Q3 2024 Deutsche Post AG Earnings Call
Ladies and gentlemen.
Speaker Change: Thank you for standing by it I mean, what's your chorus call operator, we're come and thank you for joining the DH Air Group Conference call. Please note that the call will be recorded you can find the privacy notice on DHL Dot com.
Speaker Change: Throughout todays presentation, all participants will be in a listen only mode. The presentation will be followed by a question answer session. If you would like to ask a question you May Press Star followed by one on you touched on telephone. Please press star followed by zero for operator assistance I would now like to turn the conference over to Martin Sieg Buck head of IR. Please go ahead Sir.
Speaker Change: Thank you.
Speaker Change: Good morning, and welcome to everyone out there for our Q3 2004 called following last week's release, we add today looking at the food.
Speaker Change: Set of Q3 figures, which I take it you have in front of you I have here with me our group CEO <unk> and group CFO, Melanie crisis, and we will follow the usual procedure and that means they're kicking off with the presentation over to your at UBS.
Speaker Change: Thank you Martin and good morning to everyone joining from bone.
Speaker Change: Start with page two the highlights for the group for the third quarter, what we observe globally is still a very heterogeneous development of <unk> trade, we have some trades in some modes that have been growing more in.
Quite pronounced in the third quarter, but we also still see markets with contraction, particularly also the freight market in Europe has been rather disappointing.
Speaker Change: Also the macro environment is falling short of the expectations that the others.
Well as US had for this year what is positive we do see the e-commerce trend affecting our b to C possible business being fully intact, we see.
Speaker Change: Good volume growth in the different markets, where were present with last mile delivery services and also the peak season.
Speaker Change: Looking quite positively from today's point of view.
Speaker Change: We had to adjust guidance slightly last week to now above $5 8 billion EBIT for the year from what was the lower end of 6.0 to $6 six before.
Speaker Change: This is still implies.
Speaker Change: At least 8% increase in EBIT for the last quarter, which we're confident to deliver we have a great focus on yield management across the different divisions, particularly also express.
We have a demand surcharge for the first time in place as have many of our competitors.
Speaker Change: Similarly for the parcel business in Germany, as well as some of the other domestic business. We are present and we have such a surcharge.
Speaker Change: For the fourth quarter are slightly longer. So this is providing us with confidence that we will see progress on yields and we also are generally.
Speaker Change: Positive about the cost measures that we've put into place productivity.
Speaker Change: Shaping up quite nicely.
Speaker Change: That definitely areas, where we could also seen a bit more positive development, that's particularly true for the GP in air freight, which we're going to talk about in more detail later.
Speaker Change: The strong free cash flow generation as the basis to provide attractive shareholder returns. So we remain committed to that.
Speaker Change: In the fourth quarter is traditionally a very strong quarter when it comes to cash.
That is important as we stay committed particularly to our dividend policy.
Speaker Change: On the following page you see.
Speaker Change: The chart that we've shown.
Speaker Change: Previous quarters as well the progress in the economic cycle when it comes to the <unk> freight market. So we do see it.
Speaker Change: In air freight and Ocean freight volumes, particularly out of Asia, China, playing a strong role, especially when it comes to ocean freight we've seen quite tight airfreight markets out of Taiwan, Vietnam for instance, but we also do see that the TDI market, our premium express product on the <unk>.
Speaker Change: <unk> remains quite subdued.
Speaker Change: So here it is particularly our yield measures that contribute.
Speaker Change: The earnings.
Speaker Change: On page four youll see the overview for the different divisions, starting with express a slight increase in EBIT year on year debt.
Speaker Change: Again on relatively subdued volume and weight development.
Speaker Change: We have stabilized the EBIT at a solid margin of 11%, obviously, we expect the seasonal impact in the fourth quarter to the positive.
Speaker Change: But generally trading.
Speaker Change: In line with our expectations.
Speaker Change: Before wording afraid we saw volume growth again that also provided a positive revenue momentum for the group.
Speaker Change: Have some structural effects, we have for instance, more exposure to beer wine and spirits, which traditionally.
Speaker Change: Trade small on backhaul trades, which have been less dynamic as it relates to rate development.
Speaker Change: But also some work to be done in particular in airfreight, we still had some contracts on the buying side that were quite elevated.
Speaker Change: On the other hand, we had some contracts that we still carried with us last year.
<unk> now cycled out.
Speaker Change: And particularly out of Asia, some imbalances in our buying and selling that was not as advantages as we would have.
<unk> to see that developing so.
Speaker Change: Not satisfied as it relates to the quarter in air freight, but overall also if we look at the productivity development.
Speaker Change: In global forwarding.
Speaker Change: That is developing on a very continuous and positive trend.
Speaker Change: Supply chain very steady positive development, despite some lower economic activity that we do see with existing customers. So a lot of the growth both in revenue as well as in EBIT is based on new business wins the pipeline there continues to be strong.
Speaker Change: Also in the right sectors with a REIT GP so.
Speaker Change: Again, a good quarter for supply chain.
Speaker Change: <unk>, 7% organic growth similar volume growth. So we do see still some yield pressure.
Speaker Change: We have some very strong markets, the Netherlands and U S included we have some other markets, where we still have a lot of competitive pressure and.
Speaker Change: US building out a <unk> network, where we still have some scale effects to overcome so that will continue for a while.
Speaker Change: The volume growth in E. Commerce again shows that the trends they are fully intact on post and parcel, Germany. We had another very good quarter as it relates to parcel.
Speaker Change: Has generally been a success story in the last years as many of you.
Speaker Change: Are familiar with.
The other hand, we had quite some shortfall of mail volumes.
Speaker Change: Some of that accelerated decline was expected.
Speaker Change: This is also why last year, we applied for an early increase in the tariff.
Speaker Change: Stem price.
Speaker Change: So.
Speaker Change: Net of one offs and earning of around 100 in the quarter, which is not satisfying and we're obviously still in the process for the stem price increase in 'twenty five 'twenty six so that is something which is still ongoing.
Speaker Change: If we go to page five the factors influencing our guidance.
Speaker Change: You have those structural factors.
Speaker Change: That I already talked about as well as the cyclical factors I think we can conclude and you'll also see this in the small graph on the bottom right hand of this page that we are progressing in the economic cycle.
Speaker Change: We have seen stronger revenue growth already in Q3 after.
Five quarters of reducing <unk>.
Speaker Change: Revenue.
Speaker Change: A slight growth in Q2, 6% growth on the top line in Q3.
Speaker Change: And also on the EBIT side.
Speaker Change: Basically flat for Q3 year on year, but do expect in excess of 8% increase for the fourth quarter.
Speaker Change: And based on the trading we see in October we are confident to deliver on that.
Speaker Change: On page six the guidance as we have now adjusted to with the announcement last week.
Then five 8 billion EBIT for the group with a split.
Speaker Change: Of greater five five for DHL in Pnp now around $800 million.
Speaker Change: As well as this being reflected in the free cash flow on the midterm, we adjusted that to bigger than seven mainly for two reasons, one being the slower economic recovery, especially in some of the <unk> freight markets, which will obviously have a significant exposure to.
Speaker Change: Not only in express, but that is obviously an important factor in our overall earnings situation, but also the preliminary decision of the network agency that is falling short of what we should be.
Speaker Change: Be granted as margin in Pnp by law.
Speaker Change: So that is still to be seen whether that now fully materializes.
Speaker Change: But that is a factor that we came to know end of September which now is reflected in this updated guidance.
Speaker Change: Looking a bit further into the future with the strategy 2030 on page seven you have again, the summary of our assumptions as it relates to that.
Speaker Change: Time horizon. So we assume that we return to normal GDP growth of around two 5% to 3% in real terms.
Speaker Change: Which then translates into underlying volume growth.
Speaker Change: As shown on the right hand side of this graph in terms of our development relative to the market. Our explorations are summarized on page eight we want to further but gradually increase market share in express.
Speaker Change: We do see that also in the last three months, we have delivered really good quality.
Speaker Change: Our internal thresholds and that is a key driver of customer loyalty in this segment.
Speaker Change: So that is going to continue to be our strategy that we focus on the premium end of the market and do not compromise on quality.
Speaker Change: And combine this excellent service offering with the yield discipline that I think we have shown in recent quarters on DG F. We need to still prove that we are able to outgrow the market. We are very much aware of that.
Speaker Change: We have done is work on the system and process side.
Speaker Change: We are well underway as it relates to productivity development.
Speaker Change: But we still need to.
Speaker Change: So that we can outgrow the market also in terms of yields.
Speaker Change: And the measures.
Speaker Change: That we're going to present, how are we going to do that supply chain can build on our strong track record already.
Speaker Change: A different combination of levers ranging from supporting real estate development to the extensive deployment of robotics and automation. So we'll continue that strategy with a focus on specific sectors, which we see as particularly attractive E. Commerce again as you know a heterogeneous.
Speaker Change: Portfolio of last mile activities, some of them performing very well others work to be done and.
Speaker Change: Also patient to be applied as we grow our market position and then with Pnp stable market shares to continue the transformation into.
The leading parcel player in the German market, we are roughly three times the size of our next competitor in the parcel delivery market, which obviously is critical.
Economies of scale matter in this game and we have through our legacy in this market the structural factor cost disadvantage. So the relative scale has actually improved in recent years.
Speaker Change: Due to the stronger fragmentation of volume onto our competitors with the entry of Amazon logistics.
Speaker Change: Page nine summarizes what our short term focus is.
Speaker Change: You will have seen that the capex flexibility continues to work out well.
Speaker Change: Flex down Capex in those areas, where we do not grow we're very mindful of not increasing capital intensity. Further we think we are at a healthy state. We do good investments in the fleet of express for instance, which are paying off.
Speaker Change: But especially on the real estate side.
Speaker Change: We need to focus on purely owning strategically important assets and we will do that cost management I think is well underway. We do this with a steady hand.
Speaker Change: We're not in favor of abrupt changes.
Speaker Change: But also if you look in the Stat book on the development of staff in areas like DTF.
Speaker Change: Despite consolidation of the Dubai activity.
Speaker Change: The development is down year on year. So I think we're showing good development on productivity and obviously the peak season is on everybody's mind now is critical especially in those areas, where we do charge a surcharge be the peak season or demand surcharge that we deliver quality and.
We see ourselves well underway to do so.
Speaker Change: As it relates to strategy 2030.
Speaker Change: The focus for the division and.
Speaker Change: And the common denominator remains quality driving customer loyalty and also the ability to charge premium yields.
Speaker Change: We would want to further accelerate growth, we've shown 6% topline growth in the quarter, but that obviously needs to be broader and less dependent on rate developments.
Speaker Change: And we want to achieve that by continued focus on e-commerce, but also markets that are fast growing from a geographic perspective.
Some specific sector life science, and healthcare and renewable energy being two of them <unk>.
Decarbonization continues to matter, we continue to buy even in this economically more demanding situation sustainable aviation fuel and to continue to invest in carbon neutral assets b that electric vehicles or alternative heating systems, we do see a gradual pickup of cash.
Speaker Change: The demand and willingness to pay for such low carb or no carbon services, but we're obviously still investing ahead of the curve also to ensure that we have sufficient supply, especially as it relates to sustainable aviation fuel.
Speaker Change: Further and Youll see that on page 10 deep.
Speaker Change: Deep dive on the divisional plans and development in our capital markets Day in April early April of next year. We will then give a granular overview of what strategy 2030 means for each of the divisions and particularly how we're going to accelerate growth in those different businesses.
Speaker Change: With that I will hand, it over to Melanie for some more details on the development of the different divisions.
Melanie Crisis: Thank you Tim and good morning also from my side to all of you out there.
Melanie Crisis: I will now take you in some more detail through the most relevant business development, focusing on express global forwarding and Pnp as well as on our cash generation and capital allocation.
Melanie Crisis: So let me start with some overall good news and that is for me. The express Q3 performance on page 11.
Melanie Crisis: My summary of the express performance in Q3 is that we continue to go well.
Melanie Crisis: Macro environment.
Melanie Crisis: <unk> volumes stay volatile hovering around flat year over year development might be.
Melanie Crisis: <unk> volumes are down year over year also reflecting our focus on the right TDI shipment profile at the right price.
Against this volume development, you can see on the right side that our compensating lever sector, yes.
Melanie Crisis: We have constantly flex our total air capacity up and down through the year to adapt to the volume calculation.
Melanie Crisis: Of course keep our focus fully on the premium TDI segment of the market and as a result weight per shipment is up year over year or said.
Melanie Crisis: Said differently total rate is down less than volume as we maintain high discipline on which volume we take onboard.
Melanie Crisis: And this is also reflected in yield.
Melanie Crisis: We see continued strong contribution from pricing in the current volume environment.
Melanie Crisis: Presentation of the peak surcharge fully on track.
Melanie Crisis: Of course, we look forward to a pickup in volume to drive EBIT growth again, and we expect in Q.
Melanie Crisis: Q4 at least from a seasonal.
Melanie Crisis: Perspective on volume growth.
Melanie Crisis: We have once again shown that we are also able to adapt to the express network to maintain a solid double digit margin even in a prolonged volume weakness.
Melanie Crisis: So overall for Q4, we expect good EBIT growth in express and the strengthening of the margin.
Melanie Crisis: That will include the unexpressed, let's now turn to what has not worked out as planned and forwarding side on page 12 to be as already mentioned some of the client.
Melanie Crisis: So on the positive side forwarding volumes continue to recover from the double digit declines last year, we have seen a good peak season and ocean freight and that has also driven a good profit contribution from ocean freight in Q3.
Melanie Crisis: However, an assay we have been preparing for a strong peak season demand uplift and what we have seen in the last.
Melanie Crisis: This is reflected in the Q3 GP per tonne development and based on the volume development. So far in Q4, we also do not anticipate that.
Melanie Crisis: Significantly improve in Q4.
Melanie Crisis: We have reflected that in our 'twenty guidance update accordingly.
Speaker Change: So did you have was the main disappointment versus initial 24 expectations and do you have now less EBIT contribution from the peak season embedded in the new guidance.
Speaker Change: Importantly, <unk> also mentioned that already we are working on the most fluctuate topic and there is good cost discipline.
Speaker Change: And ETF remain focused for example on productivity, which you can also see in our numbers.
Speaker Change: Turning to page 13, Pnp I want to quickly talk about what happened in Pnp in Germany This quarter.
Speaker Change: On the women.
<unk> pointed out again to the roughly 70 million Euro positive effect that we had in the numbers here related to positive developments in some legal proceeding.
Speaker Change: So once you strip that out EBIT was clearly disappointing in Q3.
This is the main reason being a stronger than usual decline in mail volume in particular in dialogue marketing.
It means advertisement volume.
Speaker Change: While this has some cyclical aspect. It is of course most of our part of the biggest structural may decline trend. So.
Speaker Change: So continued network adaptation and cost cutting is one part of the answer and of course getting an appropriate price increase at UBS has already pointed out.
In terms of outlook you have seen that we took.
Speaker Change: The TNT guidance down to around 800 million Euro for this year.
Speaker Change: We continue to expect to reach the 1 billion minimum threshold of 25% driven by cost measures and of course path for growth.
Speaker Change: I'll finish on a positive note on that side not to forget about profit growth profit performance was good.
Speaker Change: It's a combination of volume and price growth and the colleagues Ofcourse hearing uplift significant peak season acceleration week.
Speaker Change: That was a quick snapshot of what happened in three of the divisions.
By tenant.
Speaker Change: One in line with expectations I'm, not going to dive into details here.
Speaker Change: Turn to our cash flow statement instead on page 14, and this is actually from my perspective quite simple to explain.
Speaker Change: I think the main message is the Capex flex is working with IVF.
Speaker Change: <unk> talked about so.
Speaker Change: Adjusting our investment towards a more subdued macro environment and then that way we are offsetting in the cash flow statement this lower EBIT progression.
Speaker Change: The one negative thing to point out in the Q3 cash flow statement is that we have seen a working capital buildup and global forwarding.
Speaker Change: That was partially to be expected given the revenue growth you have also seen that with peers, but particularly in Q3.
Speaker Change: Slightly stronger also driven by the ocean freight.
Our growth pattern between Athene. This is going to normalize again over time, but not necessarily in the short term and that is why our free cash flow guidance.
Speaker Change: Earlier to the range between $2 8 billion for the year 2004.
Speaker Change: Let me, perhaps also apps.
Speaker Change: At this point in time that we have consciously decided against any short term optimization methods that would have allowed us to upward free cash flow and also the EBIT guidance just for the sake of confirming guidance.
Speaker Change: Know that these measures have a short term benefit, but then quickly universe at this time.
Of the 25 performance and that is not what we would consider sustainable profitable cash generation and therefore would you say that again.
Speaker Change: Measure.
Speaker Change: Okay.
Speaker Change: Capex management, we already briefly talked about it but he is included on page 15.
Speaker Change: Two funds again illustrates the Jeff mentioned Capex flexibility.
Speaker Change: Also putting that into a multiyear context in line with the prolonged volume weakness, we have reduced capex spending in the last three years. There is another step down year to date and that is also true for almost capital intense division.
Speaker Change: Correct.
Speaker Change: That is done in a balanced way. This does not mean that we are foregoing investment opportunities that address attractive structural growth opportunities going forward as outlined in our strategy 2006.
Speaker Change: Talking about sustainable value creation page 16 gives you an update on our return on invested capital.
Speaker Change: Two additional sector.
Speaker Change: Firstly on a 12 month rolling basis return on invested capital is declining year to date 24, which is actually not really surprising.
Speaker Change: I've seen the yielding a decline in EBIT.
Asset base is not shrinking for mathematically.
Speaker Change: It gives you a small deterioration in ROIC.
Speaker Change: The key to really increase will be the EBIT recovery in the shorter term while in the long run metric will of Qualcomm optimized capital return.
We'll cycle.
The second observation is that it provides you as a kind of ROIC ranking on the right side, the three big DHL divisions being the one.
Speaker Change: <unk> return on invested capital above group average and the Technical reminder, once again, our return on invested capital number fully into both goodwill and thesis and the invested capital.
Speaker Change: With like differently.
Speaker Change: We're taking this very.
Harsh.
Speaker Change: Perspective, they are particularly on the east assets and you can have a lengthy philosophical debate about what that does.
Speaker Change: The right approach, but we are doing it consistently in this way.
Speaker Change: Turning to page.
Speaker Change: <unk> catheter.
Speaker Change: On shareholder returns.
Speaker Change: I think.
Speaker Change: Nothing fundamentally new on page 17 regarding dividend and share buyback numbers.
Speaker Change: It's important for us given our guidance update and the fact that we already had a 59% payout ratio last year to emphasize here that dividend continuity is there.
Speaker Change: Very important element of our finance policy and of course, the dividend will ultimately be voted through the usual process next year, but we want to with yesterday that dividend continuity ensuring that this dividend is at least on the same level as last year.
Speaker Change: This is Lee written in our finance policy and therefore, we are not hot powered by the 60% upper end of the nominal payout Colorado law.
Speaker Change: And I think what we also have to bear in mind is that naturally both our cash flow and our balance sheet position at.
Speaker Change: At a significantly stronger and very solid level. When you think back to where they were five years ago that we clearly have the foundation.
Speaker Change: On the dividend continuity.
Speaker Change: That already takes me to a brief conclusion on page 18, Anthony is the continued cyclical downturn out there.
More prolonged than all of us had expected and hoped for but we can weather. This very relevant all the established and sensible lever, which we have also used in the third quarter of 2004, especially to protect free cash flow.
Speaker Change: And we have a clear strategy, there and how to accelerate sustainable growth based on this strong basis going forward.
Speaker Change: And does that Martin over to you and to your questions.
Martin Sieg: Thank you Melanie and the operator will now please initiate the Q&A round.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session anyone who wishes to ask a question you May press star and one on the touch tone telephone.
Speaker Change: You will hear a tone to confirm that you have entered the queue.
Speaker Change: If you wish to remove yourself from the question queue, you May press star two.
Speaker Change: Participants are requested to vote handset when asking a question.
Speaker Change: One was the question you May press Star one at this time, one moment for the first question.
Speaker Change: The first question come from <unk> <unk> from Bank of America. Please go ahead.
Speaker Change: Melanie and <unk> and Martin and two questions. Please firstly just on E. Commerce. So in express DTC volumes are down over 10%.
Speaker Change: Can you talk about what's driving that is it kind of all the Chinese e-commerce volumes coming out from last year and why do you thing.
Speaker Change: This.
Speaker Change: It's understandable form parcel volumes in Pnp, which are up 5% any e-commerce, which are up 8%. So that's my first question and then secondly, you talked about clearly the guidance being lowered for this year in 2006 and I know you don't have a guide for next year.
Speaker Change: Can you talk about just the building blocks for next year and trend for each segment.
Speaker Change: Uh huh.
Speaker Change: And your expectations currently thank you.
Speaker Change: Alright, Thank you Emily Barr I would take the first millennia the second question.
In terms of the development of B to C volumes and the difference that you rightly observed between express in the domestic segment I think its.
Speaker Change: Two elements that play out here.
Speaker Change: In the current situation, we still see a lot of E comm players being rather focused on cost.
Speaker Change: And this has to do still will be after COVID-19 situation of capacity in fulfillment and other areas being built out.
And markets not being as strong yet.
Speaker Change: And thereby being quite some pressure in the system also on the side of the E Tailers.
Speaker Change: Which then.
And again, we have seen this in previous cycles as well leads to a greater focus and cutting more premium shipments and.
Speaker Change: In this part of the cycle, putting more into the deferred space.
Speaker Change: That is definitely something that we do observe also for some domestic express shipments you aware that we're also in some domestic markets, even though not a volume play out but again at the high and the other is indeed that we.
Actively have focused on what's profits.
Speaker Change: Profitable for Us and also not wind into the risks for the peak season in being burdened, particularly with volume on the Trans Pacific, which is high risk as it relates to its volatility and then the resulting need to procure.
Speaker Change: Afraid charters at very high prices. So we have reduced our exposure very consciously.
Speaker Change: In some of those trades and that is reflected in the express b to C volume figures.
And then what does that overall I think.
I mean, whether it's now 8% compared to 10% I think there is clearly good growth in the domestic E com business.
Speaker Change: Well I think the fundamental structural growth driver here has proven its validity both in passenger Germany as well as they.
Speaker Change: Fee income division.
Speaker Change: Yes, with regard to guidance I'm 25, I mean as usual, we will give the guidance in March.
Speaker Change: <unk> focused on.
Speaker Change: Concluding the year 'twenty four.
Speaker Change: Strong fourth quarter as <unk> already said.
Speaker Change: The lower end of our new guidance range implies that we will grow in the fourth quarter again, 8%.
Speaker Change: Thank you.
Speaker Change: Now with Q3 being roughly on last year's level in terms of EBIT getting back into EBIT growth and finishing the year 'twenty four.
Speaker Change: On this positive dynamic.
And also give us a good basis into 2005, and then we will give you the guidance in March.
Speaker Change: Alright.
Speaker Change: Great next caller. Please to the next question comes from <unk> <unk> from Bernstein. Please go ahead.
Speaker Change: Commodity nanometer monitored via combined.
Two questions. Please.
Speaker Change: On the PMT letter volumes.
Speaker Change: In 2022.
Speaker Change: That market metal volumes to decline between minus two minus 3% per year through 2025, but now according to the regulator in your numbers.
<unk> will be substantially above that.
Speaker Change: What exactly was driving that maybe could you comment on that.
Speaker Change: And do you expect sort of a catch up decline of volumes.
Speaker Change: Germany that has significantly sort of underground ore.
<unk> declined less than other European markets do you expect to catch up decline of those volumes going forward.
Speaker Change: And then are you going to buy.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: So thanks to be is for both questions.
Speaker Change: As you know, we generally don't talk about.
Speaker Change: Acquisitions, taking your second question first and specific targets. However, if you go through all of our criteria list.
Speaker Change: I think we had an earlier case, which had similar characteristics you will find that its not matching our criteria.
Speaker Change: Well.
Speaker Change: And we feel quite attached to those criteria so that might address that question regarding gx Ole.
On the latter side I think we need to distinguish between mail.
Speaker Change: Asian and advertising mail.
Speaker Change: Mail communication, we see a gradual increase due to also certain government agencies.
Getting some progress underway with digitalization, which has been extraordinarily slow in Germany, which has a lot to do with our federal and John.
Speaker Change: Yes.
Speaker Change: With our structure of of public administration from community level to state level two federal level.
Speaker Change: At the community level and district level also playing an important role as.
A lot of the rule setting there is not aligned in making it difficult to have standardization and thereby digitalization across those so we've seen some areas where this is now progressing and this is leading to a faster decline than we traditionally had I don't think it would lead to a catch up.
Speaker Change: Effect that we make step changes to the level that other countries have already achieved because again, if you look at the digitalization of particularly public services in <unk>.
Speaker Change: <unk>.
Speaker Change: In the Nordics for instance is a completely different level than what we have achieved here on the advertising mail. It's more also in our hand and it has always been.
Quite cyclical.
Speaker Change: So.
Speaker Change: So volatile.
Speaker Change: But obviously, we need to look at pricing there to make sure that the remains profitable and we have taken certain yield measures to also elevate the yield in this segment, which then is a conscious decision that we know drives also some.
Speaker Change: Substitution the elasticity to pricing is significantly higher for advertising mail given that you have also digital alternatives there than it is for mail communication. So this is more in our hands as well as influenced by the economic cycle, we don't expect for advertisement.
Speaker Change: Such a sharp decline as we've seen in Q3.
Speaker Change: But going forward, we will also see more decline than we have historically observed.
Speaker Change: All right so.
Speaker Change: Thank you for your questions and we continue with the next caller. Please next question comes from Nick <unk> from UBS. Please go ahead.
Speaker Change: Alright, thanks, very much hi, Thank you for taking my questions maybe the first one on the 2025 moving parts in terms of profitability.
Speaker Change: We had this mail volume weakness.
And as well as the GP per unit, how should we think of the potential headwinds to profitability from these two factors in 2025.
Speaker Change: And equally so.
Speaker Change: I think some of your peers have also meet the GP per unit in Ocean has been maybe.
Speaker Change: Maybe artificially high due to the Red Sea in Q3.
Speaker Change: So how do you think about the development into 2025 here.
Speaker Change: And secondly.
Speaker Change: Zooming gain on express.
Speaker Change: Could you give us a bit of color on what youre seeing or your expectations in b to b and B to C volumes into into Q4, excluding the China E Commerce players.
Speaker Change: And Moreover, how how youre managing your resources your capacity and number of employees going forward. The next breath. Thank you.
Speaker Change: Yeah. Thank you Christian for both questions.
Speaker Change: On the moving parts for 2025, especially made I think it is important to note that.
Speaker Change: Yes.
Speaker Change: We will see will be allowed to increase prices and mailed the current proposal of the regulators 10, 6%.
Speaker Change: For the.
Speaker Change: Bucket of private mail across all buckets, which also that includes.
Parcel shipments from consumers so out of our retail networks.
Speaker Change: That is roughly nine 6%.
Would be allowed to increase in prices.
Speaker Change: We do.
I do not think that this is.
Speaker Change: All that we would be.
Speaker Change: Due by law. So there is still an ongoing debate.
Speaker Change: We will see a price increase and that will obviously support 2025 earnings for Pnp relative to this year, even if we have a continued slightly accelerated decline in mail volumes.
Speaker Change: As it relates to the GP development in global forwarding first of all in the cross comparison.
Speaker Change: Many of you know that but just to remind everybody. It is important to see.
Not only the GP, we report on the product effort and ocean freight, but we different from some of our competitors.
Only reported transport related GP, there, whereas customs clearance handling some of the haulage is in others.
Speaker Change: For those of you who do a comparison there it's important to take the other bucket into account.
Speaker Change: The less as Melanie said, we're not particularly satisfied on the airfreight side and that effect is going to continue in Q4.
Speaker Change: As it relates to the.
Speaker Change: <unk>.
Speaker Change: <unk> per unit on Ocean in the Red Sea effect.
Speaker Change: As always the case that a.
Speaker Change: Very calm undisturbed ocean freight market with a gradual influx of overcapacity is not.
Speaker Change: Good for forward yields.
Speaker Change: The topic, we have and this is now continuing since many years is that there's always one or the other disruption coming coming back.
Be that.
Speaker Change: Port disruptions and we definitely have a lot of infrastructure infrastructure constraints not only strike related but also structurally that lead to more waiting times of shipping, thereby capacity absorbed we obviously have the significant detour of the Red Sea, we have some carriers who have accumulated quite.
Quite old vessels that are due for scrapping so theres a long list of things.
Speaker Change: If you believe that the world is going to be calm and without any disruptions in the red sea situation being resolved that will not be good for ocean freight forwarding.
Speaker Change: It is very difficult for us to predict that experience shows that there is one or the other disruption.
Speaker Change: And volatility as Intendency good for the global forwarding business or the forwarding sector at large so that's.
Speaker Change: All I can say, it's very difficult to forecast ocean freight rates and it's rather difficult to forward our development of GP per unit in that sector.
Speaker Change: And then on the express question. So clearly we expect volume decline in the fourth quarter.
Speaker Change: Clearly also tourism from the E com.
Speaker Change: <unk> already early in the year and we don't bank on a very dynamic b to B development in.
Speaker Change: The fourth quarter.
We are focusing on is first of all having great service quality. So.
Speaker Change: You will have seen.
Speaker Change: And all of that head count is down.
Speaker Change: Press, but we're doing that in a balanced way business.
Speaker Change: Asking our customers for significant demand surcharge.
Speaker Change: In the fourth quarter and that is why good quality is paramount.
Speaker Change: At the same time, we are of course, managing cost and capacity.
Speaker Change: In light of the volume and rate development.
Speaker Change: On balance the clear expectation is that we will see good EBIT growth in it.
Speaker Change: In the fourth quarter and also our margin expansion.
Speaker Change: Thank you very much.
Speaker Change: Thank you Christian and onto the next caller. Please next question comes from <unk> Kumar from Citi. Please go ahead.
Speaker Change: Thanks again for the time I've got two questions here on the demand charge offs.
Speaker Change: In jewelry units and that it is based on different trade lanes on can you comment on the.
Speaker Change: Evolution of these demand so charter cost.
Speaker Change: It means that it has been with more sticky and that had seen a big increase.
Speaker Change: And then the second one is on the.
Speaker Change: Potential or DHL fluke forwarding from potential customer.
Speaker Change: Customer.
Speaker Change: On the back of <unk> being brought on by DSV can you quantify what is your expectation on.
Speaker Change: Volumes or customer gains from that transaction. Thank you.
Speaker Change: And maybe I'll start with the first one on the demand charge and what we have said from the start is that our approach in express is that we don't do piecemeal.
Speaker Change: On the demand charge, which is of course differentiated by trade Lane as you rightly pointed out and we have held that stable. What we are seeing in competition is.
Speaker Change: They have now gone through multiple rounds of adjusting their demand surcharge. So overall on more planes. When you now look at it the orders of magnitude.
Speaker Change: Comparable the feedback we get from our customers is that they do appreciate the fact that would be towards an early on what to expect in that they were able to plan on that basis.
Speaker Change: Together with a good quality is one of the reasons why we see that.
Speaker Change: Very good stick rate under demand charge.
Speaker Change: On <unk> I think it's too early to tell.
Speaker Change: We do see this as an opportunity.
I think we have.
Speaker Change: A lot of the homework done and are ready to onboard additional customers on the global forwarding platform.
We do see a lot of talent being in the market maybe.
Speaker Change: More getting more knocks on the door, then we would naturally expect or maybe even like.
Speaker Change: So there is some.
<unk> element of that I think to be observed currently.
Speaker Change: As it relates to talent in the sector.
Speaker Change: How this translates into customers diversifying away from our combined DSV Chancre entity I think is too early to tell we do see some customers that.
Speaker Change: Are concerned about this but I cannot yet quantify to which extent we can benefit from this I do see that we will benefit but the amount is difficult to quantify.
Speaker Change: Okay. Thank.
Speaker Change: Thank you.
Speaker Change: Alright, Satish things and we continue please.
Speaker Change: Christian come from <unk> <unk> from <unk>. Please go ahead.
Yes, good morning, everyone. So I just wanted to come back on the demand side.
Speaker Change: When you say high compliance rate.
Speaker Change: Are there any pockets.
Speaker Change: Across your customer base and then.
Speaker Change: How does it relate to your credit rating for EBIT Guide, obviously youre sector.
Speaker Change: Get the EBITA was $5 8 billion, but is there possibly be better.
Speaker Change: So I'll touch maybe towards $6 billion six.
Speaker Change: 6 billion orders on possible at all.
Speaker Change: Well. Thank you for that question I think the Riemann surcharge surpasses our expectations as always reluctance with customers to pay more.
Speaker Change: That's quite natural but.
Generally this is fully in line or better than our expectations and we don't see that.
Speaker Change: Now changing in the weeks to come.
Speaker Change: The Hot weeks also fully express yet to come and as.
Speaker Change: As you know after the Christmas season in the Western World, We have Chinese new year, which grades, particularly out of those head haul lanes.
Speaker Change: The additional demand that typically then also leads to customer stickiness.
Speaker Change: So again fully in line or exceeding our expectations and thereby not a big variable from our perspective any more.
Speaker Change: Whether we will do better I think more depends on the general economic development across all divisions.
Discussed.
Speaker Change: <unk>.
Speaker Change: Global forwarding air freight and Ocean freight I think theres a lot of volatility in both of these markets. We do see the Shanghai freight index last week picking up to Europe, nearly 10% week on week.
Speaker Change: So.
Speaker Change: We have seen volatility like that before.
Speaker Change: But.
Speaker Change: It is uncertain, how this will unfold until the year end and similarly.
Speaker Change: Afraid markets like Taiwan, Vietnam being extremely tight for some weeks, which at times also and we've seen this in Q3 on the negative side also leaves us exposed to some very expensive buying but on.
Speaker Change: Obviously on some lanes also presents significant opportunity for us. So this is more what still drive some potential upside in the fourth quarter.
Speaker Change: Okay. Thank you.
Speaker Change: Wonderful.
Speaker Change: Continue with the next question please.
Speaker Change: Our next question comes from Andy Chu from Deutsche Bank. Please go ahead.
Andy Chu: Good morning, two questions from nicely.
Speaker Change: <unk>.
Andy Chu: Two questions. Please the first one is around the guidance.
Andy Chu: Could you just confirm what the Q4 is going to be a clean quarter should wait.
Andy Chu: We expect any sort of one offs, but when I look at Youll reagents.
Andy Chu: Q4, requiring.
More than 8% year on year.
Andy Chu: Im little bit confused maybe I'm running the wrong numbers, but Q3 last year I think you had an underlying EBIT of close to $1 5 billion.
I think unique close to $1 billion to hit the $5 8 billion minimum.
Andy Chu: So that kind of implies maybe double the sort of 8% growth year on year. So maybe you can clarify.
Andy Chu: What I'm missing.
Andy Chu: And then secondly on the on the F rights.
Buying patterns I guess typically half right is asset light.
Andy Chu: You shouldn't really be exposed to kind of.
Andy Chu: Following.
Andy Chu: What's actually happened.
Andy Chu: Time round.
Andy Chu: That.
Andy Chu: Definitely can be rolled out going forward, because typically as you try and match obviously youll.
Andy Chu: Youll revenues to your to your cost in terms of purchasing.
Andy Chu: Yes.
Andy Chu: Yeah.
Speaker Change: Yeah. Thanks, Andy I'll start with the second question first so while it's asset light, it's not uncommon for us and also for our competitors too.
Andy Chu: Have different exposures on the buying and the selling side.
Speaker Change: Specifically here had some contracts.
Andy Chu: Out of Covid.
Andy Chu: That.
Andy Chu: At relatively elevated rates, which are not entirely back to back with customer commitments. So that is one factor but is also on the other side that we had some quite favored us buying where we had care is walk away due to the Boeing issue, which.
Andy Chu: It leads to a force measure.
Andy Chu: For us.
Andy Chu: So that is for instance, also a piece of that.
Andy Chu: We as we said are still not satisfied by the GP development in the effort.
Andy Chu: Business also relative to our competitors for the quarter and we've obviously spend time to look into this.
Andy Chu: And to define corrective actions will carry definitely some of that into Q4 as well so it will stay with us.
Andy Chu: This level.
Andy Chu: Pending other market developments.
Andy Chu: This year.
Andy Chu: Else on Q4.
Andy Chu: He might add to that we generally expecting a clean quarter with that reported growth that we mentioned.
Speaker Change: Yeah. So I can confirm that clearly expectation for Q4 is that.
The athene underlying increase.
Speaker Change: I think.
Speaker Change: Youre, making reference to.
Speaker Change: One off effects, we had in the fourth quarter of last year from the.
Speaker Change: The revaluation following the Danfoss.
Speaker Change: Dubai acquisition, which gave us about 14.
Speaker Change: $14 million in positive tailwind on the global forwarding numbers and mathematically it's of course, correct. If you take that out we expect.
Speaker Change: Hi.
Speaker Change: EBIT growth in Q4, but again, that's based on that growth.
Speaker Change: Thank you very much.
Speaker Change: Thank you Amy Thanks, Andy and still five names in the queue next caller. Please and the next question comes from Alexia <unk> from JP Morgan. Please go ahead.
Speaker Change: Yes, yes.
Speaker Change: Morning.
Speaker Change: My questions I have.
Alexia: Firstly on express.
Alexia: The doctor a little bit about the.
Alexia: B to C development and your expectations for volumes in Q4.
Speaker Change: Look at the third quarter being flat Q on Q, it's actually quite an improvement versus normal seasonality. So then can you just help extrapolate that in Q4, given you are doing self help on cost and yield management.
Alexia: Volumes in <unk>.
Speaker Change: From what you were saying you should be kind of broadly at the same kind of year over year levels and then the demand charge. Yes can you kind of got the building blocks, we are starting from a flat Q on Q.
Alexia: Yes.
Alexia: And.
Speaker Change: And then secondly on the postal and parcel.
Speaker Change: Can you just discuss whether you're still confident recovering ebay two one.
And then 2025.
Speaker Change: I think given kind of the advertising mail Colin you made.
Speaker Change: You will be able to capture the full price increase with the biggest gap.
Speaker Change: And then just finally.
Speaker Change: And a quick comment on.
Speaker Change: Clearly, it's a big day today.
Speaker Change: Should there be some protection measures potentially in the cards.
Speaker Change: How should we think about the multiplier to GDP going forward. Thank you.
Speaker Change: So on the different questions on starting with express.
Speaker Change: I think your observations are correct.
We do expect basically a normal seasonal development in Q4.
Speaker Change: Topped up by the demand surcharge, which we didn't have in previous years and that is obviously, a big contributor to the EBIT growth that we've talked about.
Speaker Change: So.
Speaker Change: I mean, the development by region in <unk> B to B.
Speaker Change: All of the different but if you look across express the seasonal pattern that we do observe is normal it's not excessive.
Speaker Change: <unk>.
But it's also not as it relates to the seasonal pattern subdued.
Speaker Change: And we are very well prepared for that in terms of the.
Speaker Change: The capacity deployment across the different lanes, but also the required flexibility to shift if needed.
Speaker Change: That especially is clearly visible in the good quality that we've had in recent weeks also.
Speaker Change: With seasonal surging volumes across all the lanes that we are present.
Speaker Change: But again the demand surcharge, obviously plays a big role in the financial performance of express in the in the fourth quarter.
Speaker Change: And just one technical.
Speaker Change: Good clarification.
Speaker Change: Checking very thoroughly the development of the peak season region by region compared to historical.
Speaker Change: Patents and we do see that there is a typical.
Speaker Change: Volume development.
Speaker Change: Because of the many times discuss pricing measures. We took on some of the Chinese E. Com player, we will see a volume decline.
Speaker Change: In Q4.
Speaker Change: Year, you saw that in Q3, and we will see shipments per day down in the fourth quarter that is fully included in our guidance.
Ladies and gentlemen.
Speaker Change: I hope that was understood else was please.
Speaker Change: We ask that question in terms of Pnp, Yes, we're confident too.
Speaker Change: At least meet the $1 billion level in 2025 and.
Speaker Change: The price increases obviously that are relevant go of course, so we have also the.
Speaker Change: Business customer parcel, which obviously.
Speaker Change: Also in the recent years plays a strong role, but we will get a price increase also for the regulated product and will apply also a price increase for advertisement mail and that will all.
Speaker Change: Contribute.
Speaker Change: On the yield side to achieving the EBIT number for 2025.
Speaker Change: In terms of protection as trends.
Speaker Change: It's a very difficult question.
Speaker Change: And I think we shouldnt.
Speaker Change: I mean, obviously, the big trade lanes Asia, Europe Asia U S do meta.
Speaker Change: But we do see that protectionist measures they have an impact.
Speaker Change: You could argue that the trade is astonishingly resilient if you see.
Speaker Change: How much trade is left despite high tariffs and we also obviously do see that some of the trade lines different routes in Mexico and other places too.
Speaker Change: Circumvent direct exposure to such.
Speaker Change: Tariffs, but it's also important to see that in the part where we are.
Speaker Change: Quite well represented maybe even stronger than on trades like the Trans Pacific.
Speaker Change: Trade from Asia with the rest of the world and the trade from China with the rest of the world.
Speaker Change: It is growing it's growing this year, it's a key driver of the volume trends that we've seen but it's also a structurally growing in the last four or five years.
Speaker Change: And that is obviously something that will influence the multiple going forward. So we would.
Speaker Change: I think expect with protectionist measures potentially coming into place if they would come into place that on those trade lanes, we fall below a multiplier of one but we do see on other trade lanes, especially China trading with the rest of the world at a multiplier above one so that leads us to the belief that on a.
Speaker Change: Global average even with those measures will stay with the multiplier of around one, but it's not going to go back to the two two and a half that we've seen earlier.
Speaker Change: Alex.
Alex: A few questions.
Speaker Change: Well, thank you very much.
Alex: Okay.
Alex: Yes.
Alex: The next question will then come from potash.
Alex: Jain from HSBC. Please go ahead.
potash Jain: Thank you for taking my question I have two first on the express and it's obviously I think around the full year result of around the first quarter results.
Alex: There was a hope.
potash Jain: That would be a b to b recovery.
potash Jain: Going into the second half of the year.
potash Jain: The volumes have flattened out.
potash Jain: Can you talk about that.
potash Jain: Region, which.
Industry segments.
potash Jain: Need to deliver.
potash Jain: For us to see.
potash Jain: <unk>.
potash Jain: Recovering in <unk> volume and.
potash Jain: As a result.
potash Jain: Help us with the operating leverage for the extra business.
potash Jain: Secondly for the.
potash Jain: Freight forwarding business.
potash Jain: Then there is the.
Speaker Change: Does the disruption time to time, but is it fair to say that.
potash Jain: You are.
potash Jain: People you need.
potash Jain: Has found the floor.
And as we go into 2025, six even with an expectation of sharp decline in the ocean freight rate.
potash Jain: Youre comfortable comfortable maintaining these kind of deep 11, and probably somewhat improvement in your energy P. Thank you.
Speaker Change: Yeah, so on the express side.
Speaker Change: Do think that we see on the one hand side progress in the economic cycle. So we do see lanes.
Also on the <unk> side that.
Speaker Change: <unk>.
We're getting out of the trough and slowly back to growth for us some lanes their metro more.
Speaker Change: Due to the profitability than others. So on the trend specific for instance, due to a high share of air freight cost as well as our.
Speaker Change: Structural disadvantage through delivery density or lack thereof in the U S that is a lane which is not.
Speaker Change: As contributing than some of the intra Asia volume some of the Asia to the Middle East, India Middle East and Africa.
Speaker Change: And also in Europe has a high contribution margin.
Given the fixed relatively fixed cost.
Speaker Change: Of our regional air networks, so those areas seeing growth in those areas is particularly important for us.
Speaker Change: And again on intra Asia B to B.
Speaker Change: I think we have seen progress now quarter over quarter.
Speaker Change: This all being set.
Speaker Change: With the caveat that you need to see the beat to see overlay that we now repeatedly talked about and that is obviously impacting shipment count in particular.
Speaker Change: With VEGF.
Speaker Change: I do think it depends.
Speaker Change: On the product and again comparability is not easy.
If we start with ocean freight we have a beer wine and spirit business that we are structurally very happy with but that has a different cycle.
Speaker Change: And then the typical dry cargo given that it's the backhaul business and.
Speaker Change: <unk> does not benefit from rate spikes like we've recently seen on.
Speaker Change: On the Trans Pac in particular, but also on the Asia Europe trade. So this is a bigger component in our portfolio than for some of our competitors.
Speaker Change: And on the.
Speaker Change: This side I definitely see the.
Speaker Change: The floor being found in progression going forward on some of the head haul lanes that might not be the case, especially the trans Pac I think is more questionable, but it's for US also not the biggest exposure, especially relative to some of our competitors.
Speaker Change: On the air freight side.
Speaker Change: Very much depends also on the development of different sectors.
Speaker Change: Generally I would agree.
Speaker Change: That.
Speaker Change: For 2025.
Speaker Change: The outlook should be more positive there.
Speaker Change: But again we've seen.
Speaker Change: <unk> seen this again and again freight markets are volatile.
Speaker Change: And certain.
Speaker Change: Events developments.
Speaker Change: Developments of single customers.
Speaker Change: I don't want to remind everybody what fitbit spinouts ones did to the air freight market. So these type of things.
Speaker Change: You may begin.
Speaker Change: And that obviously is an element that is hard to forecast.
Speaker Change: Thank you so much.
Speaker Change: Good evening and good.
Speaker Change: Good day.
Thanks harsh.
Speaker Change: We're almost there.
Speaker Change: <unk> come from <unk> <unk> from Morgan Stanley. Please go ahead.
Speaker Change: Thanks, very much thanks, hi, everyone.
Speaker Change: Can you talk about what recourse you could have if the pricing annual post and parcel business in Germany isn't aligned with your assumption of more than 1 billion euros.
Speaker Change: If we continue to see cost inflation and only limited efficiencies that you can put through there like what can you actually do with government with the regulator to get you over the line there.
Speaker Change: And then just on freight forwarding.
Speaker Change: Kind of visibility do you actually have in that business because it feels like.
Speaker Change: Some of these shifts in the airfreight market out of Asia might have been a bit unexpected.
Speaker Change: And obviously this stuff within your control and stuff that there isn't but I would just like to understand a little bit more on sort of the reporting robustness in freight forwarding.
Speaker Change: So that this kind of stuff maybe doesn't happen as much in the future. How regularly are you getting reports from you guys on the ground how dynamic all day in terms of contract that'd be really helpful. Thank you.
Yes, so on the Pnp question first I think it is important to note that the law.
Foresees or translates into an earnings level for Pnp of one three to $1 4 billion.
Speaker Change: If you go through details, particularly also the justification of the law.
Speaker Change: It is what you come out with the regulatory margin is after the share of corporate overhead.
Speaker Change: And Thats six 5%, which then translates into a margin around 882% depending on that allocation of the overhead for Pnp. So with 1 billion, we are already quite a bit away from that.
Speaker Change: Now the recourse is.
Speaker Change: Not so easy it mainly lies in the next regulatory round two.
Speaker Change: Look into the assumptions that the regulator has made and obviously if the actual numbers of deviating from what we are granted by law that requires US then adjustments going forward.
Speaker Change: There is also the theoretical maybe also practical potential of legal actions will.
Speaker Change: Into that once we see now the final decision.
Speaker Change: This is tricky in multiple ways, so it needs careful consideration.
Speaker Change: Whether we would pursue that.
Speaker Change: In DG F.
Speaker Change: We and.
And I think that is also important to be said.
Speaker Change: Satisfied on the productivity development and also on the system development you always also in the past you have good calls on the market and sometimes not so good calls in terms of where you buy capacity from which carrier and how reliable customer is in its volume.
Speaker Change: Commitments because customers hardly ever give us.
Speaker Change: A fixed commitment that they always want to obviously have flexibility depending on how much product they sell.
Speaker Change: So to have some volatility in that is not unusual I think our transparency on this is quite good.
Speaker Change: But again, the third quarter had some codes.
Speaker Change: And also some external developments that were unfavorable for us and obviously with the team look into that and try to avoid that going forward.
Speaker Change: But it's not a matter of transparency, it's more metal off making a call in a certain market for buying and selling one or the other way.
Speaker Change: Okay. That's helpful. I'm, sorry, just on the PMT point, so the $70 million.
Benefit from legal claims that you had benefiting the quarter is that linked to recourse on previous legislative framework.
Speaker Change: I'm going to say, but what I'm trying to understand is.
Speaker Change: If you don't get to that billion and it sounds like you should be actually getting more than that but if you. If you don't get to depending on how long do we have to wait before there is any potential negotiation with government.
Speaker Change: It just kind of feels like you guys are not not in the winning position yet that government has it all and and you just have to hope that you get paid and maybe if you don't then in the future you can get the money back.
Speaker Change: Very.
Speaker Change: <unk>.
Disadvantage position what for the division.
Speaker Change: I'm doing well.
Speaker Change: Well I think we we still in this country belief in the application of law and the law was passed in July that foresees the margin that I've mentioned so.
Speaker Change: I think that is theres no ambiguity around that wasn't easy to get there and get there.
Speaker Change: The modernization of the postal legislation took us 25 years.
Speaker Change: But there is a new base and it's now about the application of those space and if you have a change in law. There is always a bit of uncertainty how certain things are treated so that is what we see in this in this round.
Speaker Change: But I do think that obviously the.
Speaker Change: Latest the.
Speaker Change: The regulator will look also at the actual numbers.
Speaker Change: <unk>.
Speaker Change: Compare that with what is in the law and I have no doubt.
Speaker Change: The regulator.
Speaker Change: And the authorities here.
Speaker Change: Aim to fulfill what was the will of the legislator.
Speaker Change: In passing this law the mixed <unk>.
Speaker Change: You're right that we've now applied for is two years. So it's 2025 2026.
Speaker Change: So next to the question, whether there could be changes within the period, which is naturally difficult, but not impossible. The next regular cycle.
Speaker Change: <unk> 2007 onwards, it is upon us to apply for one year two years three years, two and three years being more common also more well come so that theres not too often a change in the stem price.
Speaker Change: Got it thanks, so much.
Speaker Change: Thank you Sir.
Speaker Change: Mistaken.
Speaker Change: Last call and now on the line.
Speaker Change: Our next question comes from Mark <unk> from Kepler. Please go ahead.
Yes, good morning.
Speaker Change: Two questions if I may.
Mark: One on express B to B volumes in relation to the automotive sector I guess.
Mark: Companies like like folks wouldn't have kind of shocked the German gum.
Mark: And maybe some people.
Announcing maybe some plant closures.
Mark: Interested to what extent the development of Jim auto sector and folks following announcements have changed Europe between volume assessment going into 2026.
Mark: My first question and the second question is on.
Mark: What in Germany is called the.
Speaker Change: Thanks Felicia.
Speaker Change: Sarah promote translation for the storm and be it would be.
Speaker Change: Interested what's the.
Speaker Change: Let's say market of.
Speaker Change: Business voice is currently in the mail division that might be lost until three or four years. Thank you.
Speaker Change: So.
On the express question automotive is not a dominant segment.
Speaker Change: It plays a certain role, but as you know express is extremely diversified.
Speaker Change: Across multiple sectors.
Speaker Change: Sectors like automotive, but all the industrials were typically more part of the spare parts.
Speaker Change: Type of value chain, rather than to the inbound two manufacturing so while any decline in the major industry has a negative impact we don't see this as pronounced and there was not any way.
Speaker Change: Blissett factor in our.
Speaker Change: Mid term guidance viewing.
Speaker Change: The second item.
Speaker Change: We don't know.
Speaker Change: And we're not allowed to know so what is the exact content of each letter and whether a letter.
Speaker Change: And invoice would now going forward be potentially.
Speaker Change: Be affected by that irrational sleeker electronic invoice obligation that applies to a certain subsegment of invoices, we do see obviously.
Speaker Change: And as in the past that digitalization gradually progresses, we had debt with.
Speaker Change: The declarations or certificates that.
Speaker Change: Medical doctors send to employees for kind of sickness confirmation for the employer. So that is something that came into effect last year.
And as surely having is one driver of the structural decline in mail volume that we observed this year. So we do not see major discontinuity is through a single change.
Speaker Change: But more these things as in other countries gradually progressing and substituting certain business communication ma'am.
Speaker Change: Thank you.
Speaker Change: Great.
Speaker Change: Well, operator, I think that concludes our Q&A round.
Speaker Change: Yes, ladies and gentlemen that was the last question I would now like to turn the conference back over to Martin <unk> for any closing remarks.
Speaker Change: And I'm handing over to <unk> for his closing remarks.
Speaker Change: So first of all thank you for this great set of questions I hope, we could address them in a transparent.
Speaker Change: The way that is helpful to you I think what you see in the third quarter, whilst the environment continues to be challenging that we are progressing in the economic cycle that we have returned to solid topline growth and also now at the same level.
Speaker Change: Earnings than in the previous quarter with an outlook of returning to growth.
Speaker Change: Also on the earnings and EBIT side in the fourth quarter based on that progression in the economic cycle, but also a set of self help measures, including the demand surcharge, but also many others I think especially on the cost side. We see this continued gradual progress with.
Speaker Change: A steady hand that we apply to this topic across our divisions and that is important because that's the lasting lever and positive element also going forward. So with that we are looking forward to.
Speaker Change: Putting all of our attention to the peak season, now delivering great quality for our customer which is the basis for growth in 2025 and beyond.
Speaker Change: Thank you very much for your attention.
Speaker Change: Ladies and gentlemen, the conference is now over thank you for choosing chorus call and thank you for participating at the conference you May now disconnect your lines Goodbye.
Speaker Change: Okay.