Deutsche Post Ag S/Adr

Thank you, and good morning and a warm welcome to everybody out there. It isn't that long ago that we have been together in this round, but this time around it's on the official set of Q1 2020 data. And I take it you have the presentation we send out in front of you. As announced, we've got Frank Appel, the group CEO, and Melanie Kreis, the group CFO, here with us. Usual procedure. We have got time for Q&A afterwards. And with that, over to you, Frank.

Thank you, Martin. Good morning also from my side. Thank you for joining us this morning. So I can go straight away, I think, in the presentation. Page two is actually summarizing very well where we stand at the moment. You know, the key numbers are definitely a strong sign of our fundamental strength and our broad portfolio of our businesses. You know, we see at the moment very well from our colleagues around the world that they are really delivering our purpose nicely, and we have very good procedures in place aligned around the world, but also in respective countries to protect our people. That enables us to deliver great service to our customers. Unfortunately, the visibility going forward is still difficult, despite that we see first signs of improvement. Important is, I think, that we have pretty well, as you can see from our operational cash flow Melanie will talk about later on, we have managed pretty well our liquidity. On the next page, you see what we have received from our colleagues all over the world, that they are really excited on one end to really help others to keep the world moving, and on the same side, are well equipped and prepared to save. guard their own health. So if you run a company for so long as I do, it's really rewarding to see the energy level and the commitment of our workforce around the world. And that is not just in one country. It is all over the world. I recently handed over virtually the CEO awards from last year, which we usually do. in a big event internally, and I talked to people starting from Ghana to India, Canada, Latin America, Europe, Asia, all over the place, and what they all said is, you know, we are very committed, and we are doing our utmost to help our people, but secondly, to help our customers to get things moving. And that is great to see. So if I look into how things are progressing on-page, you can see the volume development of PNP and Express. We have highlighted a couple. So you can see here, as we already communicated, the mail volume, particularly the direct mailings, are declining. As you see later, first-class mail is still doing okay. But of course, not surprisingly, people, if their stores are closed, they don't advertise. The opposite is visible on Part of the people can't buy on high street, they buy online. It took a couple of weeks until the people rechanged. Not surprisingly, the first two or three weeks, people were at home watching more of the media, what might happen, and after three weeks, they normalized somehow and said, okay, now I have to fulfill my needs. I buy now online instead of offline. Express, you see actually what we have told you already before. China After the lockdown was lifted, it has recovered pretty well with strong volumes. In week 17, you see a dip, but that was intended by us because we had too much volumes and we had to stop picking up. Otherwise, the outbound flying has been overwhelmed. In Europe, you see first signs of recovery following a pattern a little bit slower than China, less sharp, but What we can observe is that there is probably a similar pattern, as we said already before, and America, as we believe, will follow next. On the next page, you see how we are doing so far in the quarter. I think we have our strong footprint across the divisions. We are definitely benefiting from B2C, and, of course, we have a very solid balance sheet with good liquidity. The measures are clear. Of course, we focus first on our people, then our customers. service, but nevertheless, we have, of course, stopped spending discretionary spend. But we have so far never had the storm quite well by just doing an hiring freeze. We believe that the offer of furloughing is also a good concept, which has Germany and some other European countries for quite some time. To keep people on board prepares you well for after the crisis. In the divisions and TNP, it's continuing what we have started. Tobias and his team are doing a great job in trigger and leveraging all triggers we had, being on the yield side or indirect or direct costs. That has worked well. That's the reason why the profit improved. Express has still a pretty good operative margin, despite, of course, the imbalance in the network hurts us in a network, and, of course, also the disappearance of commercial lift has negative impact as well. DJFF, of course, the volumes are down in air freight, equally on ocean, even more pronounced, of course, on air freight. And of course, that hurts us on the margin of the short end. But of course, we are now adapting to that by ordering more charters for our needs. Supply chain, mixed picture. Some industries are trending up. Grocery, And life science, others are down, fashion and automotive, and therefore the picture is mixed. Actually, that's interesting anyway. You know, what we learned this time, this is not a normal recession. It's a mixture of a recession and a disruption and a discontinuity. And that you see visibly in supply chain. Nobody has expected such a surge or increase in volumes for some sectors. And, of course, nobody anticipated a full stop of certain other sectors, and that is unique. That's the reason why the prediction is also very difficult, not only for you, but also for us, because there are, in the curve, discontinuities different from a normal recession, which makes the situation more difficult to predict. E-commerce solutions, you know, we had a complete shutdown of India, more severe even than in any other country, and of course that had impact on our On the other side, we are benefiting strongly in Europe from the B2C, also in Southeast Asia. What happens next, or will it be our plan on short-term? I talked already about mid-term. I think we have to help to get the customers back into business somehow. Of course, we have to prepare ourselves for potential second wave. Even if that's not clear, if that happens, maybe vaccines will be early enough or the social distancing will work longer and more consistent than we might fear. But of course, the major focus will be to help our customers to get the business up and running and secondly, to protect us against the second wave. Long-term strategy, the clear news here is we don't need a new strategy. The only thing that would happen is the execution would be accelerated, particularly on the digital approach. That brings me to, on page seven, to the group revenue. As I already said, P&P Express are up. The DGF, not surprisingly, is down. It has less volume. Supply chain is, year over year, even if you make it organic, up, but of course sees some impact. E-commerce solution, of course, is a mixture of up-trading and the impact we have seen in Spain and India. On the group level on page eight, if you just exclude the street scooter from both years and the China supply chain sale, we would be more or less flattish in the first quarter. This shows the strength of the portfolio, including all COVID impacts. So what you see on the third right column or bar, it is not excluding COVID, it includes actually COVID-19, but excludes street scooter. So, and if you take that, we are more or less on the same level that shows the strength of the portfolio, despite that we had to digest 210 million negative impact, which is good. Of course, you know, two and a half months, we're hardly impacted. So, therefore, you know, that's not a given forever, but it's a strong sign of all strength. If you exclude the COVID-19 as well, we would be even up year over year. On page nine, I don't have to talk too much about that. That's an explanation. visibility of what I've said already, P&P is doing well, going up, excluding COVID even more. Express would be up year over year, excluding COVID. DJF would own the same level. Supply chain was slightly up, and e-commerce is anyway up already, including in your COVID impact. So overall, I think a very healthy portfolio we have. And of course, it's visible that the broad portfolio in such a crisis helps, and that's a real value of the different divisions. On page 10, more detail on PNP, main communication is stable, but there's also now increasing volumes in e-commerce because which is one product for lightweight, this and that as well. Revenue is nicely up to the yield manage. Dial-up marketing is down on both, and on parcels, we see a good development, and of course, it increased significantly at the end, but a very strong yield as well. And, you know, we are probably at the upper end of what the predicted volume decline has been, because that's mainly driven by the last two weeks of March. Express, still solid development on shipments per day, even better on revenue per day. That means the yield management is working. So let's now see what will happen. The more and faster Europe will come back, the better it will be for the further development, as we already talked about. Not surprisingly, volumes are down on both, but GP is much better due to the extreme tight market. You know, we were able to convert at least some of the price increases into profitability. On the effort side, ocean is under stress, but let's see if things are now normalizing. Somehow we should see a better development on ocean freight because capacity is there. Supply chain, a mixed picture, as I said. We have very healthy business and we have challenging business, but overall I think the flexibility has stabilized the profitability in supply chain overall, ESC as well, some very good development in parts and some challenges in Spain and India in particular as we're hot spots. In the UK we also see good development. And that's more or less the summary of all these developments. So overall I think we had a a decent first quarter, and we have taken the right action to stabilize the situation. So with that, I head over now to Melanie for more financial detail. Thank you.

Yeah, thank you, Frank, and hello also from my side. I'm looking at the group P&L on page 15. Frank already mentioned the most relevant points on revenue and EBIT. Again, from my side, I think on those two lines, the important message is that We still had growth on the top line in the first quarter, despite the developing COVID impact. And on the EBIT, obviously, at first glance, it looked like a significant decline. That is really due to the positive one-off effects of 330 million in the first quarter of 2019 and the negative non-cash street scooter impact of minus 230 in the first quarter of 2020. If you take those one-time effects out, you're already on a level playing field. And then as Frank showed earlier, we had good underlying EBIT growth around 200 million, but then we had the negative COVID impact of 200 million offsetting that. I think the rest of the page is relatively unspectacular. Financial results are pretty stable. On the taxes side, in line with our expectations, we had a tax rate of 24%. And given that we have less profit before tax, the tax line in absolute terms came down. So I would say no surprises in the lower part of the page. Which takes me to a very important slide, page 16, the cash flow. First of all, as background, due to seasonal patterns, we always have a negative free cash flow in the first quarter. That is what we see every year. When you then look at the overall development, we are very pleased with our free cash flow development in the first quarter. Why is that? When you look at the middle of the page at the operating cash flow, You can see that we tripled it from 250 in the first quarter of 2019 to 750. In this OCF line, neither street scooter nor the positive M&A effects from Q1 2019 play a role. I think this is really a good approximation for the fact that the underlying business is in a very strong shape. And what is particularly pleasing is when you look at the changes in working capital line, it is noticeably better than what we saw in Q1 2019. And one key element in here is the very good collections development, which is obviously in the current situation a top priority for the finance organization. The other number which is interesting is when you look at the net capex line, you can see that net capex is pretty much on last year's level. I think there are two important points to be mentioned here. The first one is that whilst we have naturally looked at all our capex projects and we have looked for opportunities to delay and phase stuff, given the strength of our balance sheet and the way how the business is developing at the moment, we are in a position to take a balanced approach. So we are, of course, very focused on liquidity and short-term management, but we keep investing into the future of the company. I think we are in a good position to really take a sensible and balanced approach here. The second interesting thing to mention here is we didn't have a 777 impact in the first quarter of 2019. The big cash-out for the 777 started in April 2019. In the first quarter of 2020, We had a 66 million impact from the 777, which is less than what we had originally assumed, because we were now able to do a very attractive structuring for the financing of three of the 777s for the current year. And that led to parts of the funding coming through a leasing accounting structure. And that is directionally going to reduce the 500 million we had indicated for 777 CapEx to around about 300 for the year 2020. So putting it all together, when you look at the last line on the slide, you can see that we have taken out the 650 million cash in from the China disposal in Q1 2019. And if you then look at the comparison free cash flow Q1 2019 underlying to Q1 2020, you can see that free cash flow, despite COVID, is actually up half a billion, which I think is a very encouraging start into the year. That takes me to page 17, a slide which we had shown to you in a similar shape and form before. There's nothing materially new here. At the end of the first quarter, our cash and cash equivalence position stood at $2.6 billion. We did not utilize our syndicated credit facilities, so we feel that we are in a comfortable position. But, of course, that remains a top priority for the organization overall. We do a very detailed cash flow steering. So far, we are very happy with the development. But I guess, like everybody else, we do expect that there may be an impact in the weeks to come. We're watching this very, very closely. That takes me to a topic which is, at this point in time, a bit more challenging than in normal years, forecasting and guidance. So on page 18, I think you have a good understanding of what happened in the first quarter. A good start into the year, February, China COVID impact in express and global forwarding, and then in March, 150 million impact across all the divisions also in the other regions. So where do we stand today? As Frank already mentioned when he talked about the volume developments for mail and parcel and express, We still see mixed signals in the divisions. It's too early to talk about a clear pattern. Volumes in most segments remain below normal and last year, but there are first indications that the decline is bottoming out, for example, with regard to the decline in dialogue mail volumes here in Germany. Given the general high level of uncertainty, it remains to be seen whether these developments are now really the beginning of a sustainable trend. whether they turn out to be the first phase of the recovery that we all hope to unfold, too early to tell. And that is why, now turning to page 19, we don't feel in a position yet to issue a new guidance. There's still too much uncertainty and volatility around us. We have the same open questions like everybody else and now have to see what patterns evolve over the next week. But there are also some certainties for us going forward. Whatever shape or form the recovery will eventually take, a V, a U, a L, you name it, logistics will be an essential part of any recovery. And we as a group are extremely well positioned to serve our business customers, to supply consumers around the world. And our strong liquidity and balance sheet here again will play an important role to really capture the opportunities that the recovery will bring. And that is also the foundation why we are upholding our guidance for 2022. 2020, a lot of uncertainty, but there will be a recovery eventually. We will get to a new normal. And based on our strength, we are quite confident that we are then going to get back on track. And on that basis, we are maintaining our guidance for the year 2020. And that already, sorry, for the year 2022. So that already takes me to the last page, the wrap-up. Obviously, the virus is still out there, so we remain extremely prudent. The key priority for us remains on protecting our people, and that's the basis for keeping our operations up and running, as we have successfully done so far. That is then, of course, the basis to keep our customers operating. At the same time, we are getting prepared for the recovery, whatever shape it will ultimately take. But, of course, we're also preparing for a second wave and future deteriorations, which will hopefully not occur, but nobody knows. So, to sum it up, with our strong balance sheet and excellent strategic position, we will get through the current storm. We will try to find the right balance between taking the necessary short-term adjustments, but we will do all that with a long-term focus in mind, in line with our clear strategic framework. So much for the overview, and I think with that, over to you, Martin, for the Q&A.