Poste Italiane Spa

after a nine-month 2024 Results Conference call. In a few moments, Matteo Delfante, our CEO, will take you through some opening remarks, and then Camillo Viejo, our CFO, will cover the financials. This will be followed by a Q&A session where you can ask questions either by phone or through our webcast platform. Please limit yourself to two questions. Over to you, Matteo.

Thank you, Giuseppe, and good afternoon, everybody. we are yet again reporting another strong set of results, demonstrating the ability of our unmatched platform company to deliver strong and sustainable profitability and cash generation. Starting with the top line, revenues for the nine months came in at $9.2 billion, up 5% year-on-year, or 8% on an underlying basis. Our best-ever nine-month results As you know, one of our key focuses remains expense management, and we continue to successfully mitigate inflationary impacts while, in general, cost increase came from growing business volumes. Adjusted EBITDA, excluding for consistency with business plan targets the contribution to the insurance guarantee fund, came in at nine months record of $2.3 billion, up 18% on an underlying basis. Net profits amounted to $1.6 billion, up 19% again on an underlying basis. We continue to see positive net flows in investment products with resilient results in asset management and improving flows in life insurance products in a challenging environment. We are strengthening our upgraded full-year 2024 adjusted EBIT guidance of €2.8 billion with a net profit guidance of €2 billion for the full year of 2024. Our interim dividend, which will be paid on November 20th, would be equal to 33 cents per share, for a total of $427 million, up 39% from last year, and in line with our new payout-based dividend policy. Let's move, please, to group financial results on slide 4. Group revenues came in at $3.1 billion in the quarter, up 10% year-on-year and 9.2% in the first nine months, up 8% on an underlying basis, excluding the impact of certain specific non-recurring items. In the first nine months of 2024, both adjusted EBIT and net profit were at a record level of 2.3 billion and 1.6 billion, respectively. with a year-on-year underlying growth of close to 20%, demonstrating the ability of our group to maintain cost discipline also in an inflationary environment. On slide five, you can see how the continuation of the positive commercial trends are resulting in healthy revenue growth across all business units in our platform company. In mail parcel and distribution, nine months revenues amount to $2.8 billion, driven by solid double-digit parcel growth and resilient mail revenues. In financial services, revenues were at $1.4 billion in the quarter and over $4 billion in the nine months, up 14% and 5% respectively, driven by strong NII and positive commercial trends across products. Insurance services revenues were up 8% in the quarter and 7% in the nine months as a result of a higher CSM release and growing protection business. Posted pay services also posted record top line results for the quarter at 396 million and 1.2 billion for the nine months. Revenues continue to grow strongly thanks to double GD transaction value growth backed by e-commerce leadership and demonstrating the effectiveness of the post-EPA everyday ecosystem in driving card usage. Let's go to slide six and look at adjusted EBIT evolution by segment. Mail pass and distribution shows a 29 million euro EBIT improvement compared to the first nine months of 2023, supported by strong revenue momentum across products. Financial services operating profitability is resilient and improving in Q3, reflecting positive revenue momentum while absorbing higher network costs. Insurance services EBIT reflects the positive performance of our life and protection businesses. Finally, post-EPA services double-digit EBIT growth is driven by strong top-line performance. Let's move to a more detailed review of our numbers by our CFO, Camillo Greco. Over to you, Camillo. Thank you, Matteo. Let's move to slide number eight on made parcel and distribution. Revenues amount to a record $909 million in Q3 and $2.8 billion in the nine months, up 6% and 2% respectively. In Q3, mail revenues at $496 million were up 2% and in the nine months are up a solid 4% to over $1.5 billion, supported by a favorable business mix with our volumes of registered mail and repricing. Pulsar revenues are up 15% to $3.84 million in Q3 and up 13% to $1.1 billion in the nine months, supported by all customer segments with a continuation of the positive commercial trends over the first half of the year. Distribution revenues from other business units are up 13% in Q3, reflecting positive commercial trends and compensating for higher network costs. Adjusted EBIT is up 19% in nine months to $183 million, with the solid trend reflecting top-line growth and continued cost discipline. Let's look at volumes and tariffs on slide number nine. Parcel volumes continue to grow up a robust 24% in both the quarter and the nine months, with growth in all customer segments as we are managing increasing volumes and gaining market shares across the merchant spectrum, from large e-commerce platforms to small and medium merchants. Parcels delivered via the Postini network increased from 38% to 40% in Q3, in line with full-year targets for 2024. Let's look at pricing, where the reduction in average parcel tariffs in the quarter is related to a mixed effect with higher growth of parcels with lower pricing and lower unit costs. Moving to mail, the volume decline remains related to lower margin and recorded items. Higher margin registered mail volumes have been resilient with a small single-digit growth year-to-date. These, coupled with effective advertising actions, have generated a 12% increase of the average tariff year-to-date. Moving to financial services, slide number 10. Gross revenues are at $1.6 billion in Q3, up 13%, and at $4.7 billion in the nine months. Net interest income came at $648 million in Q3, up 15%, and close to $1.9 billion in the nine months, up 13%. This is the highest nine-month NII record since listing. Such record NII is driven by higher interest rates combined with our proactive portfolio management activity, allowing us to lock in higher rates, thus enabling an increased visibility in future portfolio returns. With the rates and spreads going down, unrealized capital gains in our portfolio are also building up. Postal saving distribution fees are at $430 million in Q3, up 15%, and at $1.3 billion in the nine months, up a solid 6%, also supported by improving net flows. Transaction banking fees are resilient to $180 million in Q3, reflecting the same current account pricing as in Q3-23. In consumer loans distribution fees, we are happy to see the improving momentum with revenues at $176 million in the nine months, up 33%, supported by higher volumes and higher fee margin. Asset management fees came at $45 million in Q3, up 15%, and $142 million in the nine months, up 33%, supported by higher assets standard management. Finally, adjusted EBIT at $642 million in the nine months is flat year-on-year, reflecting positive revenue trends and higher distribution network costs. Moving to slide 11, TFA's reached $593 billion, up $12 billion since the end of 2023. We constantly adapt our offering to have a safe, fairly priced financial proposition in all market environments, This has allowed us to reach 4.8 billion net inflows in the nine months. Let's look at each component. We reported a remarkable 3.9 billion net inflows in investment products, which is the sum of mutual funds and life investment and pension. Within this component, we reported record high net inflows of mutual funds, driven by resilient demand for target date products. Our life insurance business remains resilient in a challenging market, still recording positive net inflows year-to-date and improving versus Q2 thanks to the new commercial initiatives mentioned in our Q2 24 results conference call. Postal savings net outflows have materially improved versus last year as high maturities have been compensated through successful new commercial initiatives. such as premium products generating 7 billion inflows in the nine months. Deposits benefited from higher balances from PA clients, while retail deposits are resilient, confirming the stickiness and loyalty of our customer base.

Moving to slide number 12.

Insurance service revenues reached $399 million in Q3 and over $1.2 billion in the nine months, up respectively 8% and 7%, driven by both life and protection. Life investment and pension net flows have improved thanks to newly launched products. We continue to outperform the market with positive net inflows in the nine months of $0.7 billion and a lapse rate of 6.6% compared to an industry average of over 10%. in the first nine months of 2024. Life investment and pension revenues are up 8% in Q3 to $553 million and up 4% in the nine months at over $1 billion, supported by growing CSM release year-on-year. Protection revenues grew 44% in the nine months to $133 million on the back of $771 million gross return premium, up 22% year-on-year, and a combined ratio which we expect to remain in line with our guidance at less than 85%. Adjusted EBIT is at $344 million in Q3, up 7%, and just over $1 billion in the end months, up 9%. On slide 13, we show the CSM evolution. Normalized CSM growth increased to $1.7 billion in the nine months versus $1.3 in H1, with new businesses and expected return more than compensating the release. We expect this KPI to further improve in the last quarter of 2024 and in 2025, thanks to continued commercial focus and a normalizing market environment. Group CSM at the end of September stood at $13.6 billion, up from $13.5 billion in June 2024, providing strong visibility on the division's sustainable profitability going forward. Let's look at solvency ratio evolution on slide 14. Post Evita's group solvency tool landed at 322% at the end of September 2024. well above our managerial ambition of around 200% to the cycle, and already embedding the new remittance ratio of 100% to the parent company, more than compensated by internal capital generation. Our solvency ratio is currently between 305 and 320%. Moving to post-repay services on slide number 15. Record revenues for this business unit 2 up 6% to $396 million in Q3 and up 10% to $1.2 billion in the 9 months. The best third quarter in 9 months result ever posted. Payment revenues are up 5% to $294 million in Q3 and up 8% to $858 million in the 9 months. driven by double-digit e-commerce transaction value growth and a higher stock of IBAN-backed post-separate evolution cards, showing a 5% year-on-year increase in stock to 10.4 million cards. Telco revenues are resilient to $145 million in the nine months, with the new fiber offering mitigating lower mobile customer acquisitions. Finally, continued positive commercial trends in our energy business are confirmed, with 53 million net revenues year to date, also benefiting from lower wholesale energy price volatility. Yet again, thanks to strong revenue growth, adjusted EBIT grew 12% to 132 million Q3, and a remarkable 20% to 381 million in the nine months. On slide 16, we look at our workforce evolution. Since the end of 2023, the average headcount decreased to 118,400 as we continue to renew our workforce with 3,400 new hires to date. HR costs per FTE are up almost 3.5% to €46,000 as a result of salary increases and other items such as variable compensations, with the value added per FTE growing by almost 5% to €84,500 per FTE. Moving to group HR costs, slide number 17. Ordinary HR costs are up 3% in a month to just over €4 billion, reflecting the salary increases of the previous and new labor agreements, as well as higher variable compensation rewarding strong commercial results. In the nine months, ordinary HR cost of revenues are down to 41%. Moving to slide 18, non-HR costs increased by 7% to 3.2 billion in the nine months. In particular, COGS were up 198 million, mainly driven by 120 million of additional variable costs, reflecting higher business volumes and 89 million inflation impact. Our focus on cost discipline remains sharp and protecting our bottom line remains the top priority. Thank you for your time. Let me hand over to Matteo for a wrap-up. Thank you, Camillo. Let me finish on slide 19. This is our best-ever first nine-month financial performance so far in the history of Poste Italiana. In summary, we have again delivered a robust set of results while making progress against our strategic ambition as Italy's leading platform company. All of this is supported by strong underlying revenue growth across all businesses with disciplined cost management and continued growth of our clients' financial assets. As always, we remain focused on continuing to deliver with discipline as we progress on the execution of the Connecting Platform Business Plan. Our strong and sustainable financial performance and cash generation allow us to generously reward our shareholders while maintaining a rock-solid capital position. As mentioned at the beginning of the call, we will be paying an interim dividend of 33 cents per share, equivalent to 427 million euro, which is up 39% on last year, in line with our upgraded full-year 2024 net profit guidance of €2 billion and the new payout-based dividend policy. As always, I would like to thank all our dedicated employees and colleagues whose hard work and commitment are the key to the strong results we continue to achieve. Thank you, Giuseppe, and over to you for the Q&A.

Thank you, Matteo. We are ready to start our Q&A session. To ask a question, please press Start 1, and to remove yourself from the question queue, please press Start 2. Again, please limit yourself to two questions. The first question is from Manuela Meroni at Bancaimi. Go ahead, Manuela.

Yes, thank you, and good afternoon, everybody. Two questions. The first one is on the NIA. The NIA has remained stable in the third quarter. What can we expect going forward, also considering the refixing of edges in September at different rates? And the second question is on the outlook. You are well on track to achieve your guidance for 2024. I'm wondering if you can provide an outlook on 2025, at least in terms of macro trends, challenges, and opportunities. Thank you.

Thank you, Manuel. I will start with the second question.

We gave a stronger base of our revision of guidance in July today, guiding investors to 2 billion net profit minimum for 2024. And from what we see on the revenue side of the picture, on the commercial side, and on the cost side for 2025, we have reason to be relatively optimistic because the commercial trends are stronger. Answering your first question on NII, that has been stable and will be resilient in 2025. That was, you know, one of the key items of our March 2024 plan, the resilience of the NAI across the plan. And we have embedded assumptions of lower interest rates already in our resilience assumptions for 2025. The cost side of the picture, we are showing you this quarter that is growing the cost base mainly based on volumes. So we are able to manage the inflationary pressure. And let's not forget that We have also fixed the labor cost side of the picture, so we don't see uncertainties. We see the increases, but it's all embedded in the plan. And let's not forget that so far this year, we have not booked any active portfolio management projects. item in our financial services division, but clearly there is space for this year and for next year to keep bringing some money on the active portfolio management side of our portfolio activities.

Okay. Next question is from Azura Guelph at Citigroup. Azura, please go ahead.

Hi, good afternoon. Two questions for me. One is on the mail and parcel division, which continues to seem to trend much better than originally expected, and you have already updated the guidance at the beginning, earlier in the year, but it seems that this division is trending better than the upgraded outlook, so if you can give us some color on the average pricing for mail and probably impacted by the mix effect. There's still a strong volume in parts, since you can give us some color on that. The second one would be if you can, of course, comment anything about the potential placement by the part of your main shareholder. Press seemed to indicate that was going to happen quite soon. The recent political comment might hint to a much longer timetable. If you can share anything with us, that would be great. Thanks.

Hi, it's good to hear from you.

No visibility on the placement, so we're just waiting for instructions. And on the mail and parcel upgrade and additional scope for improvement, I will let Camillo Yeah, so in the first 10 months of the year, we have experienced the evolution of the mail business. It has been more positive than what we had originally expected in the plan, and that's what has led to our guidance upgrade in July. More specifically, we have seen more volumes, stickiness around mail. recorded mail and what we call integrated services, which are the more value-added and a bit more weakness on direct marketing and unrecorded mail, as you will recall is the less profitable. That is at the volumes level. Additionally, pricing-wise, we have been quite systematic in applying price increases to our customers. You might recall that we mentioned previously and we confirmed that we think that the pricing benefit on 2024, on 12 months of the pricing actions, implemented by the management should weigh around 60 million euro on the total of which three quarters are already in and the second part of the year probably is going to be a bit less dynamic as You might recall the last universal service repricing was done in July 2023. So, in effect, the second part of the year does not benefit of the traditional repricing. It's more like-for-like in terms of pricing dynamics.

Okay. The next question is from Alberto Villa, Intermont.

Go ahead, Alberto.

Hi, thank you for taking my questions. Two from my side. One is on the life business outlook. I've seen your back in net inflows in the third quarter, but this is masking a gross inflows of 4.6 billion and outflows for 4.1 billion. So I was wondering, with the lapse still at around 7%. So I was wondering with the scenario of declining rates, although maybe not as much as previously expected. What is your expectations in terms of life, new business going forward? And also, if you can comment on the profitability and the margins you are expecting on the new business you are underwriting right now. And the second question is on the expectations for the full year in terms of postal savings. I think you have a target of 1.8 billion against the floor of 1.6. So I was wondering if you are still confident of reaching 1.8 billion or more towards the, let's say the floor of 1.6. Thank you very much.

We start with the second and then let Camille elaborate on the life business. Yes, we had a target 1.8 in March, and we will try to get as close as possible. Certainly, we will be above the floor, and hopefully we will try to be above halfway in between floor and target. In terms of the life business, Camilla, you want to take this one? Yeah, so here we are probably in a better place than we were three months ago. We were coming out of the first quarter with positive net inflows and a negative second quarter. Third quarter we're again firmly in positive net inflow territory with 0.5 billion of net inflows which are 0.7 from the beginning of the year. As you might recall, there was also some self-inflicted pain there as the As far as the insurance business is concerned, we in fact captured all the incremental volumes in additional funds that flew through our asset management business in financial services for the tune of $3 billion. What we have done in July is that we have effectively changed the catalog where we have replicated those portfolios into our Vita business and that has resulted in robust performance that is continuing also in the months after the end of the quarter. With respect to the outlook towards year-end, we expect to have another quarter with positive net inflows. Clearly, we won't catch up on some of the gap of the first two quarters, but if you look at also vis-à-vis what we have in asset management, we see that there are increased number into double digits incremental revenues that we were not initially planning to have. With respect to the profitability, which was your second part of the question, the profitability is grossly in line with the one that we had planned. We have put in place a few promotions, but nothing that impacts the levels that we had at budget.

Thank you. We go to the next question. It's from Andrea Lisi, Equita.

Hi, Andrea. Hi, thank you. The first question is on the evolution of lapses. If you can update us on which trend should we expect for the coming quarters and still related to the life business, if you can think that the release of the CSM in the life business could be broadly stable over the next quarters. Thank you.

Yes, Camilo, you can take both words. Okay, so with respect to the lapse rate, you might have seen that compared to the second quarter, the lapse rate has reduced because it moved from 7.3% to 7.1%. These levels are still below what is marked, and we are at 5.6% year-to-date. We do not expect the lapse rate to materially reduce compared to the current levels, but the current levels are also in line with what we had at the budget. So that is as far as the overall lapse rate is concerned. The other point which we have already shared with some of you is that there is also an of self-managed labs, as what we are doing is we're also rotating the portfolio of some of our customers to shift the combination of policies from a fully capital-guaranteed to a more multi-class type of product, and the weight on our labs on that commercial activity is in excess of 100 basis points. With respect instead to the CSM, the CSM today has had an annualized growth of around 1.7%. We expect that to increase compared to what we had in the third quarter as a result of the continued dynamism in the activity. And as far as the release specifically is concerned, you might have noticed that there has been a slightly higher release in this quarter. This has to do with the fact that as rates have been going down, the ratio between reserves and MPVD reserves has moved around 20 basis points.

Thank you.

Thank you. Okay, next question from Marco Nicolae Jeffries. Go ahead, Marco.

Hi, thanks for taking my question. So if I look at the cards and acquiring revenues growth, you posted a 4% growth year-on-year this quarter, and this is coming down compared to the previous quarters. So shall we expect this trend of reduced growth on a year-on-year basis to continue or you think it's possible to see a rebound in the coming quarters and coming years? And then another question, after the agreement with unions you announced recently, so what progress are you making in transferring the parcels delivery from external providers to internal workforce? which should make your cost base essentially less sensitive to higher revenues. Thank you.

I'll take the second one. I'll leave Camillo on the first one, which was on poste pay, correct, Marco?

Yeah, post-pay and CARTS and acquiring revenue growth in general. Acquiring, acquiring specifically. No, CARTS and acquiring, yeah, both.

CARTS and acquiring, issuing and acquiring, okay. On the labor cost and what we're doing after we sign, obviously you sign the top agreement and then technically you need to go down and sign the... the nitty-gritty details both on the delivery side and on the postal offices side. And the flexibility that we're getting with the new contract is quite substantial because that allows us to create within the postal labor contract, so within the company, And I think it's quite a unique case. I'm on my way tomorrow to Washington for the European, for the global mail annual meeting. And I think, you know, I will check, but I believe we're the only one globally that can take a postal contract employee and ask him to do a express day at work. So we have already created an express line within the company and that is what is showing in the gradual increase of parcel delivered by letterman versus parcel delivered in the group by our express company or third party players that we have been using and we're still using in a diminishing way going forward. So, yes, I mean, in a short way, the answer is yes. We're pushing colleagues to do a different job. And, you know, if I look at the other side of the moon, which is the postal offices, we are also shifting the typical day of the postal office colleague being at the teller and receiving clients willing to make a payment slip which you know clearly has been our history and is still very important and you know very happy to keep doing that because it gives us the flow but what we are getting also thanks to the new labor agreement, we are getting our colleagues in the post office to move to a more relationship advisory selling mindset that obviously has to do with training. of the employee has to do with products that you give to your sales force, but it has also to do a lot with the labor agreement that we sign because, you know, if you don't have an agreement with the unions, technically you cannot ask a teller person to sell a checking account, just to give you an example. We don't have our hands free, and this contract obviously was aimed at giving us significant latitude and degrees of flexibility to change our service model. On the payment, yes, so with regards to payments, there are a few trends that I'd like to share. I mean, the first is that if the numbers that you have seen in terms of absolute growth are correct, but if you were to isolate from the total stock of cards, the cards that are not government funded, which are going towards expiration, The rest of the portfolio has been growing at 11%, which is more in line with what we had planned. So there is an element of the reservoir of cars that are being less used as the government is no longer funding subsidies on those cars. So that's point number one. Point number two, as inflation is going down, also the increase of item purchase have been growing less than before, as thankfully inflation has been a bit lower. on the reducing end. And then there is a third point which has to do with another item which is within payments which is what we call other payments which have to do with the revenues associated to the payment app called Pago PA which have been captured within this revenue item. Now what has happened is that after the liberalization of the energy market, a lot of the customers have gone back to paying with the payment slip, and the revenues on the payment slips are in transaction services in Banco Posta. Hence, we have recaptured some of that fees associated to payments in a different division of the firm, thus reconfirming our ability to adapt our model to different customer situations.

Thank you. Thank you. The next question is from Giovanni Razzoli at Deutsche Bank. Go ahead, Giovanni.

Good afternoon, everybody. Thank you for taking my questions very quickly. The first one, can you please update us on the rollout of the policy project and what are the first evidences in terms of traffic on the offices and the potential for cross-selling? which my perception is that as you roll out this very crucial project for the company, this should be also beneficial for your commercial activity. And the second question related to the environment, you have partially already answered my question, This sharp and fast decrease in rate seems to me that your commercial performance and overall your operations in financial services, in insurance, and in the postal savings should be significantly benefiting from this change of the paradigm in the next couple of years. Would you agree on this? Thank you.

yes i would certainly agree with your second statement giovanni and thank you for your questions and your comment yes the insurance worked i mean you're seeing it with the solvency evolution we announced today the peak ever solvency figure benefits from more or less this rate environment, which is, you know, probably we have room to go a touch lower next year and be still well capitalized and be back competitive versus, you know, fixed income bond or fixed income funds with our live products. that will also apply to postal savings, even though postal savings benefit to a large extent to the ongoing marketing and product offering renewal that we put in place with our colleagues at Casa Depositi and Prestiti that in the last two or three years have been supporting us very strongly in our efforts to keep the stock of fossil savings stable over time. And the financial services unit is certainly the one that has on an absolute and even more so on a relative basis the best outlook going forward in a stable to declining interest rate environment. So, yes, we're optimistic as if we're entering a period which is going to be good news for us. In terms of policy, I can tell you that we are short of 3,000 offices already active You know that we started a few months ago to issue passports, which has taken a lot of attention in the public domain. We have already served 23,000 clients on the space. I was mentioning passports. We are about over 200 cities and postal offices where we accept applications for passport renewals. And we don't have data of cross-selling and honestly, We are not going to focus on data on cross-selling. This is really a service we give to the general public. If we were to do the maths, you know, office by office, probably, you know, it would be, you know, not far from breakeven in the future. So it's not something that we have started with the aim of creating a business, Giovanni.

Thank you. I look forward to see policy in Milan soon.

Thank you. Yes, yes. Your mayor is asking. Don't worry. It's working for you.

Thank you.

Okay. Next question is from Michael Atten and Berenberg. Go ahead, Michael.

Fantastic. Thank you. I was struggling to find questions. You've answered in full to lots of them and they're lovely results. I did have two. The first one is on slide 24, and I don't want to make it technical, but It seems your net financial position is very strong, and I just wondered whether you can maybe comment on that. Obviously, it's nine months, it's not full year, so we may be missing a few things, but it does seem to have improved quite sharply. I just wondered if you can, how does that change what you had in the plan? And then the second question is going back to the mail-in password, it says, I think when we met very briefly in March, you explained that the business of the group is to make sure that people get paid. Obviously, the huge chunk of revenues, which is mail and parcel, really matters. Even small deviations there are key. I know you commented on mail being slightly better. but it seems as a kind of almost like a structural element, which is better there. How are you thinking about that at the moment, or are you kind of still waiting to see whether it's true that male can be flat? Thank you.

No, unfortunately, you know, I don't think we can call it structural on the male volume side. You... You can see that in the quarter, we've gone down 7% in terms of volumes. We're 8% in the annual. Lucky that we have been able to increase pricing on the regulated and on the market products significantly, and that allow us to show a plus 4% increase revenues in mail on the nine months and it's plus 2% on the two months but the acceleration of the electronic notification of some of the public administration items will eventually take place. We don't see it now. We will obviously be more careful in budgeting 2025, which you will see very soon, and I don't think it's going to be an impact in 2025, but we know that that side of the business is bound to suffer going forward. The structural thing, when you say male and parser, which we can, on the other side, say in a very forceful way that we are really starting to win or maybe we have won, is our position on the table in the parser business. Because when you're looking at 24% increase in volumes... When you're looking at 15% increase in revenues in parcel and logistics, you know, with the market growing probably in the high single digit, it means that you are gaining market share. And not only we're gaining market share, we're gaining client trust. Obviously, we are entering the peak season, and this business is very cyclical. If we will do a good November and December peak, usually that pays the way for a good 2025 because clients in logistics have a memory. If you do a good job when they need you, which is going to be now, and it's months that we're getting ready for the peak, then they will keep giving you volumes next year. Last year we saved in the peak, we were very well positioned in the peak and we rescued literally several important clients that were not well served during peak by competition. They came to us during peak for help and we retained those flows in 2024, after the peak of 2023. So that, Michael, we can clearly call structural, and we are only optimists, we only see positive signs. We, you know, we're not seeing yet, we are not getting evidence yet, because he's residual, but there is an international side of our parcel business that I'm mentioning today, but you will hear about it more over the next quarters. We've been working on this for the last three years, and we start to see the first tangible results, and you know that when you're talking logistics, The margins in international are, you know, in the double digits and maybe low teens. And when you're talking domestic, you are in the single, in the low single digits. So, you know, moving into the international will also help us from a profitability standpoint. On page 24, I will let the CFO do the work. Indeed, we have generated $817 million of cash since the beginning of the year. We have been performing. However, the target for the year-end, based on the presentation we have shared with you the capital market there was to land at 1.4 billion. So there are effectively 800 million difference, which as of now are explained by the fact that we are paying you guys 413 million of dividend, which is not here. And in addition, the CAPEX, as you see, 455 million is quite seasonal. If you go back to the numbers we had at the budget, we had a total of 1.2 billion of CAPEX. 900, let's say, post-Italian and 300 related to the policy, so total 1.2 billion. So we probably won't get to that amount, but we certainly have around 800 million of cash outlay between now and the end of the year, which are 430 the dividend, the rest the capex. In addition, obviously we do expect to have positive FFO, which will play in our favor, but you know, the current target of 1.4 billion at the end of the year is confirmed.

Thank you so much. Thank you. Okay. So we have the final question from EMP's BNP Paribas exam. Ian, please go ahead.

Hi. Thanks for taking my questions. They're both on cost. Firstly, just on looking at the cost growth, notably when you look at, say, the HR cost growth of 3%, comparing that to the very strong revenue growth, In your plan from the capital markets day, there wasn't much an assumption of operating leverage coming through the business. Looking at the growth of delivering versus the growth of your costs and the fact you have better visibility on those costs now, do you feel more confident on your ability to deliver operating leverage going forward? And the second one was just a quick question on the costs in mail and parcel, where in Q3, as you say, for the personnel expenses, were down versus both Q2 and Q3 last year. I'm just wondering if there's anything that you wanted to flag as to what drove that. Thank you.

Yes, Camilo, you want to start with the... Yeah, so I'll start with the first question. And if you go to my press, specifically talking about non-HR costs, I'm going back to the slide number. Here we go, sorry. Slide number 18, what you see is that, first of all, that we are keeping variable costs on variable revenues flat and fixed costs as total revenues flat too. So, you know, hence your question. But what you need to consider is that we have been materially outperforming our targets in terms of mail, parcel, and the payments and that has led to an increase of variable COGS, i.e. the cost that we have to incur as a result of these extra revenues. That you see explaining 100 million out of the 120 million what we call delta variable COGS. So that's an element of that. The other is that in what we call inflation COGS. Our network of post offices and our IT costs have increased materially compared to last year to the tune of $60 million. Now we've been able to offset some of these costs with better performance, as an example, on energy for the network. and few other services, but overall we did have to face a cost increase and probably has not been as high as we expected, but it's certainly higher than last year, but we are, however, beating budget. With respect to your question on HR costs and mail parcel distribution, the only thing I'd highlight is that Last year, as you may recall, we did pay a one-off premium to our colleagues related to the capital gain of sender. Effectively, through the capital gain of sender, we funded a one-off payment of circa €1,000 per employee, which went out cash in November on the basis of performance of August, May, sorry, August, September, and October. So what they're basically saying, seeing, is that the cost Q3-24 and Q3-23 is lower because last year we had a one-off charge of around $90 million, which is two-thirds of the amount we had to fund. Okay, thank you.

Okay, there's no further questions. Thank you very much.