIT of the DKK 532 million for the quarter. Finance costs slightly up driven by higher debt and some leasing interest payments that are higher. That is profit before tax then DKK 331 million, and a profit after tax of DKK 304 million.

Turning to Page 10, just putting the Q3 EBIT in context with previous years. Previous years, obviously not where we want to be and in line with our year this year, we are down compared to previous years. This is all coming in this instance here from Ferry with the situation that we have mainly in the B Med, but also some impact from route changes. That is exemplified on Page 11. If we turn to that, where we have the impact from the Ferry EBIT. Again, overall, the existing business is performing at level with last year, and we find that important to mark. We then have some route changes, which is really the loss of the also Copenhagen and the River Tantville, both routes that have their strongest season or have their strongest season in Q3. So therefore, the impact is strongest in this quarter. And then the Mediterranean challenges with the competitive situation down there. Those are the 2 things really impacting the Ferry results for the quarter.

And then turning to Page 12, we have a similar clarification on the logistics performance. Actually, we see an uptick for both Nordic and continent. So a DKK 48 million stronger position for those 2 entities compared to last year, again, that worth noting. And then U.K. and Ireland at level, then with the loss-making EU test that we have acquired, that drags it down again to the result for the Logistics division for the quarter.

Last slide on the financials, turning to Page 13, the cash flow. An operating cash flow of just shy of DKK 600 million with a CapEx close to DKK 400 million and then some interest payments takes overall our adjusted free cash flow down to just below 0. However, our year-to-date is at DKK 740 million. The DKK 600 million of operating cash flow is, as Torben mentioned, impacted by some unfavorable move in our working capital. This was expected because it's seasonal in the way that the ETS clearance payments for 2024 all falls in August 2025, which means that all the prepayments we have received for ETS charges from our customers for passengers throughout the year, then are due payable in August 2025. And in addition, we then have a classic seasonal for our passenger business where we have prepayments for Q3 that then get reversed by the end of the quarter.

Turning to our leverage situation. We have reduced the net interest-bearing debt down to DKK 15.9 million despite taking on more debt. So that's an improvement within the year of more than DKK 1.3 billion. Our leverage ratio with One Decimo then ends at 4.3, driven by the lower EBITDA. And we are seeing that reducing slightly towards the end of the quarter.

With that, I will hand back to Torben.

[Torben Carlsen, executive]

Thank you, Karen. Moving to green and Great Place to Work. The Page 15 information relates to our continued drive to reduce our emissions from our ferries. We reduced 2.7% versus last year here, helped by increasing the burning of biofuel on a couple of our Rotterdam-based routes. We committed in this quarter to Science-Based Targets Initiative, where we now work with the SBTi organization to agree a pathway that will not be miles away from what we already work with internally. E-trucks, further launching of e-trucks and also having now more solar infrastructure in both Ballemina in Northern Ireland and Peterborough in the U.K.

Safety, we have a very measured approach to reduce our lost time incidents, and we are now quite significantly seeing improvements, both in our Logistics and Ferry divisions, and the balance between women and men in leadership positions is improving compared to last year by another 2 percentage points.

Moving to Page 17. Our priorities, nothing changed. It's the logistics Boost projects. It's adaptation of our Mediterranean network to the new reality, and it's a continued improvement of our Türkiye and Europe South business. And if we take them separately on Page 18, the Boost projects -- we have with you talked about 8 Boost projects that we initiated in 2024. In Q3, 7 of those projects or those areas that we are focused on had a breakeven or better. There's still large improvement potential, but it is a clear sign to us that the project structure works. We are using this structure also for other areas than these 8. And there, we also see progress, and this is also the reason for the relatively strong performance of our logistics network at large when excluding tests and when comparing to last year.

As you can see from the table, it's Denmark domestic, where we still have further improvement and where we expect a move to positive in Q1 '26.

Moving to Page 19. Mediterranean's new pricing model that we talked about in Q2 would come in September, have caused better rate levels. We have seen more intensified competition on the Istanbul Trieste corridor. We have reduced capacity on our corridor. You saw maybe an investor message that we sold a vessel this week from that network. We've seen positive impact, not full impact. We'll see more in '26, but at least a good trend. When you look at the total market, volumes in Q3 were up 6% versus last year, mostly driven by road conversion and then a relatively small market growth, especially in a Turkish perspective of 1%.

The market share for DFDS of the total market, where you have 50% road, as you can see in the slide on the graph, we had then 32% of the market of trailers from Turkey to Europe, and other ferry companies, 18%.

Turning to Page 20, the test turnaround, slower pace than targeted. We've done -- our team down there has done really well in terms of rightsizing the business and implementing organizational changes. There are still opportunities. What is hurting is that our volumes are lower than expected. There are some good commercial initiatives that is reverting this trend, and we are seeing in October an uplift that we expect that we can continue. We see that on the cost side, rail performance is lagging. There are a lot of infrastructure issues from Italy through to Germany and France through to Germany that we cannot impact, but there are also areas where we can work with our supplier and internally to improve things. So we are hoping for some uplift there. In addition, we are struggling with getting enough visas for Turkish drivers, which move cost up as we have idle capacity waiting for this.

But in general, progress, clear delay, but the arrow pointing in the right direction.

Moving to Page 22 and our outlook. Unfortunately, despite the good Q3, we have decided to upfront include the uncertainties we see in Q4 in our outlook. So we've lowered the outlook. It was, of course, already at the low end of our previous outlook, but we have decided to take it down a notch to DKK 600 million to DKK 750 million, excluding the one-off program costs of around DKK 100 million for the layoffs. And as mentioned, the key driver for this are the uncertainties related to the network, primarily the Mediterranean network, and the Ferry division other than Met looks stable, volumes stable. And for logistics, we will continue to see the improvement trend from Q2 and Q3 following into Q4.

So EBIT, as I mentioned, now DKK 600 million to DKK 750 million before the DKK 100 million cost that we expect mostly to hit in '25. CapEx reduced compared to previous outlook from DKK 1.3 billion to DKK 1 billion, driven by primarily sale of assets, but of course, also some CapEx discipline. And then on the adjusted free cash flow, with the CapEx reductions, we could uphold the DKK 1 billion, but we have then cautiously reduced the DKK 100 million in program cost to lower it to around DKK 900 million.

Moving to Page 24. Key priorities, some overlap to our focus areas. Obviously, organic growth focus still in all we do. Mediterranean, stay disciplined on the increased yields, test, strengthen the turnaround progress, see if there are more levers we can pull also jointly with our ferry network. a rigid implementation of our cost reduction program and continued focus on working capital where we believe we can release cash from, particularly net working capital, continue the green transition, and we, of course, stay true to our values when it comes to DE and I.

With that, we will hand over to the operator to run the Q&A session.

[Operator]

[Operator Instructions] The first question comes from the line of Ruairi Cullinane from RBC Capital Markets.

[Ruairi Cullinane, analyst]

The first question on the EUR 300 million targeted improvement from the cost program. How will that be split across divisions? And then on full year '26 expectations, clearly, you have the cost program that should help. The midpoint of your range implies improvement in Q4. So just could you talk at all about full year '26 expectations at this stage? And then yes, finally, just perhaps a comment on the channel. Is it stable there, given it didn't come up in the prepared remarks?

[Torben Carlsen, executive]

Ruairi, the cost split, I cannot give you that. It's -- you have probably a similar impact to logistics and ferry, but you also have impact in corporate functions, and those costs are split out to the divisions. So I cannot -- I don't think we, at this stage, can tell you the exact split on the divisions, but it is a sizable impact on both divisions. In terms of '26, we unfortunately cannot, at this stage, help with the guidance. The program is, of course, an attempt to make sure that we solidify the expectations that we have internally. And of course, we have also seen what analysts think '26 can look like.

In terms of the channel, it's -- we have different businesses. We have our route from Ireland to Dunkirk. We have our Newhaven Jet. We have the Dover routes, and we also have now Jersey. We see some increased volumes are challenged on the channel, and that seems to raise a little bit the competitive intensity. We, of course, think it's from the competitors. But -- so there is a little there. But overall, an okay performance on the route from Ireland, the Newhaven Jet, and the channel. The start-up of Jersey has proven harder than expected. There was a very short timeline due to the tender process had to be changed last minute by Jersey. We are working with Jersey to see how we can agree different changes to both secure a good service to the islanders and visitors, but also can ensure that we, going forward, can deliver the results that were implied in the agreements we made with Jersey.

So a long answer, but channel performance a little bit down in Q3 due to this issue.

[Operator]

We now have a question from the line of Dan Togo Jensen from DNB Carnegie.

[Dan Jensen, analyst]

A few questions from my side as well. I'll just take them one by one here. Could we maybe start with the route from Istanbul to Trieste and the price increases you have introduced here? How much have you increased the prices? And what is the difference to Gremeldy now? And what is the impact on volumes here in September? Is it a net positive, so to say? And how do you see that pan out for the rest of the year? And maybe also a few comments on why it is exactly that you can basically charge more than Cromeldy? And maybe also on that, is Cromey actually following suit? Or are they just staying at the same price point?

[Torben Carlsen, executive]

These are all good questions. I think you will understand why we cannot go into details on this. I will try to give you an overall understanding of how things are developing. We've seen the competition entering a fourth vessel in October, following, you can say, our price initiative, whether it's connected or not, we don't know, and we don't speculate on that. But our initiation of price increases were necessitated by the results that we could see we were delivering despite relatively strong volumes on that particular route, we have an earnings problem. So we decided to increase prices. Have they been increased as much as we would have liked? No. Have they had an effect? Yes.

In terms of volumes, we've lost, I think, versus last year, we are probably 10%, 15% down in volumes between Turkey and Italy. But we have also reduced capacity. So it is definitely the right path. The price increases will have further impact in '26. We can hope for a little more tailwind in terms of growth in Turkey as well next year. So we have a positive impact from the net of the price increases and the loss of volumes. And it is the path that we will stay on. And again, as we said already in last quarter, we are not looking too much to what the competition is doing. And I cannot speculate. Of course, we hear a lot of rumors about what the price differential may be, but we look at our own, the necessary prices we need to make this a profitable route.

[Dan Jensen, analyst]

And maybe some words on what will happen with the PLT terminal now you are forced to reduce your attendance or your slots here. Can you make room in your own terminal to accommodate? Or will you need to reduce the frequency on the merchant route?

[Torben Carlsen, executive]

We are very unhappy with how we have been treated in the PLC terminal. That is a fact. We have established a project to see how we can make sure that customers pick up trailers faster from our own terminal to see if we can free space to accommodate these extra calls. And we're also looking at whether we have to reduce calls to succeed. We can already see, of course, that the operation has become more challenging at our own terminal, but I will be able to update you better when we have seen the full impact of this move by the terminal and terminal in Italy.

[Dan Jensen, analyst]

But I guess these challenges are baked into the new guidance?

[Torben Carlsen, executive]

Absolutely.

[Dan Jensen, analyst]

And then maybe if we can jump to the Mersin route, where you now see a competitor and I understand that they now have permission to move trailers that was initially banned from them as I understand, but now they have the permission here. Can you -- are the dynamics similar in this market? Or is -- I mean, you've been able to stick with your key clients in the Istanbul route, but this market between Turkey and France. Can you maybe give some indication of how that market functions? Is it similar? And are we heading into, so say, a similar market dynamic as we see in Istanbul? And what will your response be down there?

[Torben Carlsen, executive]

We know that apparently this week, this new operator has been starting operating. We can see from the schedule that it's a schedule that goes to Mersin, but also to Tarragona in Spain. So it's quite a long sailing where you have to stop in Mersin. Obviously, some of our customers will like the fact that they now have a Spanish route. Others will like our frequency and our point-to-point service, plus our rail connections. We've obviously picked our terminals in a time where we had first pick, and we think that's a quite big competitive advantage. We have looked at what capacity will come in from the competition, and it's a different capacity that we have -- that we are facing in the -- on the Italian corridor in terms of size and efficiency.

So we have not seen quite the same response from our customers in terms of price focus. There's always, of course, some focus. But again, we have a strong network. We have a strong frequency. We have a very competitive setup. So there's always impact, of course, when you have more capacity, especially when you call a new area where maybe others would have taken ours before and drive. But we see an impact. It's baked into our forecast. And then, of course, we'll see longer term what the impact will be. But I guess we've learned from the first situation in Turkey to believe more in our own strength and have really focused on what it is we are offering, and that seems to be working well with this new situation.

[Dan Jensen, analyst]

How much of the volumes to Mersin and on that route is ECA actually?

[Torben Carlsen, executive]

Well, we don't have a route to Marseille. We have a route to Z.

[Dan Jensen, analyst]

Z, yes, sorry. Yes, of course. But on that route that is in competition with the new one here, how much is ECA here?

[Torben Carlsen, executive]

ECA is a top 3 customer on that route. So it's a little bit -- it's probably more -- the Z route probably have even larger concentration among customers than the Trieste route. So the top 5 has a larger percentage of the market than the top 5 on the Trieste route would be my guess.

[Dan Jensen, analyst]

So it's easier for you to defend -- is that -- can you conclude that?

[Torben Carlsen, executive]

We think we have a really strong service. We think the nature of the competition is different than what we are seeing on the Italian corridor. So we don't see the same impact from the new competitive situation that we have seen in the Italian corridor.

[Dan Jensen, analyst]

And then just maybe a household question for Karen, maybe. When you look at logistics and the employee costs here, it's more or less the same Q-on-Q here in Q3 compared to Q2. But with 1,000 FTEs being reduced, I know some of them are being circum million coming back in as you hire them. But why isn't employee costs coming down faster, so to say, in logistics Q-on-Q?

[Karen Boesen, executive]

In Q3, we still have a bunch of redundancy costs as well for the actions taken back in Q2 as well.

[Dan Jensen, analyst]

And how much is that?

[Karen Boesen, executive]

I think we can, but it's in the ballpark of DKK 10 million maybe. But it's across the board.

[Torben Carlsen, executive]

But I also -- the 1,000 people, we -- are you comparing quarter-to-quarter or?

[Dan Jensen, analyst]

Yes, quarter-to-quarter, yes.

[Torben Carlsen, executive]

Yes, exactly. That has happened since the start in November. And of course, against last year, you only had 6 weeks of tests. So I think it may also simply be a matter of that we -- you don't have good comparisons. We'll try to find something for you that if you want to talk to IR, we can maybe give you more clarity.

[Dan Jensen, analyst]

I just want to understand what -- you are now introducing the DKK 300 million, and how much is from this program as well.

[Torben Carlsen, executive]

Yes, yes. But no, this is completely different. The 1,000, that's a lot of outsourcing of traction. to subcontractors. The DKK 300 million is by the clear majority office-based workers throughout the system, and actually not from -- to any large extent to do with the test. This is the old network, primarily where this comes from.

[Operator]

[Operator Instructions] We now have a question from the line of Ulrik from Danske Bank.

[Ulrik Bak, analyst]

First question on the Mediterranean segment. Just an update on this new competition from the new competitor, U.N. Ro-Ro. And also just we've seen Grimaldi adding a fourth vessel, the terminal situation in Trieste not going according to your preference. Does these items or these factors, do they impact the way that you have implemented the price increases? And perhaps also part of the reason why you have not gotten the level of price increases through as you hoped for, as you alluded to in your prepared remarks? And then also these factors, what do they mean for the market recovery prospects into next year?

[Torben Carlsen, executive]

The -- of course, the competitive situation in the market has an impact on what prices you can charge. We have -- again, as I said to Ruari before, we have focused on what we need to run a profitable route or profitable route. And we have started the journey to get back to the required profitability. That's not easy, and that's not fast. So we've taken what we believe is feasible in this first round. And there has, of course, been pushback from customers. And then we have settled a certain level where we see improvement, and we already have commitments that will mean further improvements in 2026. It's clear that coming midyear or September and ask for price increases are harder than price increases 1st of January.

So we are on a good traction and it's harder to get price increases when you have -- before you had the choice of road, you had the choice of Uudesil, now you have another choice. And that obviously means that it is a little bit harder. But we focus on our network, our services, and stay the course. Will it impact our '26 outlook that -- there's also now a competition on the French route. We are, of course, factoring that in when we build our bottom-up expectations for '26. And then we will talk more about it when we get to February.

[Ulrik Bak, analyst]

And then these changes that Grimaldi has made with the fourth vessel, and now also having improved terminal access in Trieste. So if you had to evaluate your service from Istanbul to Trest and Grimaldi currently, so I guess their service has relatively to yours improved given that you now face some challenges in Trest. Is that a fair assumption? And what do customers say in terms of this service between you and Grimaldi?

[Torben Carlsen, executive]

Our service is very strong still. We have a very high frequency. We have a very, very strong rail connection offering. We have some congestion issues. There are also congestion issues in PLT. So we're very comfortable with the strength of our network.

[Ulrik Bak, analyst]

Then on the Test business or the old ECO, does that -- how is that affected by this new ferry operator, UGN Ro-Ro? Is it affected at all in terms of pricing or competitive tension? Just to get some feedback on that.

[Torben Carlsen, executive]

That's relatively marginal, the impact to Test from this.

[Ulrik Bak, analyst]

And then in terms of your leverage and liquidity position, I see that you make a sale and leaseback of 3 warehouses in Q3, giving proceeds of more than DKK 700 million. You've now also sold the vessel here in Q4. Earlier this year, you also initiated factoring program to -- which has also released some liquidity. So how many more of these initiatives do you have in the draw to -- and how are you looking at your debt or the leverage ratio at the moment and in terms of your debt covenants? Are you comfortable with the levels? And if you can just also remind us where are the debt covenants? And is there a certain threshold you need to get below at a certain point in time, would be appreciated.

[Torben Carlsen, executive]

I'll let Karen answer just one correction. We didn't release DKK 700 million from the sale and leaseback of the warehouses. We released the profit element of, was it some DKK 50 million. But anyway, Karen, over to you.

[Karen Boesen, executive]

And just going on that, that was actually -- that was a renewal. It was existing warehouses that we had on sale and leaseback, but we had a purchase option that had value. And that was what we released. And then we prolonged with the additional years possible, the sale and leaseback of those warehouses. So it's not of the magnitude that you mentioned there, but of course, it was, of course, providing some improvements, right?

Then in terms of questions on -- if your first question was if we have more of that in our pocket, we are constantly adjusting our capacity base, of course, to the business needs. And as you saw earlier this week, we have sold a vessel. So I think that's a part of our continuous housekeeping to adapt our fleet and our infrastructure on the logistics side to the requirements of our business. So that cannot be ruled out, but it's not like we sit with a list of 10 assets that we are just waiting to execute on tomorrow. So that will be my answer to that part.

And then your questions around leverage ratio. I mean we have been transparent about that our leverage ratio is higher this year than where we want it to be. And we are, of course, monitoring and making the improvements we can, in particular on the net interest-bearing debt reduction in terms of improving working capital, in terms of reducing CapEx to the minimum, and so forth. And we'll continue those efforts until we get to a level where -- which is our targeted level.

In terms of headroom, we are still comfortable with the headroom we have. We have good support from all our core banks. We have no concerns on their side, and we are able to continuously refinance debt as required. There was quite a few questions in your -- so maybe one of them that I missed.

[Ulrik Bak, analyst]

No, I think that was great. Just a final one also some housekeeping. Your depreciation level is increasing quarter-over-quarter. I see that it's logistics that's sticking out here. So any -- has there been some restructuring one-off, or anything? Just trying to get a sense of what the run rate will be from Q4 and onwards?

[Karen Boesen, executive]

No. But there's been some general renewal of the fleet, which would be trailers and trucks. And of course, then the starting point for the depreciation gets up, and we have done that both in BTS and in other places.

[Torben Carlsen, executive]

And of course, then there is the fact that Tess is still not in comparison numbers from last year. There was an adjustment at Tess regarding previous quarters, correct just over DKK 40 million Yes, you see that there is an increase in EBITDA, but then also an increase in depreciation so that on EBIT level, it's unchanged.

[Ulrik Bak, analyst]

And this adjustment of DKK 40 million shouldn't -- should be excluded going forward, I suppose?

[Torben Carlsen, executive]

It's DKK 46 million, actually, I think. But let's take that offline with Søren as well, how that -- and where it comes from.

[Operator]

Yes. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Torben Carlsen for some closing remarks.

[Torben Carlsen, executive]

Thank you, and thank you for listening in and having good questions today. Let me wrap up the call. We are still in transition to a higher level of financial performance. We will now start to see stronger quarters than the comparison going forward. We made progress in Q3, but we still have major challenges to resolve. We are working hard to achieve that. Our new cost program will firm up earnings in 2026, along with our well-performing business units. Thank you very much for joining the call and your questions. Look forward to speaking to you again soon. Have a good day.

[Operator]

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.