DFDS Dover Pitch Deck
Risk Factors
Market risk
The Group is exposed to competing forms of transportation
The freight- and passenger-shipping markets are impacted by industry-specific market conditions, including changes in market conditions faced by competing forms of transport such as road, rail and air - the latter of which mainly impacts the
passenger sector. Although air transport can only partly be considered a directly competing product to the Group, price has a crucial influence on the customers' perception of a travel product relative to the price they are willing to pay for the
transport component of such product. In addition, markets are impacted by changes in local and regional competition, such as the opening or closing of competing routes and capacity increases on existing routes. If competition from direct and
substitute providers in the markets in which the Group operates intensifies in the future and cannot be compensated for by new or already implemented improvement measures, it may significantly affect the performance of the Group.
The Group is exposed to risks from chartering of vessels
The Group mainly charters freight ships for varying periods. Such charters are subject to price risks (charter rates) and risks concerning availability of ships that fit operational requirements. Similar risks, including counterparty risks, are relevant
when chartering out excess ships. In addition, there is a price risk related to acquiring or ordering ships at cycle peaks. In connection with the ordering of ships, there is a default risk related to the shipyard, which can lead to additional costs,
including delayed delivery. Although the Group endeavours at any time to charter in or out vessels on profitable terms, subsequent market developments may cause charter contracts to become unprofitable in the long term which in turn may
affect the future performance of the Group. Due to the ongoing process of replacing and renewing the Group's fleet, the sale of ships or the cancellation of contracts may result in gains, losses and costs that are not included in annual profit
forecasts.
The Group is dependent on access to suitable port facilities to carry out its business
The Group is dependent on access to suitable and to some degree customized ports and port facilities for an efficient operation. The Group may also be exposed to increases in costs and charges imposed in the various ports. Any significant increase
in these costs and charges could adversely affect the Group's business and financial performance.
The Group is exposed to overall freight volumes
Risks of major fluctuations in earnings caused by market changes and changes in economic growth are highest for the Group's shipping activities and lowest for the transport and logistics activities. The difference in risk profile is due to a high share
of fixed costs in ferry shipping as opposed to a high share of variable costs in transport and logistics as the majority of transport services is subcontracted to external carriers. If demand in the freight market decreases, the capacity utilisation of the
ferries may be reduced and the cost per unit of freight may increase. In such a case, if the Group fails to adapt its tonnage sufficiently to the market conditions, it may have a material adverse effect on earnings.
The Group is exposed to changes in freight patterns
Much of the Group's activities are based on freight transported through the Group's route network. Having a balanced freight pattern is an important prerequisite for profitability in the route network, as this enables acceptable utilization of the
capacity deployed. Changes to the freight pattern may put downward pressure on the profitability of one or more routes, which may affect the future performance of the Group.
The Group relies on long-term contracts with industrial customers in certain areas
On a few routes, a significant proportion of freight volumes are derived from a few industrial customers. Risks inherent in such relationships are mitigated by multiple-year customer contracts that also reflect investment requirements to service
such contracts. In the event that the proportion of long-term contracts cannot be maintained, it could result in increased earnings fluctuations and uncertainty.
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