Danish ferry and logistics operator DFDS has announced job cuts and operational changes as further steps to “restore long term growth and efficiency” in the wake of the Coronavirus.
A company announcement said that the measures will generate annual cost savings of up to DKr250m and see around 650 employees leaving DFDS in “the coming months”.
DFDS said that freight volumes in Q2 have in most areas been “above expectations” and of the 12 freight carrying ferries laid up in March/April, five have now been redeployed.
Since the outbreak of Covid-19 in mid-March and the initial actions taken to adapt operations, DFDS management has developed a plan with a longer perspective for implementation in the coming months.
Among the initiatives, “industry sales of large freight customer solutions, involving both ferry and logistics operations, will be combined in one unit to drive sales across the DFDS organisation”.
The unit will be part of the Logistics Division. In addition to creating a “stronger commercial focus,” overlapping functions will be streamlined.
The Ferry Division will focus on delivering “reliable and cost-efficient services” to freight forwarders and hauliers.
Freight and logistics operations will be adapted to new market conditions, including “optimisation of port terminal and haulage operations”.
“Our initial response to Covid-19 has been successful. We now take further steps to restore long term growth and efficiency. At the same time, we continue to monitor new opportunities that may arise”, said Torben Carlsen, CEO of DFDS.
The company said that a range of improvement and efficiency projects will simplify and focus business support functions: “This includes a reshaped and integrated IT and digital organisation as well as a downsizing of various functions.”
The statement added: “The adaptation to the new market conditions will, regretfully, lead to around 650 employees leaving DFDS in the coming months, 200 of whom are employed in Denmark. DFDS currently employs around 8,600 people.”
A one-off redundancy cost of around DKr100m is expected in 2020 and will be recorded under Special items.
These initiatives are expected to generate annual cost savings of up to DKr250m. In 2020, a positive financial impact of DKr50-75m is expected.
Initial actions and current situation
Initial actions to adapt to the severe drop in demand caused by lockdowns from mid-March included keeping employees and locations safe, reducing costs by laying up freight ferries and suspension of two passenger routes. The outcome of these actions is in line with expectations
One of the passenger routes, Oslo-Frederikshavn-Copenhagen, reopened on 25 June following the opening of borders between Denmark and Norway.
The reopening of the second passenger route, Amsterdam-Newcastle, and the non-essential travel on the English Channel is contingent on an easing of UK and EU travel restrictions.
Outlook 2020
On 7 May 2020, the outlook for EBITDA before special items was reduced towards DKK 2bn.
Uncertainty remains exceptionally high, particularly for passenger travel, and this may still cause the outlook and its assumptions to change significantly in the second half of the year.
“Therefore, the 2020 outlook for EBITDA before special items is maintained at this point in time.”
DFDS plans to report financial results for Q2 2020 on 12 August.
