Deutsche Post Ag S/Adr

Thank you, and good morning to everyone out there. After yesterday's release, we stay on the fast track and have our call a bit earlier in the day than usual. So, nevertheless, thank you very much for joining. I take it you have the material we are going to talk about in front of you. And with that, I'd like to hand over right away over to you, Frank.

Yeah, thank you, Martin, and welcome as well from Whiteside. Good morning. So we want to structure the presentation in four pieces. First, to show how we have delivered our strategy 2020. Melanie will then talk about the key financials, then cash flow returns, and I will finally give you an outlook. So on page three of the deck, you can see that we actually have delivered along all dimensions. Here you see the EBIT development over the years. Yes, we had some dips on the road, but we did a finally fully loaded 4.8 and even adjusted 5.4. We had very high employee engagement, the highest ever we have seen as well increase. in our perception of the customers in a nice way and that's the reason why we today suggest an increase of the dividend to 135 and we announced yesterday a share buyback in addition. On page 4 you can see the development of our dividend over the years. Our finance policy we have not in place for quite some time. We followed strictly all these years and you can see here that we, you know, due to the underlying performance, we are able to increase the dividend by 20 euro cents, which is a significant step up without a doubt. And since we have delivered a lot of free cash flow, we can, as I already said, you know, also do a share buyback. If I look a little bit back on page five, you'll remember definitely our capital markets day with the announcement of Australia 2020 in 2014, our half our time report and of course also the launch of the new strategy 2025, which is a continuation of what we have created for Australia 2015 and 2020. If you look on to page 6, and that is a reflection of what we originally announced in 2014. I know that we have increased our guidance in UCROS to 5 billion, but the original guidance in 2014 based on 2013, a CAGR of 8% growth until 2020 for the group, 10% growth annually for DHL, and 3% growth for P&P. Of course, it makes me proud that we have delivered on all three dimensions over such a long time period, six years outlook, and we were spot on with all our numbers and also in the right mix. So that shows the strength of our portfolio. We were really able to deliver along these lines. We also, on the next page, have improved the mix of our portfolio from the revenue perspective. You can see here You know, the business unit, which definitely is the global leader in the express industry, has grown the most. But also the DGFF business has continued to grow. Supply chain is slightly down, but there are some portfolio measures. As you know, Williams Lee was sold. The China business was sold. You know, the accounting for NHS has changed. We have now a new member of the family, which almost already 5 billion revenue in e-commerce solutions, which we didn't have in 2013. And the mix in P&P Germany has, you know, much more beneficial now with significant bigger chunk, you know, from the revenue for parcels instead of mail. So I think this is a very good reflection of improved mix we have as a company, despite all divisions have contributed to that. On the next page, you see also the development of our margins. We have shown that now for a couple of quarters. You can see nicely that, of course, our start performer is expressed, but the group is also up. P&P is up. DGF is up after, you know, we had some challenges. And even supply chain, despite that they have significant headwinds from the shutdown of many of our customer operations, we are still ahead of what we have started with. In e-commerce, it's our rising star without a doubt. As we guided already quite some time ago, we are now on the journey to deliver 5% margin. So overall, over that long period, all divisions have improved and they all have contributed. That has enabled us as well to have significant investments on the next page, page 9, significant investments in our capex to expand our footprint, but we also paid a significant amount of the operating cash flow and free cash flow as a dividend. Despite all that, we still have a significant excess liquidity, which enables us, as I already said, for another share buyback. Over that period from January 2014 to end of 2020, I think we have generated with 91% a very good total return to shareholder. I think that's a sign of the tremendous strength of our portfolio. On the next page you see the underlying trends which we have already explained in 2014 and we re-endorsed them or said they are still valid in 2019, last year for 2025. So let me go through some of them. I think that's interesting. Our concept, which we have since 2009, our three bottom lines, have worked extremely well also last year. Our employee engagement is on record level. We have added another 20,000 people to our workforce. Provider of choice, we have improved our NPS score again and again, and last year we had record numbers, as I shall show later, you have seen We have really helped our customers to perform well, you know, and kept their supply chain stable. On the investment of choice I already talked about, and good news as well on the sustainability development, we are now at 37% improvement in efficiency, carbon efficiency based on 2007, which is two percentage points better and seven percentage points better than we originally fought for 2020, which was 30%. So we have delivered along all three bottom lines. We will announce on the 22nd of March our new ESG strategy or the next step of our roadmap. So please join us there. Then you will learn more about what we want to do along the ESG dimensions. On the next page, on page 12, you see the development where we started in 2013. We are now 90,000 people more. You know, employee engagement is 10 percentage points up. That's the highest ever, and it's definitely in line with what our target has been with 80. So we improved here well. On page 13, you can see the net promoter score. That means the attractor means the detractors, or promoter means the detractors, and you can see here we are in very good shape. All divisions have continuously improved, and also 2020 over 19 was not an exception. So we are in good shape here, too. If you think then about e-commerce, you can see here the growth we have seen in 2020, which is stronger than what we have seen over the whole period. But even the whole period, the 9% in Germany and the 8% expressed is a tremendous growth. Not surprisingly, e-commerce is still on the rise, and we are enabled of that and have, of course, benefited through tremendous growth as well. We have invested on page 15 significantly into that. The sorting capacity in Germany is up, in Express is up. The workforce and supply chain gets more and more tuned to e-commerce. We have launched our e-commerce solutions division which is growing now the fastest in our portfolio and the share of B2C in Express has increased from 10 to 45% in 2020. E-commerce definitely has been an enabler for our growth, but we also have been an enabler for the e-commerce or the e-tailers. Globalization on page 16 is continuing. We use vaccines as a good example of how well globalization creates solutions without the interaction of pharmaceutical companies around the world with usage of their capabilities in different markets and our logistics capabilities You know, the speed of the vaccine distribution has not been possible. It shows the power of globalization. Good news is that also B2B on page 17 is coming back. You will see the growth rates we have experienced from the B2B businesses. Q4 was already close to, you know, to the zero line in some parts, and above that, even for others, we have seen a continuation of that healthy trend for B2B in the start of the year. Digitalization. You know, it's of course important as well. We have talked about that several times. I don't have to go through the details of that, but we have a very comprehensive agenda supported by some centers of excellence on group level. We have, you know, made tremendous progress in our IT infrastructure, which of course enables digitalization. But you can see here some examples. You know, we have now the first, you know, full-fledged, you know, self-service operation in P&P. We have a digital postage tracking. We have in supply chain automated warehouses. In my year, July, the new tracking and booking tool and code tool for DJF is getting traction and also Express has done a lot to get more intimate, closer to our customers. So in summary, before I hand over to Melanie, I think the company is in a much better position than ever, much stronger. I think we have learned in the last 10 years a lot of things and have made our company much stronger. It's different now. Our purpose became very visible with connecting people and improving lives last year, which creates tremendous pride in our organization. We have a better mix, higher returns, better cash flow, and I also have to say we probably have on the two layers the best team ever. So that will help us to continue with our journey. We have a very clear agenda, and I have no doubt that the guidance we show you later is definitely achievable based on our strong performance we have demonstrated the last year and also with a good start we had into the year. With that, I hand over to Melanie for some key financials. Thank you for listening.

Yeah, thank you very much, Frank, and good morning, everybody, also from my side. Thank you for joining us so early. Let's now take a look at our financial results in more detail, and I will start with the 2020 revenue summary on page 21. Actually, I don't think there's too much additional color needed anymore. 2020 has obviously been a year of strong e-commerce acceleration, visible particularly in Express, in Parcel, and in e-commerce. But it was also a year of volumes. And I think that is the most important assumption going forward, which will apply to each division and which is the basis for our 21-23 outlook as given today. We expect B2C to continue to grow, although with growth rates normalizing in the course of the year. So slower growth over time, but growth and from a higher basis. Also, we expect B2B activity to continue to recover. Like nobody else, we have no crystal ball either to forecast how each of these two trends will exactly unfold. But what helps is that we expect them to be strongly related, as both depend on exactly the same external triggers. So if there is a faster way out of the lockdown, we will see a faster reduction in the growth in e-commerce, but should also see a stronger and faster acceleration in B2B and vice versa. So we don't know the timing, but we are pretty confident that there will be a relation between the two trends, and that should be helpful for stabilizing our results going forward. So the second comment I want to make is that, obviously, with all totally justified excitement around e-commerce, we should also not forget that we have sizable B2B exposure, mostly in Express, in global forwarding, and in supply chain, where we have seen volumes decline in 2020. and their volumes have now started to recover, which is then, of course, also a growth opportunity into 2021 and beyond. If you look back at 2020 and at the organic revenue growth in group revenue, taking out the significant currency headwind, we were up 8.5% for the full year, and then you look at the fourth quarter, we were up 18%, which reflects the very strong peak season driven by e-commerce, but also the fact that B2B is no more dragging down growth. So we clearly saw, and Frank showed that in one of his previous slides, clearly saw that B2B volume started to come back in the fourth quarter. And that is also the dynamic with which we have entered 2021. We had a very strong start into the year, and we indeed plan with EBIT growth in all divisions for the full year 2021. That takes me to the EBIT development on page 22, which very much reflects the same logic I have just talked about. Express is, of course, standing out, reaching a new record margin of 14.4%. I will discuss each division in a bit more detail in a second, but overall, same key message, strong growth in B2C and recovery towards year-end in B2B. As you will see later in the underlying EBIT bridge, which we have also shown you a couple of times before, the reported full-year 17% EBIT growth was actually 34% when you adjust for the 2019 and 2020 one-off factors. Now, I will start the review of the divisional performance with the strongest contributor, the group EBIT, DHL Express on page 23. The overall full year volume number actually hides a bit the extent of B2C growth, as that B2C growth was offset by declines in B2P. In Q4, you see the full strength of the B2C peak season, with B2V volumes also back into growth territory. So I could say a lot about the tremendous express performance in 2020. I think when you put it all together from a financial perspective, The basis for this performance was a combination of volume growth and operating leverage, a very efficient and agile network management, as well as our well-established yield mechanisms. And that combination was what drove us towards these record results. As mentioned before, for B2C in general, we expect growth to normalize at some point in time over the course of 21. But we certainly expect Express to contribute continuous year-over-year growth in EBIT in 21 and beyond. Because, again, don't overlook the B2B recovery, which should also positively benefit the Express division. Let's continue the 2020 review with more B2C growth and our e-com solutions division on page 24. Obviously, in that division, we first of all had an operational challenge, and that was to cope with this very strong volume growth in the domestic and in the international networks. And supported by Ken's streamlining measures also on the cost side, the division was able to translate that very strong volume growth into the first profit contribution in 2020. That was something we had been aiming for since we started e-commerce solutions as a division. But you may recall that at that point in time, the aspiration was to take us to 50 to 100 million EBIT contribution. Obviously, the team has done much better than that. But looking forward here again, we don't think that's the end of the story. We expect B2C growth rates to slow down eventually, but we have now reached a higher basis. And on that basis, we also expect more EBIT growth and further margin improvement from our youngest division into 21 and beyond. Turning to P&P, which is a bit kind of like the transition division, we have a B2C positive growth component here in parcel, but we also have a more B2B associated mail business, which obviously had a challenging year in 2020. Obviously, overall, we have seen a significant acceleration in the parcel to mail volume shift in 2020. Here as well, tremendous performance from the team to adapt the networks and make these levels of e-commerce growth possible. I think what really paid off here was that Tobias had, over the last two years, systematically prepared for being able to handle small parcel volumes also in the mail network. If he hadn't done this pre-work, we would have drowned in volume. But given the pre-work, we were able to operationally cope with the volume growth, and that was, like in Express, complemented with network efficiency, cost focus, and also very strong parcel yield management. These were the key ingredients to see P&P now fully recovered from the 2018 challenges. Going forward, the name of the game obviously remains to manage the mix shift successfully on the operations side and financially profitably, and to balance the parcel growth with the ongoing mail decline based on what we have seen from the team in 2020, I'm more confident than ever that this is actually really doable also in the long term. Turning now to our more B2B-oriented businesses, starting this global forwarding on page 26. So obviously, the market circumstances in air and ocean and road trade have been extraordinary. We saw very tight capacity conditions, first in air freight, then also in ocean freight. That was, in terms of volume development, a challenging year. In financial terms, given the capacity constraints, we saw very high GP per unit, which drove GP up despite the volume decline. And that, together with TIM's efficiency focus, has allowed us to drive EBIT and margin up in 2020. We now see volumes starting to recover. They were still in decline in the fourth quarter, but the decline has obviously come down. And we are now entering a phase where we already saw in 2020 the impact of the pandemic. So we do think that in terms of volume, things are moving in the right direction. Obviously the market is still quite distorted and we expect market imbalances and rates to normalize only over time, i.e. not extremely quickly. So if rates gradually down, we expect volume to come back and on that basis, GCFF should also contribute to EBIT growth in 2021. not at least also thanks to our continued internal improvement measures. Talking about what to expect in 2021, let's finish the divisional roundup with the one division where we had a setback in 2020, negative revenue growth, which of course now positively means a good base for recovery in 2021. And that's our supply chain division. We talked about it since the second quarter. Supply chain is most directly linked to individual customer activity levels and individual sites where many were impacted by heavy lockdowns, complete site closures and volume declines. That is why supply chain revenue declined in 2020 and therefore is and will now see the most pronounced cyclical recovery. Continued growth in e-fulfillment and our whole digitalization and automation agenda will further support that momentum. So we certainly expect supply chain to return to its already previously achieved target margin of 5% over time. To wrap up the operating performance review, the final update of our 2020 e-bill bridge on page 28 shows what I mentioned earlier. excluding runoff EBIT growth of 34% to an underlying 2020 base of 5.4 billion. And I think that number is probably the most important number on this page because that is the basis going forward. We consider the 5.4 underlying base our starting point for further growth. And that has obviously been the base also for our guidance 21 and 23. That takes me to the third chapter, cash flow and returns. The cash flow summary on page 30 is actually quite simple. We have more detailed slides on the cash flow in the backup. But I think actually a fundamental message is very simple. Record EBIT was driven by a clean, strong operating performance, so no one-offs, no funny things. And part of the EBIT one-offs were actually non-cash when you think about the asset impairments we did in the second quarter. So this very strong, healthy operating EBIT performance drove up operating cash flow and ultimately led to a record group free cash flow of 2.5 billion euros. When you compare it to last year, I think there are two effects to bear in mind. CapEx was lower. as we had the Boeing 777 investment peak in 2019. But at the same time, we had the cash in from the China supply chain disposal in 2019. So if you take out both effects, the year-over-year increase was actually pretty close to what we now show here in terms of reported free cash flow growth of 1.668 billion. So I think a really pleasing performance. And I think the important message for you is that we really see that as a new and sustainable order of magnitude for free cash flow. So it's not a one-hit wonder. We have really kind of like entered a new territory in terms of cash generation here. Frank will cover the guidance, but maybe a quick sneak preview and a quick comment on our free cash flow guidance from my side. Because you may be wondering, after what I've just said, why is the free cash flow guidance for 21 actually cheaper than the 2.5 we delivered in 2020? I think it's actually quite consistent with the increase in EBIT we are forecasting, but also the fact that we are spending more on CapEx, 400 million more. I think that nicely explains why our CapEx guidance is for 21, 2.3 billion. And you then also see in Frank's slides what we expect in term horizon. So overall, I think this new cash flow generation territory has really now put us into a position to balance growth into the future business and do the investments we need to do to keep growing healthily. but also generate significant shareholder returns. So let's talk about investments first. Very briefly, we expect a slight increase compared to the 2020 levels out to 2023, which I don't think should be a surprise given the enormous volume growth we have seen in our networks. So I think this is really a continuous increase in moderate steps in CapEx to really cope with the volume growth which we have seen so far and of course also with the volume growth we expect going forward and as an important reminder numbers out to 23 include the full expected cap expense in both 777 orders so that was the investment side so now let's look a little bit on return on our asset base on page 32 I think this Page should also be quite encouraging because it shows you that over time we are generating increasing returns. We are investing more, but we are also generating increasing returns on that basis. One comment I always have to make, you can see that there was a change from 17 to 18. As you all know, we changed to IFRS 16. That significantly increased our asset base. So in our asset base for the calculation since 2018, we actually include all the right of use assets. That's about one quarter of the overall net asset base. So we pretend that this cash has already been spent and we have to earn a return on it, even though in terms of cash flow phasing, this is of course only going out over time. So again, I think a very conservative perspective. And, yeah, what counts for me most is to see the positive trend, which is very clear in both accounting worlds and shows how our continuous investments generate increasing returns. So we invest into the business with increasing returns, and at the same time we are generating sustainably stronger cash flow, which allows us to combine continued profitable growth investments with increasing shareholder returns. Page 33 shows the development of excess liquidity, which is defined as free cash flow in excess of dividend payment, something we have laid out in our finance policy more than a decade ago. As Frank already mentioned, we decided on our second large share buyback program yesterday. You can see here on page 33, the first one in 2016-17 had been distributing the excess liquidity generated in the years running up to that. and this time we generated significant excess liquidity in 2020 alone, more than a billion just last year, and on that basis decided to return one billion of that to our shareholders in the form of a share buyback program to be executed in the next 12 months. We are very happy that we were able to take this decision and thereby deliver on our finance policy. Our decision was partially based on the strong 2020 financials, But partially, this decision has also been linked to the fact that we are looking forward with confidence to further performance improvement in the years to come. And with that, I hand back to Frank, who will finish our presentation with some more details on our outlook and the base assumptions.