Deutsche Post Ag S/Adr

Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the DHL group conference call. Please note that the call will be recorded. You can find the privacy notice on DHL.com. Throughout today's presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you wish to ask a question, we ask that you please use the raise hand button at the bottom of your Zoom screen. If you have dialed in, please select star 9 to raise your hand and star 6 to unmute. Instructions will also follow at the time of Q&A. I would now like to turn the conference over to Martin Ziegenbolg, Head of Investor Relations. Please go ahead.

Thank you and a warm welcome from my side to the Q325 results call. As it says on the title, I have here with me our Group CEO, Tobias, and the Group CFO, Melanie. We aim to cover all ground within the next hour or so. So, therefore, without losing any further time, over to you, Tobias.

Thank you, Martin. Thank you all for participating in this call and your interest in our company. On page two, the highlights for the quarter. Firstly, on the short term, dealing with the changes in the global landscape, particularly the outfall of the changes in U.S. trade policy. Within the quarter, we had the abolishment of the de minimis also for the rest of the world. I think we have been able to deal with that very effectively by adjusting and shifting capacity, especially in our more asset-intensive global transportation networks, that being Express especially. to do adequate yield management, to overall mitigate the impact on the U.S. trade lanes and continue to take advantage where there is growth, and we'll talk about where there is growth in a minute. What is also very important to us, not to only be observed with the short term, but continue to spend time and execute measures to accelerate our growth, through the focus on the industry verticals that we've laid out in our strategy 2030, but also, and very importantly, to invest in those geographies that are growing and will continue to grow. You know, we have a list of countries which we call GT20, Global Tailwinds 20, with related trade lane development measures. And I think we can say that we also made good progress on that in the third quarter. Cash flow generation was strong. Melanie is going to talk about that in a minute. And we continue to be committed and execute on our promise on attractive shareholder returns through dividends and share buybacks, which also continued in the quarter. On page three, you see a statistic, a graph that we published in conjunction with our global connectiveness tracker. Those of you who follow us more closely have been doing this for some years in collaboration with NYU Stern. And we found it worthwhile to highlight that the average distance of trade has continued to grow, actually reaching a record high. There is a strong narrative out there that talks about regionalization and French shoring and there might be reasons for such trends, but the fact of the matter is that long distance trade continues to grow. We have massive shifts that we see in our company, but also beyond. due to the changes in U.S. trade policy, but we also see that other trading partners continue to expand. I think most notably that was visible in the September export figures of China, where trade to the U.S. was down 27%, but you had double-digit growth in the trade with China. Southeast Asia with the trade of Europe as well, and particularly the trade to the Middle East and Africa was growing a lot, Latin America as well, these being long-haul trades. and that compensating for some of the decoupling that we see as it relates to the U.S., which clearly has a lower share of participation in global trade, is increasingly replaced by China as the most important trading partner for many countries in the world. That is also visible on page four when it comes to our volumes here, a focus on the time-deafened international piece, so that specific segment of DHL Express. You see, by and large, the trend from the second quarter continuing, so especially the decline on the U.S.-bound trade, the U.S. inbound, that is. but we see also some other trades, also U.S. exports, being somewhat under pressure as input factors for U.S. producers get more expensive. If aluminum is double the price in the U.S. than it is in other parts of the world, it's obviously difficult to produce cost-competitive products. So that is something that will continue to influence global trade and thereby our customers and the business that we do with them. As spoken, the de minimis now being abolished also for the rest of the world, that had a notable impact on volumes, less so for us on profitability because we were able to counteract that, but also we see that some volumes are declining that have been not so profitable for us to start with, so that also impacts our overall results. But the cost action is very important, and on page five you see some details on that. Aviation costs down 8.5% in the quarter. That's hard work, and we are really pleased to see that the Express Aviation team has been able to deal with that very professionally. Service was very good in the quarter, and we are also pleased really looking forward to the fourth quarter across all divisions. I think we're very well prepared with our setup to deliver excellent quality. But we do that in good balance with strengthening our cost competitiveness. So we have adjustments that are more cyclical, ramping down capacity, shifting capacity. But on top of that, structural measures, which we have under the program Fit for Growth. That really makes us a better company in many ways. Cost competitiveness is an important part of our growth journey going forward as well. So we see ourselves in making good progress on that. We keep the discipline that you used from DHL Express, but also the other divisions when it comes to yield. That's clearly also supportive of the result in the quarter. Some more examples on P&P on the following page six. Maybe before I go on to the profitability accelerators, it's important to note that the volume in the quarter for P&P had some shifts for some goods carrying products between letter and parcel. There are details in the backup. On that, so if you look on an organic basis, parcels were up around 2%. We had normal ups and downs in the volume of mail as well. The advertising mail had been quite weak in the third quarter. of 2024 so year on year it looks quite positive but overall when it comes to letter volume in germany there is no change to any trends we still see that on the path that we talked about earlier Now, coming to the concrete measures that helped us also improve profitability to the level that we're now seeing, which is in line with the guidance that we've provided, AB steering, this is something that We can now do to a greater extent because of the lead time extension we got for the standard letter so that those standard letters are only brought to every address every second day, staying within the allowed lead time but allowing for some efficiencies in that last mile and skipping households where we would elsewise only have a single letter on Monday and Tuesday, for instance, and now we bundle that. to two letters on Tuesdays. That's what's meant with that AB steering. Joint delivery is something that we have been on for a long time. It's a really big program because it requires us to rebuild infrastructure to a great extent. but that is really very important in the long run to strengthen the efficiency of the system, to ultimately become a parcel carrier that also carries some mail. We're now at 69% of parcels being jointly delivered with mail, so that's steadily progressing and supporting the efficiency, much needed efficiency within P&P. Out of home continues to be a focus. We continue to invest in that. as close to consumers as we ever were in Germany, and that is strengthening our position in that market. And also from the support functions, we are nimble and efficiency focused, which you also see in the numbers. Technology plays an important role. On page seven, there are some examples how we also deploy agentic AI. Outside Europe, we have support for frontline recruiting, for instance, the prequalification, the initial interview of somebody who wants to work for DHL, an applicant that's done with the support of AI customer service, probably across industries, the most common use case. That is also visible in our company. More specifically, on customs, it's very helpful not only from an efficiency point of view, but Agentic AI also does an excellent job in documenting the sources that were used for a classification. So on the regulatory side, but also on the goods description side, that does not only increase efficiency, efficiency, but also service quality and compliance, very important in this area, especially when we talk about U.S. clearances, an important component of our success there. I think we have been leading in providing continued great service into the U.S. in recent months, so that's something where this also contributed. And then on service logistics, dispatch calls, for instance, following up on the dispatch of trucks is one of those areas where AI also comes in handy. When we look at growth accelerators on the following page 8, we continue to invest organically, roughly at the same level than we had in previous years. This goes into infrastructure that improves our quality, like in Barcelona and Helsinki for Express. but also investments that unlock new revenue streams, particularly in geographies like Middle East and Africa, where we're really getting into new verticals as well for supply chain especially, and then the ongoing expansion we have in our last mile activity. We continue to do targeted M&A, and we also had such in the third quarter as it relates to, the merger of our e-commerce operations in UK with Avery. That is a consolidating move. We believe we need to be amongst the top three players in every e-commerce last mile market that we're in. If we're not able to reach this organically, we'll do so inorganically. We have announced a similar move for Iberia earlier in the year. We have now closed the transaction in the UK, getting into such a market-leading position with that participation in the merged entity. We did a smaller acquisition in the U.S. that gives us access to specific capability on healthcare-orientated last-mile hospital logistics. And with our investment in Ajax, we get access to last mile activities in the Gulf Corporation Council countries. So, again, an expansion of our footprint, which is part of the strategy that we have communicated. Similarly, we support the strategy with a strengthened management focus. We have a dedicated team for supply chain Middle East and Africa that has been executed in the third quarter. We just announced that we'll also have a similar move with DHL Global Forwarding as it relates to Latin America. So we want to have senior leadership in the region to drive the growth of those businesses. That's part of our strategy execution as well. That already brings me to my summary on page nine. So we cover the short-term volatility that the business is exposed to. We're successful in protecting earnings and cash flow generation in that environment by doing the cyclical capacity flex, which I believe was highly effective also in this quarter. but also work on the structural measures that make us more competitive in the mid- to long-term through the Fit for Growth initiatives, including increased deployment of technology such as AI-based tools. But also the long term, we saw progress in the quarter with those organic investments, the targeted M&A. We see ourselves making good progress on those structural elements of our growth journey towards strategy 2030. And that is important to accelerate our growth trajectory in 26 and 27. We're aware that additional momentum is needed. With that, I would hand it over to Melanie to give you some more details on the financial performance of the divisions in the third quarter.