Deutsche Post Ag S/Adr

Thank you and a warm welcome from my side to our Q4 full year 2022 conference call. As announced in the invite, I've got with me Melanie Kreis, Group CFO. We've got Frank Appel, CEO, and also as announced, Tobias Meyer, incoming Group CEO. And with that, we don't want to lose any time. Over to you, Frank.

Yeah, thank you for joining us. And let me start with the overview somehow, and then my colleagues will give you more detail in the outlook for this year and three years. So if we go to page three of the deck, we have summarized some nice highlights here. We really had a very strong financial year. We have a record EBIT number, but also a very strong free cash flow that shows somehow the health of our business. We also have continued to deliver on our comprehensive ESG strategy, and I will show some details later. And finally, as good practice from many years now in our company, we have a quite nice participation of our shareholders as well by increasing the dividend to 185 and increase our share buyback program until 2024. If we look into some of the developments which has driven that, you can see on the next page, first the B2C volumes for three divisions. You know, structurally, the volumes are much higher than they were in 2019 before COVID. But of course, the cool down of the economy had impact as well. Our volumes, you can see that here, overall very strong growth long term. last quarter was down against last quarter 2021 in two divisions and flat in the third you know that's not surprising take into consideration inflation uh consumption is down in many sectors retail and e-commerce you have seen that with some e-tailers as well and of course that's reflected in our volumes nevertheless we believe the structural growth you have seen before covet And we will see in the future is in the, you know, this high to single digit, mid to high single digit growth rate underlying. And we believe that this will come back if things have normalized. B2B on the next page is impacted significantly more. Very similar to what we have seen in the financial market crisis, you know, volume drop in B2B at that time was quite strong as well. But it also embeds and somehow some opportunities for the future. You can see here that in global forwarding and express volumes are even down against in B2B against 2019, despite that the economy is still bigger than in 2019. So if volumes are dropping that much, they have to come back because the underlying economy is much larger than We have seen exactly the same pattern in the financial market crisis. B2C volumes were relatively flattish. B2B volume dropped quite a bit. And we remember that we have seen at that time a pretty vast recovery later on. Supply chain is the exception. Very resilient business. Not surprising as well. We have seen that in former crises as well. They're stable. But in addition, we see underlying good growth, healthy growth. gaining market share, and that has driven the top line quite a bit in supply chain. Let me come now to the financial numbers. You can see on page six, the fourth quarter, where we see already the impact of the volume development you have just seen. Nevertheless, still almost $2 billion, a bottom line, almost $25 million revenue. In total, record revenue number and record EBIT number driven particularly by global forwarding, which was significantly up. But also supply chain has the best year ever. And Express kept the tremendous level we have now, $4 billion, quite nicely. So very encouraging signs. E-commerce solutions also a couple of years back at a zero profit is still around $400 billion. And yes, in PNP, we have seen a decline driven by a significant revenue decline. Not surprisingly, the long-term trend in volumes in mail is still the same. And parcel volume dropped, and that has, of course, significant impact. So we have reduced our profit in this segment. If you look now forward, the question is always, and that's a good question, and I think we have clear answers to that, what will happen in the next months. We don't know, and we will come to that later. But as I said, maybe there are some signs already that heading in the right direction, but it's too early to celebrate. We have very clear proven levers to reduce cost. The Express team has worked diligently on reducing our capacity for Express business. You have heard that from us, but often we have a very flexible structure with short-term ACMI contract to only airplanes for long-term. That helps. We also have flexibility to reduce operational costs and also indirect costs. Of course, we put a hiring freeze in place. We have reduced travel quite a bit. These are all normal practices we have done again and again, so nothing surprises, but that will help us to stabilize the situation if volumes are not recovering. Long-term, I think we have to continue what we have done well in the last years, always continue to invest into our operations, and the result is that we have been able, in moments where it was necessary to produce significantly more volume. Yield is very high on the agenda. We discussed that in all BRMs with the divisions, it's much higher on the agenda than 10 years ago. And we will not change our view that ESG can become a competitive advantage as much as digitalization, and that's the reason why we will continue to invest both. If you look into digitalization as the first of these two drivers, here you can see first what we intend to do. First, we want to make the customer experience better by better touch of digital touch points. The same is true for employees. Or we make our operations more effective or efficient. On the bottom, and I will not go through them, you'll see many different examples where we really have digitalized the organization significantly more. The nice thing is, I have now started to travel again and there are the women in town halls. Five years ago, I got many questions about digitalization. Will I lose my job? I get now only a digitalization question. Can we not accelerate even further? So we have demystified and took the fear away from all people. The people see that this makes the jobs better, our operations better, our customer experience better. And that's the reason why our organization is very much engaged. And that makes me very optimistic that we will see a further acceleration of digitalization in our organization. ESG, I think we have ticked all boxes this year. All the targets we give ourselves, we have achieved, which is great to see on an environmental. We have invested into our carbon reduction and we delivered a million tons carbon reduction through decarbonization efforts. We have kept our high engagement of all people. As you know, we are a great place to work, number one, and The number dropped only from 84 to 83, but it's still significantly above the short of 80, which we think is outstanding. And on governance, all our trainings, our mandatory trainings have been delivered at the ratio. This is a very high number. If you look into other companies or you might ask other companies what their compliance with training effort is there to begin with 50% or 60%. So that's a very good achievement. We will introduce now a new KPI for governance, which is cybersecurity that is based on BitSight. They are measuring that and the result last year was 700. And we want to go now to the bottom of the best quarter of all companies, not only in industry, but across many industries. And that's when you go, I think that's a very important indicator. It's still early phase with cybersecurity ratings, but I think we want to make a start there. and want to measure ourselves against these indicators. Going forward, next page, I think we are well positioned to weather the 2020 free challenges. We have the right measures in place. We have discipline in the organization. We are actually a quite interesting portfolio because we are defensive and relatively stable in the moment of crisis, and we will definitely benefit from the recovery of globalization in e-commerce in the next quarters if it comes back. And we are particularly proud that we have a very agile, energetic organization with now 600,000 people, which will help us to get through that. So overall, very good year. Outlook at the moment is more challenging, but we believe that we are well equipped. And with that, I hand over to Melanie for more details on the key financials. Thank you for listening.

Yeah, thank you very much, Frank. And good morning to all of you on my side. Let me briefly start with the full year P&L on page 12, where after what you just heard from Frank and what you already know, you can obviously see some new record numbers in terms of revenue, EBIT and net profit. I think the interesting thing is, as we have already flagged in our implied Q4 guidance last November, We have seen a change in the development and in market trends over the course of the year. Frank showed you the Q4 P&L, so Q4 EBIT was down year over year from a record Q1 2021 with 2.2 billion to 1.9 billion. However, when you also put that into perspective to the volume trends which Frank showed, I think that was still a very, very strong quarter, and I think it shows the resilience of our portfolio. and also our ability to deal and manage successfully a period where the volume dynamic is weaker, and that was clearly the case in the fourth quarter. So we're very pleased with bringing the year home in line with expectations on the P&L side. And of course, now turning to page 13, we are also very, very happy that our cash flow focus continues to pay off, as we translated record full-year EBIT into a very strong free cash flow, excluding net M&A $4.6 billion, above $3 billion when you take into account M&A, particularly the $1.5 billion for Hiller Brand. So we are ahead of our previously increased guidance, and you know my obsession with cash flow. I'm, of course, very happy that we are also able to report record numbers on the free cash flow side. So I guess that takes us to the question now that we have that nice cash flow, how do we use it? And in line with the commitments of our finance policy, we are using parts of this strong cash generation for our multi-year share buyback program. We are now increasing the overall size by 1 billion to a total amount of 3 billion until the end of 2024. 800 million, the first tranche was fully executed in 2022. We are well on our way with the second tranche, 500 million, which will be completed by the end of the month. And in line with our aspiration for share buybacks to be almost continuously in the market, we are preparing for the next tranche to follow up right after our AGM in May. So, increase in our share buyback program, that's one use of cash. Of course, another very important element is our continued investment into future growth of our business. And that takes me to page 14, where I want to highlight three important messages. The first one is that we are very disciplined with our capital allocation. Overall, how much capital we allocate to the different divisions, and then of course also on an individual BCA basis, when we look at the individual investment projects. to ensure that we generate a good return on capital employed. You can see on the left side of the slide the development of return on capital employed over the last years. And, of course, that is something we now also bear in mind when we see, as you will have seen in our guidance phase, where there is less EBIT growth. We will, of course, also look at making sure that we stay at very respectable levels for ROSI going forward. That takes me to the second important point and the question, how do we steer CAPEX in the current environment? Tobias will talk about our full-year guidance. We have already included on this page the range we are giving for CAPEX guidance. And I think you can see with that range that we do have flexibility. So it's not that our CAPEX is a given. We have flexibility and we are using the flexibility and we will that in the course of the year, depending how the volume development plays out. The third important message is that we will do so as we have done over the past years in a balanced way. I think the good news for us is we have a very experienced team who is not going through a volume downturn phase for the first time. So we know how to strike the right balance between focus on cost, cutting back on capex, whilst also making sure that When spring comes, and there will be spring eventually, we are ready to really pick up in a smooth way and then really harvest the upswing again. So now turning to page 15 and to round up uses of cash dividend. Page 15 shows our long-term track record of progressive dividend increases, something that is very significant. important to us, including the proposal for the full year 2022 with 1.85 euros. We know that this is at the lower end of the 40 to 60% corridor. I think it has to be seen in conjunction with the share buyback increase. But I think what is also very important for us is dividend continuity, so we are also really looking ahead, bearing in mind our EBIT guidance for the year 2023. As this is Frank's last year, last full year announced results, I also took the liberty of including some numbers, taking a bit of a look back to the year 2008. when Frank took over as the CEO of the company. And I think we can show some very impressive numbers of what happened over these last 15 years. We spent more than 23 billion on dividends and share buybacks. And shareholders have received more than 15 euros accumulated dividend for each share held over the period. And then you look in terms of total shareholder return, I mean, 2008 was obviously also quite a challenging year, but from that starting point, we were able to generate a TSR of 8%, well ahead of market, and I think something we are very pleased with. So that was a bit of a look in the rearview mirror. Now we turn to the future, and with that, I hand over to our incoming CEO, Andreas Meyer, for Southwark.