Half Year 2026 Deutsche Post AG Earnings Call

Speaker #1: We see people with a unique passion for logistics and sustainability—thousands of individuals improving lives and supporting the needs of our customers. But how did we get here?

Speaker #1: Let's take a look back. Wait—no, not that far back. Yes, that's more like it. It's 2003, when Deutsche Post bundles its entire express and logistics business under the DHL brand.

Speaker #1: Three brands become one, and white and red turn into the yellow and red brand that we know today. Later, another one joins our course, expanding and improving our products and services to meet the increasing—standing by.

[Company Representative] (DHL Group): Three brands become one, and white and red turns into the yellow and red brand that we know today. Later, another one joins our cause, expanding and improving our products and services to meet the increasing-

Operator: Standing by. Welcome, and thank you for joining the DHL Group Conference Call. Please note that the call will be recorded. You can find the privacy notice on dhl.com. Throughout today's presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you wish to ask a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Instructions will also follow at the time of Q&A. I would now like to turn the conference over to Martin Ziegenbalg, Head of Investor Relations. Please go ahead.

Speaker #1: Welcome, and thank you for joining the DHL Group conference call. Please note that the call will be recorded. You can find the privacy notice on dhl.com.

Speaker #1: Throughout today's presentation, all participants will be in listen-only mode. The presentation will be followed by a question-and-answer session. If you wish to ask a question, we ask that you please use the raise-hand function at the bottom of your Zoom screen.

Speaker #1: Instructions will also follow at the time of Q&A. I would now like to turn the conference over to Martin Ziegenbalg, Head of Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Right, thank you, and welcome. You’re all on the Q2 2026 conference call of DHL Group. You’ve seen our full set of reporting out today.

Martin Ziegenbalg: All right. Thank you. I welcome you all on the Q2 2026 conference call of DHL Group. You've seen our full set of reporting out today. We've got with us here Group CEO, Tobias Meyer, Group CFO, Melanie Kreis. It's going to be the usual procedure. After your presentations, Tobias and Melanie, we go straight into Q&A. With that, over to you, Tobias.

Speaker #2: We have with us here Group CEO Tobias Meyer and Group CFO Melanie Kreis. The procedure will be as usual: after your presentations, Tobias and Melanie, we will go straight into Q&A.

Speaker #2: And with that, over to you, Tobias.

Speaker #3: Yeah, good morning. Thank you, Martin. We had indeed a good second quarter as DHL Group, with group revenue accelerating to 13% year-on-year, as you see on page two of the presentation.

Tobias Meyer: Good morning. Thank you, Martin. We had indeed a good Q2 as DHL Group with group revenue accelerating to 13% year on year, as you see on page two of the presentation, and group EBIT increasing by 30%. We had a good flow-through of the increased business through the bottom line due to the effects that we also spoke about in recent quarters, our Fit for Growth program, which we executed, also continued good management of both yields as well as capacity, and thereby our cost base, especially in Express. The free cash flow reflects that we are in a growth situation with some build-up of working capital, as you would expect. Also one extraordinary item driven by the refunds of the IEEPA tariff, which are currently reversed, as you will be aware of. We had some temporary increases in cash flow given that we received payments in the last days of June, which are currently in the process of being repaid to customers.

Speaker #3: And group EBIT increased by 30%. We had a good flow-through of the increased business to the bottom line, due to the effects that we also spoke about in a recent quarter.

Speaker #3: Our fit-for-growth program, which we executed, but also continued good management of both yields as well as capacity, and thereby our cost base—especially in Express.

Speaker #3: The free cash flow reflects that we are in a growth situation, with some build-up of working capital, as you would expect, but also one extraordinary item driven by the refunds of the IEPA tariff, which are currently reversed, as you will be aware.

Speaker #3: So, we had some temporary increases in cash flow, given that we received payments in the last days of June, which are currently in the process of being repaid to customers.

Tobias Meyer: We are very satisfied with the acceleration of our growth path throughout the H1 of this year, with significant increases in the volume that we transported in our Express network, also what we consider a good performance in Global Forwarding relative to our peers and a continued very satisfying path for our Supply Chain business, which continues to develop very favorably. This also gives us, despite the continued uncertainty and volatility around us, the confidence to increase our guidance as we have communicated on 7 July.

Speaker #3: We are very satisfied with the acceleration of our growth path throughout the first half of this year, with significant increases in the volume that we transported in our Express network, but also what we consider a good performance in Global Forwarding relative to our peers.

Speaker #3: And continued very satisfying path for our supply chain business, which continues to develop very favorably. And this also gives us, despite the continued uncertainty and volatility around us, the confidence to increase our guidance, as we have communicated on July 7th, and also to increase our share buyback program, which will extend until the end of next year and increase to a value of up to €6.5 billion as the cumulative amount.

Tobias Meyer: Also to increase our share buyback program, which will extend until the end of next year and increase to a value of up to EUR 6.5 billion as the cumulative amount. Going into some details on page three, you see the development of group revenue growth. We also showed here the organic development excluding FX, which is by far the bigger effect, and M&A. We had talked about some headwinds going away already with the reporting on Q1. Those headwinds particularly relate to FX with the strong appreciation of the Euro against other currencies, including the US dollars in February and March of 2025. That has now cycled out and we basically have no major effects as it relates to FX on revenue and earnings in Q2.

Speaker #3: Going into some details on page three, you see the development of group revenue growth. We also show here the organic development, excluding FX, which is by far the bigger effect, and M&A.

Speaker #3: So we had talked about some headwinds going away already with the reporting on the first quarter. Those headwinds particularly relate to FX, with the strong appreciation of the euro against other currencies, including the US dollar, in February and March of 2025.

Speaker #3: That has now cycled out, and we basically have no major effects as it relates to FX on revenue and earnings in the second quarter.

Speaker #3: But also, the volume development with the initial waves of tariffs coming into effect at the end of the first quarter of 2025. The second quarter has a lower baseline as it relates to volume.

Tobias Meyer: Also the volume development with the initial waves of tariffs coming into effect end of Q1 of 2025. The Q2 has a lower baseline as it relates to volume. Those were headwinds that we anticipated going away. As you see on the right side here highlighted on page three for the Express network, the weight that we carried in that network, we had a quarter-on-quarter increase of about 6 percentage points of volume. That figure is relatively stable if you compare to 2019 or whether you compare it to 2024. That gives you a sense how the underlying business has developed and the really positive momentum that has unfolded in Q2 on a very broad base across business that we have increasing customer demand and also growth in the sectors that we targeted.

Speaker #3: So those were headwinds that we anticipated going away. But as you see on the right side, here highlighted on page three, for the Express network, the weight that we carried in that network, we had a quarter-on-quarter increase of about 6 percentage points of volume.

Speaker #3: That figure is relatively stable if you compare it to 2019 or whether you compare it to 2024. So that gives you a sense of how the underlying business has developed and the really positive momentum that has unfolded in the second quarter.

Speaker #3: On a very broad base across the business, we have increasing customer demand and also growth in the sectors that we have targeted. As shown on page four, our Strategy 2030 is now in full execution with our focus on top-line growth, but also on profitability accelerators.

Tobias Meyer: As shown on page four, our Strategy 2030 is now in full execution with our focus on top-line growth but also profitability accelerators. This is just a reminder on what we're working on. How that unfolds and what we're exactly targeting for Express is highlighted on page five. This is a longer-term graph. The share of the integrator industry, the Express players relative to the total air freight market. We started collectively in the late 1960s, early 1970s. If you look at UPS, FedEx, and us, in particular, at that time, the business was very much focused on documents. Not much tonnage, not much kilos transported. That has changed over the years with the integrator industry taking a growing share of the general air freight market, and we expect that to continue.

Speaker #3: So this is just a reminder on what we're working on, how that unfolds, and what we're exactly targeting. For Express, this is highlighted on page five.

Speaker #3: This is a longer-term graph. The share industry, the express players relative to the total air freight market, we started collectively in the late '60s, early '70s.

Speaker #3: If you look at UPS, FedEx, and us in particular at that time, the business was very much focused on documents, so not much tonnage, not many kilos transported.

Speaker #3: That has changed over the years, with the integrator industry taking a growing share of the general air freight market, and we expect that to continue. We had this post-COVID normalization that was strongly driven also by a shift of e-commerce shipments leaving the integrator networks for cheaper ways of transportation—bulk charters and injection into lower-cost last-mile networks.

Tobias Meyer: We had this post-COVID normalization that was strongly driven also by a shift of e-commerce shipments leaving the integrator networks for cheaper ways of transportation, bulk charters, and injection into lower-cost last-mile networks. We now are strongly focused on the growth in industrials, B2B. We believe that both our cost position relative to the general air freight market, but also our value proposition has improved and increased. This gives us the opportunity for significant share gains, and continuing the 50-year journey of taking share from the general air freight market. That's what we are focused on, and that's what you also see in the Q2 numbers of Express. That we're successful in executing that strategy and accessing volumes in verticals that are not traditionally the heaviest users of Express. Page six provides some examples on how we sell and what we sell based on.

Speaker #3: We are now strongly focused on growth in industrials—so, B2B—and we believe that both our cost position relative to the general air freight market, as well as our value proposition, have improved and increased.

Speaker #3: And this gives us the opportunity for significant share gains and continuing the 50-year journey of taking share from the general air freight market. That's what we are focused on, and that's what you also see in the second quarter numbers of express that were successful in executing that strategy and accessing volumes in verticals that are not traditionally the heaviest users of express.

Speaker #3: Page six provides some examples on how we sell and what we sell based on. So, it is the reliability, the speed, and the predictability of the integrator model, which is superior on those dimensions to the general air freight product.

Tobias Meyer: It is the reliability, it is the speed and the predictability of the integrator model, which is superior on those dimensions to the general air freight product. That is attractive not only for small spare parts, but also for bigger parts like turbines, be that for the use in aviation or for power generation. For the supply chain of complex high-value products. What you see, especially in IT and data center logistics especially, we've played a significant role in the semiconductor industry now for about 20 years. It's a vertical that was added to the integrator focus area about 20 years ago. Now it is also a much broader representation in that value chain. Also in traditional areas like automotive, in this case, motorcycles. There is a space for us with the cost position that we've reached with the scale that we have reached.

Speaker #3: And that is attractive not only for small spare parts, but also for bigger parts like turbines, be that for use in aviation or for power generation.

Speaker #3: For the supply chain of complex, high-value products—what you see especially in IT and data center logistics—we've played a significant role in the semiconductor industry now for about 20 years.

Speaker #3: It's a vertical that was added to the integrator focus area about 20 years ago. Now, it also has a much broader representation in that value chain.

Speaker #3: And also, in traditional areas, like automotive in this case, motorcycles, there is a space for us with the cost position that we've reached with the scale that we have reached if you look at our intercontinental fleet, it is the most efficient air cargo fleet around.

Tobias Meyer: If you look at our intercontinental fleet, it is the most efficient air cargo fleet around. That is different than what we had in terms of scale and relative cost position 20 years ago. There is a natural and attractive play for us in those verticals. Beyond that, we continue to broaden our capability set to be an attractive provider to more industries in the space of new energy shown on page seven. That is particularly the handling of DG, of dangerous goods of different categories, but especially also batteries where there's a strong need to build up not only the supply chain for new goods, be that inbound to manufacturing or the distribution of such, but also increasingly spare parts.

Speaker #3: And that is different than what we had in terms of scale and relative cost position 20 years ago. So that there isn't natural and attractive play for us in those verticals.

Speaker #3: Beyond that, we continue to broaden our capability set to be an attractive provider to more industries. In the space of new energy, shown on page seven, that is particularly the handling of DG—of dangerous goods—of different categories.

Speaker #3: But especially also batteries, where there's a strong need to build up not only the supply chain for new goods—be that inbound to manufacturing or the distribution of such—but also, increasingly, spare parts. Spare parts as it relates to full-scale batteries for EVs, but also spare parts in areas like wind energy, where remote places have to be reached in increasing amounts to keep those machines running.

Tobias Meyer: Spare parts as it relates to full-scale batteries for EVs, but also spare parts in areas like wind energy where remote places have to be reached at an increasing amount to keep those machines running and provide the needed parts for such installations. Data center logistics is something that is in full swing with significant building taking place, especially in the United States where we also increased our business there. That is in two areas mainly. In the international transportation along that value chain. Inbound to the data center construction site, but also and increasingly so upstream. Then the staging of material and sequencing at or near the construction sites of those facilities.

Speaker #3: And provide the needed parts for such installations. Data center logistics is something that is in full swing, with significant building taking place, especially in the United States, where we also increased our business.

Speaker #3: That is in two areas—mainly in the international transportation along that value chain. So, inbound to the data center construction site, but also, and increasingly so, upstream, and then the staging of material and sequencing at or near the construction sites of those facilities.

Speaker #3: There's obviously high urgency to bring such sites into operation, and that urgency then translates into goods that need interim storage and sequencing, to alleviate bottleneck capacities at the construction and us also taking over even certain installation services on site.

Tobias Meyer: There's obviously high urgency to bring such sites into operation and that urgency then translates into goods that need interim storage and sequencing to alleviate bottleneck capacities at the construction and us also taking over even certain installation services on-site. That's the two areas. We also expect significant spare parts business to follow as those installations mature. That is an area where we are traditionally very strong with our service logistics business. The journey on life science and healthcare also continues. This is a longer-term play for us, where we systematically build out capacity, but also capabilities, especially on the Express side, to offer an end-to-end cold chain service in the Express network.

Speaker #3: So that's the two areas. We also expect significant spare parts business to follow as those installations mature. That is an area where we are traditionally very strong with our Service Logistics business.

Speaker #3: The journey in life science and healthcare also continues. This is a longer-term play for us, where we systematically build out capacity but also capabilities, especially on the express side, to offer an end-to-end cold chain service in the express network.

Speaker #3: So, this is something that did not have a significant impact on the top line or bottom line in the quarter, but remains important for the mid- to long-term growth of the Group overall.

Tobias Meyer: This is something that did not have a significant impact on top line or bottom line in the quarter, but remains important for the mid- to long-term growth of the DHL Group overall and DHL Supply Chain, DHL Global Forwarding, and DHL Express in particular. As it relates to the profit accelerators on page eight, we continue to do professional yield management. In this case, we highlight the example of Post & Parcel Germany, where you see the development of volume and revenue, and thereby can conclude on the yield measures that we have taken. This remains obviously very important that we pass on inflationary effects, be that from labor or be that from fuel and other input components.

Speaker #3: And supply chain global forward and express in particular. As it relates to the profit accelerators on page eight, we continue to do professional yield management.

Speaker #3: In this case, we highlight the example of Parcel in Germany, where you see the development of volume and revenue. And thereby you can conclude on the yield measures that we have taken. This remains, obviously, very important—that we pass on inflationary effects, be that from labor or be that from fuel and other input components for fuel.

Tobias Meyer: For fuel, we want a recovery mechanism, and that is also for the DHL Group overall, how it played out for Q2, that we recovered the additional cost that we had through the elevated prices of fuel. Fit for Growth, we have successfully and ahead of time executed and achieved our objectives as it relates to the savings. We will obviously continue to be very mindful about productivity and efficiency in the different parts of the business. We will continue to deploy technology to leverage efficiency potentials and realize such. It is not that we in any way lose focus on such opportunities, but as a structured program that was also meant to react to the changes we saw in the market post-COVID. We have achieved our objectives and we will now have a more embedded approach again.

Speaker #3: We want a recovery mechanism, and that is also for the group overall, how it played out for the second quarter, that we recovered the additional cost that we had through the elevated prices of fuel.

Speaker #3: Fit for growth, we have successfully and ahead of time executed and achieved our objectives as it relates to the savings. We'll obviously continue to be very mindful about productivity and efficiency, in the different parts of the business.

Speaker #3: We'll continue to deploy technology to leverage efficiency potentials and realize such, so it's not that we in any way lose focus on such opportunities.

Speaker #3: But as a structured program that was also meant to react to the changes we saw in the market post-COVID, we have achieved our objectives, and we will now have a more embedded approach again—which, again, does not mean that we lose focus on the absolute necessity to remain cost competitive.

Tobias Meyer: Again, does not mean that we lose focus on the absolute necessity to remain cost competitive. The same is true as it relates to our investments. We continue to spend diligently and enable new growth. We are very mindful not to increase the capital intensity in our existing business, but we want to fuel growth where CapEx is required to realize such growth. That is the case in DHL Express, but also in DHL Supply Chain, where we have significant demand and a very good success track record to enable new real estate and new buildings for our customers and also increasingly automate and deploy robotics in those solutions, which means that the new businesses that we onboard there has a certain requirement to spend CapEx. We happily do since such business is accretive not only to the top line, but also to the bottom line of our business.

Speaker #3: The same is true as it relates to our investments. We continue to spend diligently and enable new growth. So, we are very mindful not to increase the capital intensity in our existing business, but we want to fuel growth where CapEx is required to realize such growth. That is the case in Express, but also in Supply Chain, where we have significant demand and a very good success track record to enable new real estate and new buildings for our customers, and also increasingly automate and deploy robotics in those solutions. Which means that the new businesses that we onboard there have a certain requirement to spend CapEx, which we happily do since such business is accretive not only to the top line, but also to the bottom line of our business.

Speaker #3: On page nine is the outlook, which is unchanged since the publishing of the preliminary results on July 7th. So we now expect to exceed €6.5 billion EBIT for the full year of 2026, with a split that you see below—the increase coming from the DHL divisions, while P&P and Group Functions stay unchanged.

Tobias Meyer: On page nine is the outlook, which is unchanged since the publishing of the preliminary results on 7 July. We now expect to exceed EUR 6.5 billion EBIT for the full year of 2026 with a split that you see below the increase coming from the DHL divisions, whilst DNP and DHL Group functions stay unchanged. Also, free cash flow and gross CapEx guidance remains unchanged as the mid-term outlook, which is also unchanged. With that, I will hand over to Melanie for some more details on the divisional developments.

Speaker #3: Also, the free cash flow and gross CapEx guidance remain unchanged, as does the midterm outlook. With that, I'll hand over to Melanie for some more details on the divisional developments.

Speaker #1: Yeah, thank you very much, Tobias. And good morning and welcome also from my side. I will start, as usual, with the key takeaways of the quarter for the divisions, which you can see on page 10.

Melanie Kreis: Thank you very much, Tobias, and good morning and welcome also from my side. I will start as usual with the key takeaways of the quarter for the divisions that you can see on page 10. For DHL Express, I am happy to simply underscore the key observations shared by Tobias just now and already disclosed in our pre-release on 7 July. The strong EBIT performance mainly reflects the operating leverage from weight per day being back into growth mode in combination with our effective cost and yield actions. Yes, we had some benefits from the tighter air freight market conditions as reported in our pre-release, and fuel price volatility is inflating both revenue and costs.

Speaker #1: For DHL Express, I'm happy to simply underscore the key observations shared by Tobias just now and already disclosed in our pre-release on July 7.

Speaker #1: The strong EBIT performance mainly reflects the operating leverage from rate per day being back into growth mode, in combination with our effective cost and yield actions.

Speaker #1: Yes, we had some benefits from the tighter air freight market conditions, as reported in our pre-release, and fuel price volatility is inflating both revenue and costs.

Speaker #1: But the key driver of the strong Express Q2 financials is simply the core operating performance, where the Express team is finding the right growth at the right price and serving it with the most cost-efficient and flexible network.

Melanie Kreis: The key driver of the strong Express Q2 financials is simply the core operating performance where the Express team is finding the right growth at the right price and serving it with the best cost efficient and flexible network. I will come back to that in a minute. DHL Global Forwarding also delivered a good Q2. While we still have more structural work to do, our Q2 performance shows above-market growth of 7% for both ocean and air freight volumes, with ocean freight GP holding up well and air freight yield and GP increasing strongly. Volatile markets are part of the new normal as it seems, we should definitely not call this a one-off, we still thought it is worth sharing that we think we had some more temporary benefit from the air market disruptions in Q2, as also mentioned in our pre-release already.

Speaker #1: I'll come back to that in a minute. DHL Global Forwarding also delivered a good second quarter. While we still have more structural work to do, our Q2 performance shows above-market growth of 7% for both ocean and air freight volumes, with ocean freight GP holding up well and air freight yield and GP increasing strongly.

Speaker #1: Volatile markets are part of the new normal, it seems. So we should definitely not call this a one-off, but we still thought it's worth sharing that we think we had some more temporary benefit from the air market disruptions in Q2, as also mentioned in our pre-release already.

Speaker #1: With the phasing out of FX effects year over year, the full DHL Supply Chain growth momentum is now again visible also in the top-line development, with a 13% reported and 10% organic growth.

Melanie Kreis: With the phasing out of FX effects year-over-year, the full DHL Supply Chain growth momentum is now again visible also in the top line development with a 13% reported and 10% organic growth. Considering last year's positive one-off, EBIT is also further up year-over-year with a good margin of 6.5%. It is worth mentioning that this is actually the first quarter where DHL Supply Chain delivered more than EUR 300 million in EBIT, excluding special effects like in Q2 of last year. DHL eCommerce numbers continue to reflect deconsolidation of the business in the UK and Iberia now in the Q2 as a new effect, while the organic growth of 9.5% shows the continued strong underlying eCommerce growth momentum, which is the reason we keep investing into the expansion of our network, as you see reflected, for example, in higher depreciation, holding back EBIT growth.

Speaker #1: And considering last year's positive one-off, EBIT is also further up year over year, with a good margin of 6.5%. It's worth mentioning that this is actually the first quarter where DHL Supply Chain delivered more than €300 million in EBIT, excluding special effects like in Q2 of last year.

Speaker #1: DHL e-commerce numbers continue to reflect the consolidation of the business in the UK and Iberia, now in the second quarter as a new effect, while the organic growth of 9.5% shows the continued strong underlying e-commerce growth momentum.

Speaker #1: Which is the reason we keep investing in the expansion of our network, as you see reflected, for example, in higher depreciation holding back EBIT growth.

Speaker #1: And last but not least, P&P has delivered a quarter pretty much in line with expectations, based on the known business drivers, as the P&P team continues to work hard to counter the structural mail decline and stepwise wage inflation, with continued parcel growth and effective cost actions.

Melanie Kreis: Last but not least, P&P has delivered a quarter pretty much in line with expectations based on the known business drivers as the P&P team continues to work hard to counter the structural mail decline and stepwise wage inflation with continued parcel growth and effective cost actions. Let me briefly step back from Q2 and take a broader look at the Express performance drivers on page 11, as we frequently get questions on what is explaining the strong Express development and what KPI can be best used to forecast or track that development. Looking at what John and his team successfully do and at our internal discussions on financial performance and the daily decisions that lead to that financial performance, I think the key observation from my side is that there is not the one single KPI that ultimately determines our Express performance.

Speaker #1: Let me briefly step back from Q2 and take a broader look at the express performance drivers on page 11, as we frequently get questions on what is explaining the strong express development and what KPI we can best use to forecast or track that development.

Speaker #1: So, looking at what John and his team successfully do, and at our internal discussions on financial performance and the daily decisions that lead to that financial performance, I think the key observation from my side is that there is not one single KPI that ultimately determines our express performance.

Speaker #1: Quite to the contrary, given the fixed asset nature of that business and the span across more than 220 countries and territories, the key to success lies in the aligned and successfully steered interaction between where and how we grow, how we calibrate pricing accordingly, and all that in alignment with the capacity and cost flex of our network.

Melanie Kreis: Quite to the contrary, given the fixed asset nature of that business and the span across more than 220 countries and territories, the key to success lies in the aligned and successfully steered interaction between where and how we grow, how we calibrate pricing accordingly, and all that in alignment with the capacity and cost flex of our network. Beyond the improvement in a lot of single KPIs, which we currently see, the Express team has improved tools and enhanced visibility to execute this delicate steering better than ever before. That gives me a lot of confidence also for our future development. In that context, please take note of the invite we sent out earlier this week for a capital market briefing to be hosted by John Pearson, our DHL Express CEO.

Speaker #1: So, beyond the improvement in a lot of single KPIs, which we currently see, the Express team has improved tools and enhanced visibility to execute this delicate steering better than ever before.

Speaker #1: And this gives me a lot of confidence also for our future development. In that context, please take note of the invite we sent out earlier this week for a Capital Markets Briefing to be hosted by John Pearson, our DHL Express CEO. It will take place in London on September 17th.

Melanie Kreis: It will take place in London on 17 September, and John will provide some more details on how we manage profitable growth in the DHL Express division. After that short advertisement, let me get back into the depth of our Q2 numbers with a few observations on our Q2 P&L on page 12 and the cash flow statement on page 13. On the P&L, the 13% top-line growth includes a roughly 5 percentage point contribution from the pass-through of higher fuel prices, but no relevant FX effects different to the previous quarters. Organic revenue growth, excluding the fuel contribution, accelerated to 8%, reflecting the improvement in business momentum as well as our continued yield management. The higher activity levels and fuel pricing are equally visible in the higher purchased goods and services line.

Speaker #1: And John will provide some more details on how we manage profitable growth in the DHL Express division. So, after that short advertisement, let me get back into the depths of our Q2 numbers with a few observations on our Q2 P&L on page 12 and the cash flow statement on page 13.

Speaker #1: On the P&L, the 13% top-line growth includes a roughly 5 percentage point contribution from the pass-through of higher fuel prices, but no relevant FX effects, which is different from previous quarters.

Speaker #1: So organic revenue growth, excluding the fuel contribution, accelerated to 8%, reflecting the improvement in business momentum as well as our continued yield management. Higher activity levels and fuel pricing are equally visible in the higher purchased goods and services line.

Speaker #1: Bottom line, we see a 30% increase in EBIT, reflecting accelerating volume and weight growth, active yield management, and continued cost focus. The ongoing share buyback program is, of course, supporting earnings per share growth even further.

Melanie Kreis: Bottom line, we see a 30% increase in EBIT reflecting accelerating volume/weight growth, active yield management, and continued cost focus. The ongoing share buyback program is, of course, supporting earnings per share growth even further. The same drivers are essentially visible in the cash flow statement, with business growth as well as higher freight rates and fuel costs driving a to-be-expected expansion of related working capital in Q2. Included in the working capital number is also a temporary positive effect from the IEEPA tariff reimbursement procedure, where we receive reimbursements and then pass them on as quickly as possible back to our customers. At the end, this will have no impact on our free cash flow generation, but in the Q2 cash flow, there was a positive effect of EUR +416 million of reimbursements received and not yet paid out to customers.

Speaker #1: The same drivers are essentially visible in the cash flow statement, with business growth as well as higher freight rates and fuel costs driving a to-be-expected expansion of related working capital in Q2.

Speaker #1: Included in the working capital number is also a temporary positive effect from the IEPA tariff reimbursement procedure, where we receive reimbursements and then pass them on as quickly as possible back to our customers.

Speaker #1: So at the end, this will have no impact on our free cash flow generation, but in the second quarter cash flow, there was a positive effect of €416 million of reimbursements received and not yet paid out to customers.

Speaker #1: We really saw a significant inflow, particularly in the last days of the quarter, and we are now, of course, working on reimbursing the received funds as quickly as possible.

Melanie Kreis: We really saw a significant inflow, particularly in the last days of the quarter, and we are now, of course, working on reimbursing the received funds as quickly as possible. Much for the technical aspects. What fundamentally counts for me when I look at this cash flow statement is that you see EBIT growth very nicely flowing through to OCF before changes in working capital, and that confirms for me the very strong and healthy operating profit growth and that we invest into our organic growth ambitions with continued high discipline. This all is the basis for the very good free cash flow development in the H1, which you can see on page 14. The H1 performance puts us well on track to deliver on our full-year free cash flow target.

Speaker #1: So much for the technical aspects. What fundamentally counts for me when I look at this cash flow statement is that you see EBIT growth very nicely flowing through to OCF before changes in working capital, and that confirms for me the very strong and healthy operating profit growth. And that we invest into our organic growth ambitions with continued high discipline.

Speaker #1: This is the basis for the very good free cash flow development in the first half of the year, which you can see on page 14.

Speaker #1: The H1 performance puts us well on track to deliver on our full-year free cash flow target. And I think it also confirms, once more, our structurally improved free cash flow generation, which allows us to balance the four quadrants of our finance strategy.

Melanie Kreis: I think it also confirms once more our structurally improved free cash flow generation, which allows us to balance the four quadrants of our finance strategy. Continued targeted investments in organic growth, attractive dividend, complementary inorganic growth in accordance with our Strategy 2030 growth priorities, and share buybacks as an additional shareholder return instrument. We are therefore also in a position to extend our current share buyback program and increase the overall size once again, as shown on page 15. This gives us up to EUR 1.5 billion of remaining share buyback firepower until the end of 2027. As a conclusion, I think the numbers pretty much say it all. We are accelerating growth driven by improving business activity as well as our strategic actions.

Speaker #1: Continued targeted investments in organic growth, an attractive dividend, complementary inorganic growth in accordance with our Strategy 2030 growth priorities, and share buybacks as an additional shareholder return instrument.

Speaker #1: We are therefore also in a position to extend our current share buyback program and increase the overall size once again, as shown on page 15.

Speaker #1: This gives us up to $1.5 billion of remaining share buyback firepower until the end of 2027. In conclusion, I think the numbers pretty much say it all.

Speaker #1: We are accelerating growth, driven by improving business activity as well as our strategic actions, and we are certainly watchful to ensure that this accelerated growth is sustainable for our shareholders in terms of value accretion through higher return on invested capital, as well as continued free cash flow generation.

Melanie Kreis: We are certainly watchful to ensure that this accelerated growth is sustainable for our shareholders in terms of value accretion through higher return on invested capital, as well as continued free cash flow generation. With that, let's get into your questions. Martin or operator?

Speaker #1: And with that, let's get into your questions. Martin, or operator?

Speaker #2: You—yeah. Luke, this would be a good time to start the Q&A process.

Tobias Meyer: Yeah. Luke, this would be a good time to start the Q&A process.

Speaker #3: Ladies and gentlemen, we will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen.

Operator: Ladies and gentlemen, we will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. If you have dialed in, please select star nine to raise your hand and star six to unmute. When you see a pop-up on your Zoom screen, please accept. Once your name has been announced, please unmute and ask your question. If you want to withdraw your question, please lower your hand using the raise hand function. Our first question comes from Alexia Dogani with J.P. Morgan. Please unmute your line and ask your question.

Speaker #3: If you have dialed in, please select *9 to raise your hand and *6 to unmute. When you see a pop-up on your Zoom screen, please accept.

Speaker #3: Once your name has been announced, please unmute and ask your question. If you want to withdraw your question, please lower your hand using the raise hand function.

Speaker #3: Our first question comes from Alexia Dagani with J.P. Morgan. Please unmute your line and ask your question.

Speaker #4: Yeah, good morning. Thanks for taking my questions. I have three, if possible, please. Just firstly, on the weight-per-day growth you showed in Q2, can you talk a little bit more in detail about the regional trends you're seeing?

Alexia Dogani: Yeah. Good morning. Thanks for taking my questions. I have three if possible, please. Just firstly, on the weight per day growth you showed in Q2, can you talk a little bit more in detail about the regional trends you're seeing? Obviously, Americas and the Middle East showed a very strong acceleration, maybe base effects explain that. Fundamentally, what are you seeing by region would be quite helpful. Secondly, you've again helpfully singled out the benefit in the quarter from the Middle East disruption. When you look at the outlook over the coming quarters, do you think some of that is sustained, or do you think markets have already corrected? How should we think about the bridge into 2027? Because I guess we've just gone through our recovery post-COVID. Obviously, these one-off events help near term, but become a drag in the future.

Speaker #4: Obviously, Americas and the Middle East showed a very strong acceleration. Maybe kind of base effects explain that, but, you know, fundamentally, what you are seeing by region would be quite helpful.

Speaker #4: Then secondly, you've again helpfully singled out the benefit in the quarter from the Middle East disruption. When you look at the outlook over the coming quarters, do you think some of that is sustained, or do you think markets have already corrected?

Speaker #4: And how should we think about the bridge into 2027? Because I guess we've just gone through, you know, a recovery post-COVID. Obviously, these one-off events help near term but become a drag, kind of, in the future.

Speaker #4: Is that how we should see the Middle East benefit, or do you think other factors will help you keep driving growth? And then, finally, the market is focusing a lot on AI CapEx. I think it's been only a couple of quarters where we've been hearing from you and peers that you see the benefits of this data center rollout.

Alexia Dogani: Is that how we should see the Middle East benefit, or do you think other factors will help you keep driving growth? Finally, the market is focusing a lot on AI, CapEx. I think it's been only a couple of quarters where we've been hearing from you and peers that you see the benefits of this data center rollout. Where would you say we are on the journey for that growth? Are we still at the beginning? Are we in the middle? Does it follow closely the AI CapEx numbers we hear from the big hyperscalers? Just give us a sense of how quickly you benefit from those trends. Thank you.

Speaker #4: Where would you say we are on the journey for that growth? Are we still at the beginning? Are we in the middle? Does it follow closely the AI CapEx numbers we hear from the big hyperscalers?

Speaker #4: Just give us a sense of how quickly you benefit from those trends. Thank you.

Speaker #2: Yeah, thank you, Alexia, for your questions. As it relates to the first, that being weight per day growth, that's really pretty broad-based. Some of that, obviously, especially as it relates to the Americas—the United States also—has to be seen in the year-on-year comparison.

Tobias Meyer: Yeah. Thank you, Alexia, for your questions. As it relates to the first, that being weight per day growth, that's really pretty broad-based. Some of that obviously, especially as it relates to the Americas, the United States also has to be seen in the year-on-year comparison, that the Q2 last year was a bit weaker. Also if we look out Asia Pacific, which is obviously from an export perspective, very important, we see good growth there. You already highlighted the Middle East and Africa. Again, for us, relatively strong in the quarter despite the disruptions. I think I strengthened our market position there due to the excellent performance that the colleagues really delivered under difficult circumstances. Europe, weaker, as you would expect, given the macroeconomic situation. Overall, weight per day growth, pretty broad-based.

Speaker #2: The second quarter last year was a bit weaker, but also, if we look at Asia-Pacific—which is obviously, from an export perspective, very important—we see good growth there.

Speaker #2: You already highlighted the Middle East and Africa. Again, for us, relatively strong in the quarter despite the disruptions. I think we strengthened our market position there due to the excellent performance that the colleagues really delivered under difficult circumstances.

Speaker #2: Europe was weaker, as you would expect, given the macroeconomic situation. So overall, weight per day growth was pretty broad-based. The benefits or the situation around the Middle East, I think, is not so easy to isolate.

Tobias Meyer: The benefits or the situation around the Middle East, I think is not so easy to isolate. It's not the primary effect of the disruption in the Middle East that is positive. Within the Middle East, as we talked also in the context of the Q1 reporting, we also had significant extra costs, those being operational, those being insurance related. It is more the overshadowing on the overall demand supply situation on Asia, Europe, which is also why we called that out with EUR 150 million effect. Now, whether that is going to settle down entirely and will fully back to normal in 2027, for us, is hard to say. We specified the amount relative to the situation prior to that disruption, that major surge or escalation as it relates to Iran. That is what it constitutes.

Speaker #2: It's not the primary effect of the disruption in the Middle East that is positive. Within the Middle East, as we talked about also in the context of the Q1 reporting, we also had significant extra costs.

Speaker #2: Those being operational, those being insurance-related. It is more the overshadowing of the overall demand-supply situation on Asia-Europe, which is also why we call that out with the €150 million effect.

Speaker #2: Now, whether that is going to settle down entirely and will be fully back to normal in 2027, for us is hard to say. We specified the amount, you know, relative to the situation prior to that disruption—that major surge or escalation as it relates to Iran.

Speaker #2: So that is what it constitutes. Whether we are fully back to normal in 2027 and would not have any other disruptions that influence the demand-supply balance in the overall express and air freight market, or Asia-Europe, is hard for us to judge.

Tobias Meyer: Whether we are fully back to normal in 2027 and would not have any other disruptions that influences the demand supply balance on the overall express and air freight market or Asia, Europe, for us, it's hard to judge. You need to read the EUR 150 million to the situation prior, and the primary effect being the changed demand supply situation for Asia, Europe, as the much broader and more significant market.

Speaker #2: So you need to relate the $150 million to the situation prior, with the primary effect being the changed demand-supply situation for Asia-Europe, as that's the much broader and more significant market.

Speaker #1: But neither could. Just to add one thing here—so, I mean, obviously there are many moving parts. You mentioned your comparisons, the Middle East impact, and there is still a lot of volatility in fuel and so on.

Melanie Kreis: Maybe if I could just add one thing here. Obviously, there are many moving parts, year-over-year comparisons, the Middle East impact, and there is still a lot of volatility in fuel and so on. I think what you can really see in a lot of the numbers we presented today is that there is also an underlying healthy trend and that the measures of our Strategy 2030 are really working. Just one number from Supply Chain, EUR 4 billion in new contract value won in H1. Yes, there's a lot of volatility. We have shown that we can deal with that volatility, but I think we also see increasing traction of our more structural long-term growth agenda.

Speaker #1: But I think what you can really see in a lot of the numbers we presented today is that there is also an underlying healthy strength, and that the measures of our Strategy 2030 are really working.

Speaker #1: I mean, just one number from Supply Chain—$4 billion in new contract value won in H1. So yes, there's a lot of volatility. We have shown that we can deal with that volatility, but I think we also see increasing traction of our more structural, long-term growth agenda.

Speaker #2: Absolutely. And I think that's also visible in the absolute numbers. If you look at the €1.9 billion earnings in the quarter relative to the €150 million, the great majority of the increase is driven by what Melanie rightly characterizes as what we see as clearly sustainable, long-term oriented growth.

Tobias Meyer: Absolutely, I think that's also visible in the absolute number. If you look at the EUR 1.9 billion earnings in the quarter relative to the EUR 150, the great majority of the increase is driven by what Melanie rightly characterizes as what we see as clearly sustainable long-term orientated growth. AI and the CapEx spend, that impacts us in two ways. What has been particularly notable in the quarter is the warehousing and staging part, which we also highlighted, where we had significant increase in activity. We also had increase in activity in the international transport of parts and components for data centers. We expect that to continue well beyond 2026. It will also transition then into more spare parts logistics where we see an opportunity.

Speaker #2: AI and the CapEx spend—that impacts us in two ways. What has been particularly notable in the quarter is the warehousing and staging part, which we also highlighted, where we had a significant increase in activity.

Speaker #2: We also had an increase in activity in the international transport of parts and components for data centers. We expect that to continue well beyond 2026.

Speaker #2: It will also transition, then, into more spare parts logistics, where we see an opportunity. So while for us it's hard to say whether the level of CapEx flow will continue, we will definitely see that this is a lasting component of our business to then also supply spare parts and components for the ongoing operation of those sites, as we have done for many years in other parts of the tech industry.

Tobias Meyer: While for us it's hard to say whether the level of CapEx flow will continue, we'll definitely see that this is a lasting component of our business to then also supply spare parts components for the ongoing operation of those sites as we have done for many years in other parts of that tech industry. If you think about telecommunication networks, if you think about the data networks, the routing facilities, but also general data centers where we have a pretty strong position in supplying those, not only at the phase of the initial build, but also at continued operations.

Speaker #2: If you think about telecommunication networks, if you think about the data networks, the routing facilities, but also general data centers where we have a pretty strong position in supplying those—not only at the phase of the initial build, but also at continued operations.

Speaker #1: Excellent. Luke, the next caller, please.

Martin Ziegenbalg: Excellent. Luke, the next caller, please.

Speaker #3: Thank you. Our next question comes from Jacob Lax with Wolfe Research. Please unmute your line and ask your question.

Operator: Thank you. Our next question comes from Jake Lacks with Wolfe Research. Please unmute your line and ask your question.

Speaker #4: Hi, good morning. Thanks for your time. So, is the weight-per-day improvement you're seeing— is that at all tied to the air freight capacity constraints you discussed, or is that more so related to pricing?

Jake Lacks: Hi. Good morning. Thanks for your time. Is the weight per day improvement you're seeing, is that at all tied to the air freight capacity constraints you discussed, or is that more so related to pricing? Do you have any early expectations for how peak season is shaping up this year in Express? Given the improvement in weight per day, are you expecting a year of larger surcharges? Thanks.

Speaker #4: And then, do you have any early expectations for how peak season is shaping up this year in Express? And given the improvement in weight per day, are you expecting a year of larger surcharges?

Speaker #4: Thanks.

Speaker #2: So, on the weight-per-day development, as I tried to highlight, this is mainly driven by the strategy that we have in Express to refocus on industrial growth—smart industrial growth—to highlight the specific value proposition of the integrator model of our DHL Express capability to industrial customers, and that is what we see working out very well.

Tobias Meyer: On the weight per day development, as I tried to highlight, this is mainly driven by the strategy that we have in Express to refocus on industrial growth, smart industrial growth, to highlight the specific value proposition of the integrator model of our DHL Express capability to industrial customers. That is what we see working out very well. You see that we are very disciplined with pricing, so it's not that we have been in any way attracting higher volumes to lower prices. That's not the case. We specified the spillover on the Asia-Europe lane as it relates to the changed balance of demand and supply. The great majority of the growth that we see in Express in terms of weight per day is the execution of the smart industrial growth strategy.

Speaker #2: You see that we are very disciplined with pricing, so it's not that we have been in any way attracting higher volumes through lower prices.

Speaker #2: That's not the case. We specified the spillover on the Asia-Europe lane as it relates to the changed balance of demand and supply. But the great majority of the growth that we see in Express, in terms of weight per day, is the execution of the Smart Industrial Growth Strategy.

Speaker #2: As it relates to peak, different than some of our competitors, we currently do not have a peak surcharge as we speak. We are in the non-peak period, but if the season would unfold as per usual and we would then expect also an increase in the buying rates for air freight, we would use a peak surcharge as per usual.

Tobias Meyer: As it relates to peak, different than some of our competitors, we currently do not have a peak surcharge as we speak, in the non-peak period. If the season would unfold as per usual and we would then expect also an increase in the buying rates for air freight, we would use a peak surcharge as per usual. That is not decided yet how that exactly would play out, but it is a regular instrument that is a cost recovery mechanism for higher air freight cost and as such is a normal instrument in the integrator industry, which we will also continue to use under normal circumstances.

Speaker #2: That's not decided yet how that exactly would play out, but it’s a regular instrument that is a cost recovery mechanism for higher air freight costs.

Speaker #2: And as such, it is a normal instrument in the integrator industry, which we will also continue to use under normal circumstances.

Speaker #1: Jake, works for you, I hope? Luke, the next caller, please.

Martin Ziegenbalg: Jake, works for you, I hope. Luke, the next caller, please.

Speaker #3: Thank you. Our next question comes from Muneeba Khayani with Bank of America. Please unmute your line and ask your question.

Operator: Thank you. Our next question comes from Muneeba Kayani with Bank of America. Please unmute your line and ask your question.

Speaker #5: Yes, good morning. So, first question around Express and the $150 million benefit that you've had because of the tight air freight market. Just to clarify, has that gone through the 9% weight per day growth, or is that coming through the ACS part of Express?

Muneeba Kayani: Yes, good morning. First question around DHL Express and the EUR 150 million benefit that you have had because of the tight air freight market. Just to clarify, has that gone through kind of the 9% weight per day growth, or is that coming through the ACS part of DHL Express? If it is in that 9%, can you help us understand how much of that 9% was this kind of spillover from the tight air freight market? That is my first question. Secondly, on DHL Global Forwarding, your air yields were super strong. Is there a mix shift happening in there? Can you help us understand kind of the moving parts in there? The third question around DHL Supply Chain and the data centers, and you have talked about the increased activity. Can you kind of help us understand what the potential you see in your DHL Supply Chain business from data center build-out?

Speaker #5: And if it's gone through, if it's in that 9%, can you help us understand how much of that 9% was this kind of spillover from the tight air freight market?

Speaker #5: That's my first question. Secondly, on forwarding, your air yields were super strong. Is there a mix shift happening in there? Can you help us understand kind of the moving parts in there?

Speaker #5: And then the third question around supply chain and the data centers, and you've talked about the increased activity. So can you kind of help us understand what the potential you see in your supply chain business from data center build out, like how much has it contributed so far and what sort of growth should we be thinking about based on what you're seeing right now?

Muneeba Kayani: How much has it contributed so far, and what sort of growth should we be thinking about based on what you're seeing right now? Thank you.

Speaker #5: Thank you.

Speaker #6: Yeah, thank you, Muneeba. Let me start with the first question. So, I mean, first of all, this is not a mathematical formula where you really get one single answer.

Melanie Kreis: Yeah. Thank you, Muneeba. Let me start with the first question. First of all, this is not a mathematical formula where you really get the one single answer. I think the EUR 150 million was our best attempt to quantify those more temporary impacts due to the tightness in the air freight market. There we have indeed seen that also volume, which normally would have gone with forwarders, ended up in our core TDI product. It had an impact on the weight per day growth in the 9%, but it is by far not the dominant driver. I think the real driver is that we really see the smart industrial growth taking place. There is a component now in Q2, which leads to the EUR 150 million impact from the more temporary nature.

Speaker #6: I think the $150 million was our best attempt to quantify those more temporary impacts due to the tightness in the air freight market. And there we have indeed seen that also volume which normally would have gone with forwarders ended up in our core TDI product.

Speaker #6: So it had an impact on the weight-per-day growth in the 9%, but it is by far not the dominant driver. So I think the real driver is that we really see the smart industrial growth taking place, but there is a component now in Q2 which leads to the €150 million impact from the more temporary nature.

Speaker #2: So, on DGF, this is a variety of factors that ultimately stem from the disciplined execution of the plan that Oscar has laid out. Makeshift is maybe a little part of that, but it's not particularly pronounced.

Tobias Meyer: On DGF, this is a variety of factors that ultimately stem from the disciplined execution of the plan that Oscar has laid out. Mix shift is maybe a little part of that, but it's not particularly pronounced. We had a focus and applied usual measures to larger, not so profitable customers. Here it's really also fairly broad-based that we have seen improvements in the business, both on the margin side as well as on the volume side. Both for air and ocean, I can say I'm very satisfied with the trajectory that we are on, and there are no extraordinary effects or particular things that we would highlight. This is an organic development that we, again, are very pleased with, but also not surprised by. You already saw this in Q1.

Speaker #2: We had a focus on, and applied usual measures to, larger not-so-profitable customers. But here, it's really also fairly broad-based that we have seen improvements in the business, both on the margin side as well as on the volume side.

Speaker #2: So, both for Air and Ocean, I can say I'm very satisfied with the trajectory that we are on, and there are no extraordinary effects or particular things that we would highlight.

Speaker #2: This is an organic development that we, again, are very pleased with, but also not surprised by. You already saw this in the first quarter.

Speaker #2: So, we are accelerating on a good path, and I would not expect this to change in the quarters to come.

Tobias Meyer: We are accelerating on a good path, and I would not expect this to change in the quarters to come.

Speaker #6: Thank you for those. For those of you who listened to Oscar's capital markets briefing in London a couple of weeks ago, I think you could really see how the product and the country and regional organizations are working together much better to hunt profitable growth.

Melanie Kreis: I think for those of you, as you said, for those of you who listened to Oscar's capital markets briefing in London a couple of weeks ago, I think you could really see how the product and the country and regional organizations are working together much better to hunt profitable growth. This is what we now really see in the numbers. Clearly something which is not one-off driven or one special effect, but more the sustainable different way of working under Oscar.

Speaker #6: And I think this is what we now really see in the numbers. So, clearly something which is not one-off driven or due to one special effect, but more a, yeah, sustainable different way of working under Oscar.

Speaker #2: Yeah. And we continue to have a strong focus on great service quality and invest in capabilities. So, whilst we are also cost-conscious, we are not single-minded about cost.

Tobias Meyer: Yeah. We continue to have a strong focus on great service quality, invest in capabilities. Whilst we are also cost-conscious, we are not single-minded about cost. You heard me talking about that before, but I think it is important. We are a service organization, and particularly in global forwarding, it is extremely important to have great people and have great capabilities. We see ourselves confirmed in having that balanced view and not being single-mindedly obsessed about cost. To your third question, Muneeba, on supply chain and data center logistics. What we have there, particularly in the US, but not only in the US, are particularly multi-year contracts. This comes from a relatively small base as it relates to this particular activity, which is the staging of parts and components for the construction of data centers.

Speaker #2: You know, you heard me talking about that before. But I think it is important. We are a service organization, and particularly in Global Forwarding, it is extremely important to have great people and to have great capabilities.

Speaker #2: So we see that we are confirmed in having that balanced view and not being single-mindedly obsessed about cost. To your third question, Muneeba, on supply chain and data center logistics—what we have there, particularly in the US, but not only in the US, are typically multi-year contracts.

Speaker #2: This comes from a relatively small base, as it relates to this particular activity—which is the staging of parts and components for the construction of data centers.

Speaker #2: We have been very well represented in other parts of the value chain. I talked about service logistics, so supply chains before. Obviously, in the semiconductor industry, we are an integral part of that supply chain.

Tobias Meyer: We have been very well represented in other parts of the value chain. I talked about service logistics, so supply chains before. Obviously, in the semiconductor industry, we are an integral part of that supply chain, and we continue to be that and also profit from the overall uplift. We expect that to continue. The specific staging of components and having larger warehouses for this activity comes from a relatively small base.

Speaker #2: We continue to be that and also profit from the overall uplift, and we expect that to continue. The specific staging of components and having large warehouses for this activity comes from a relatively small base.

Speaker #1: All right, thank you, Muneeba. Luke?

Martin Ziegenbalg: Right. Thank you, Muneeba. Luke, we are ready for the next caller.

Speaker #4: We're ready for the next question.

Speaker #3: Our next question comes from Alex Irving with Bernstein. Please unmute your line and ask your question.

Operator: Our next question comes from Alex Irving with Bernstein. Please unmute your line and ask your question.

Speaker #7: Good morning. Two questions from me, please. The first one is on carriers progressively restoring their networks, and of course with that comes the belly hold capacity between Asia and Europe.

Alex Irving: Good morning. Two from me, please. First one is on Express. I note that the Gulf carriers have been progressively restoring their networks, and of course, with that comes the belly hold capacity between Asia and Europe. How does that shape your expectations for weight per day growth and revenue per kilogram growth into Q3? Could you maybe share how July was on those metrics, please? Secondly, on DGF, greater seat conversion improved above 19%. Can you help us understand a little bit more what is temporary versus permanent? I note you talked about the low to mid double-digit millions EBIT temporary effect. If I were to very crudely sort of roll forward the Q1 unit gross profit and air freight to mitigate the impact of the disruption, that would be sort of a EUR 55 million hit rather than low to mid double-digit millions.

Speaker #7: How does that shape your expectations for weight-per-day growth and revenue-per-kilogram growth into Q3? And can you maybe share how July was on those metrics, please?

Speaker #7: Secondly, on DGF, great to see conversion improve to above. What is temporary versus permanent? Note you talked about the low to mid double-digit millions EBIT temporary effect.

Speaker #7: If I were to very crudely, sort of, roll forward the Q1 unit gross profit in Air Freight to mitigate the impact of disruption, that would be sort of a $55 million hit, rather than low- to mid-double-digit millions.

Speaker #7: That would give me a 16 to 17% conversion ratio. What am I missing? How can you help us separate the temporary versus permanent impacts on DGFF profit in the quarter, please?

Alex Irving: That would give me a 16% to 17% conversion ratio. What am I missing? How can you help us to separate the temporary versus permanent impacts on DGFF profit in the quarter, please? Thank you.

Speaker #7: Thank you.

Speaker #2: All right, I would start with Express, and Melanie would comment on the second question. So, we do not see that the activity level of the Gulf carriers would change our outlook on weight per day for Express in any meaningful way.

Tobias Meyer: All right. I would start with Express. Melanie would comment on the second question. We do not see that the activity level of the Gulf carriers would change our outlook on weight per day for Express in any meaningful way. We see a broad base growth out of multiple origins, implementing our smart industrial growth strategy. We would expect that to continue. How the yield effects play out also on the ACS product, which was mentioned, which for us is a cost offset, is hard to forecast as freight rates are generally hard to forecast. Again, we would not see significant effects coming from that, also due to the sheer size of it. On weight per day, I'm very confident that we'll continue a positive trajectory independent of the situation of the Middle East carriers.

Speaker #2: We see broad-based growth out of multiple origins. We are implementing our smart industrial growth strategy, and we would expect that to continue. How the yield effects play out, also on the ACS product—which was mentioned, which for us is a cost offset—is hard to forecast, as freight rates are generally hard to forecast.

Speaker #2: But again, we would not see significant effects coming from that, also due to the sheer size of it. But on weight per day, I'm very confident that we'll continue a positive trajectory, independent of the situation of the Middle East carriers.

Speaker #6: Yeah, and on your DGF question—so, probably three components to the answer from my side. I think the first one is, like with Express, we try to quantify as best we can the more temporary impact from the air freight market distortions, with this relatively wide range, because again, it's not a mathematical formula.

Melanie Kreis: Yeah. On your DGF question, probably three components to the answer from my side. I think the first one is, like this Express, we try to quantify to the best way possible the more temporary impact from the air freight market distortions. This is a relatively wide range because, again, it is not a mathematical formula. There was a positive impact from the current market situation, but it is not the main driver for the progress we see. We would have had year-over-year improvement also excluding that. Having said that, we are clearly not where we want to be on Global Forwarding. I already said that in my comments earlier, that we have further work to do. The encouraging thing is that we see the trend going in the right direction.

Speaker #6: So, there was a positive impact from the current market situation, but it is not the main driver for the progress we see. We would have had year-over-year improvement even excluding that.

Speaker #6: Having said that, we are clearly not where we want to be on Global Forwarding. I already mentioned that in my comments earlier—that we have further work to do.

Speaker #6: The encouraging thing is that we see the trend going in the right direction. But obviously, as you pointed out, the 19% conversion rate is not where we want to be.

Melanie Kreis: Obviously, as you pointed out, the 19% conversion rate is not where we want to be. There is more work to be done.

Speaker #6: So, there's more work to be done.

Speaker #1: That was our answer, Alex. Next caller, please.

Martin Ziegenbalg: That was our answer, Alex. Next caller, please.

Speaker #3: Our next question comes from Marco Lameed with Barclays. Please unmute your line and ask your question.

Operator: Our next question comes from Marco Limite with Barclays. Please unmute your line and ask your question.

Speaker #7: Hi, good morning. I hope you can hear me. Please confirm.

Marco Limite: Hi. Good morning. I hope you can hear me. If you can confirm.

Speaker #4: Yeah, we can. Thank you.

Martin Ziegenbalg: Yeah, we can. Thank you.

Speaker #6: Marco we lost you somehow.

Melanie Kreis: Marco, we lost you somehow.

Speaker #7: Hello? Hi. Go ahead.

Marco Limite: Hello? Hi.

Speaker #6: Yes? Go ahead. Yes, we hear you.

Melanie Kreis: Yes.

Tobias Meyer: Go ahead.

Melanie Kreis: Yes. Yes, we hear you.

Speaker #7: First question, I'm the ship. The first question is on the share buyback. So, you have extended the share buyback until year-end 2027 and €500 million plus.

Marco Limite: The first question is on the share buyback. You have extended the share buyback until year-end 2027 and EUR 500 million plus. If we do the math, EUR 500 million executed year to date, plus EUR 1.5 billion until year-end 2027 is EUR 2 billion, which is EUR 1 billion per annum. Let's say we were modeling EUR 1.5 billion for 2026. The run rate on a three-year basis for now has come down. Can you just explain to us why, let's say you have extended by one year but only increased by EUR 500 million, despite let's say the trading environment being quite strong? That would be my first question. The second question is a bit more detailed on Express revenues, where I've got actually two questions there.

Speaker #7: But if we do the math, €500 million executed year to date plus €1.5 billion until year-end ’27 is €2 billion, which is €1 billion per annum.

Speaker #7: And let's say we were modeling $1.5 billion for 2026. So, the run rate on a three-year basis for now has come down. Can you just explain to us why—let's say, you have extended by one year, but only increased by $500 million, despite, let's say, the trading environment being quite strong?

Speaker #7: That would be my first question. The second question is a bit more detailed on Express revenues, where I actually have two questions. So the first one is: as you focus more on heavyweight cargo, should we expect a negative price mix going forward, as the average price per kilo goes down with the shift towards larger, more heavyweight types of cargo?

Marco Limite: The first one is, as you focus more on heavyweight cargo, shall we expect a negative price mix going forward as, let's say, the average price per kilo goes down as you focus on larger, more heavyweight sort of cargo? On my math, it looks like, yeah, Q2 pricing was a bit below expectations. Also within Express revenues, I've noticed that if I compare volume growth versus revenue growth, for example, Americas revenue growth is quite below volume growth. Also wondering what is driving, let's say, pricing dilution in Americas. The third question is a follow-up to something that's been already asked, but trying to be a bit more explicit. As we think about the EUR 150 million and the mid, go to mid double-digit benefits in Q2, to what extent shall we expect those numbers, let's say to repeat in Q3?

Speaker #7: On my math, it looks like, yeah, Q2 pricing was a bit below expectations. And then also within Express revenues, I've noticed that if I compare volume growth versus revenue growth, for example, America revenue growth is quite below volume growth.

Speaker #7: So, also wondering, what is driving, let's say, pricing dilution in the Americas? And then the third question is a follow-up to something that's already been asked, but I'm trying to be a bit more explicit.

Speaker #7: So, as we think about the $150 million and the mid- to low-double-digit benefits in Q2, to what extent should we expect those numbers, let's say, to repeat in Q3? Any indication would be good.

Marco Limite: Any indication would be good. Thank you.

Speaker #7: Thank you.

Speaker #6: Okay, Marco, let me start with the first question on the share buyback. Yeah, so indeed, year to date we have executed €500 million. And with the upping to €6.5 billion until the end of '27, we now have €1.5 billion left for roughly one and a half years.

Melanie Kreis: Okay. Marco, let me start with the first question on the share buyback. Indeed, year to date, we have executed EUR 500 million. With upping to EUR 6.5 billion until the end of 2027, we now have EUR 1.5 billion left for one and a half years roughly. I think that is also the run rate which we had at the beginning of the program for many years. We upped it in between, but I think it is a healthy run rate. It clearly gives us quite a good firing power now for the next months to come.

Speaker #6: And I think that is also the run rate which we had at the beginning of the program for many years. We then upped it in between, but I think it is a healthy run rate, and it clearly gives us quite a good firing power now for the next months to come.

Speaker #2: On Express revenue, I would say that the growth we are currently seeing is accretive. And, as you see, there's also obviously in the margin—it is very beneficial.

Tobias Meyer: On Express revenue, I would say that the growth we are currently seeing is accretive, you'd see this also obviously in the margin, is very beneficial. There will always be mix effects, but there are also difference in the cost structure. If you deliver a 200-gram flyer, obviously the variable air freight cost is much lower than the cost of the stop on the route. Heavier shipments have a different cost structure, thereby might have slightly lower revenue per kilo than what you see in a mix of light weights that have a lot of flyers as well, documents that means. That's normal. What we manage is that it's accretive growth, I think we're very successful with that. Also on backhaul lanes, which is the case, for instance, for the Americas.

Speaker #2: There will always be a mixed effect. But there are also differences in the cost structure. If you deliver a 200-gram flyer, obviously the variable air freight cost is much, much lower than the cost of the stop on the route.

Speaker #2: So, heavier shipments have a different cost structure, and thereby might have slightly lower revenue per kilo than what you see in a mix of lightweights that have a lot of flyers as well.

Speaker #2: Documents, that means. So that's normal. What we manage is that it's accretive growth, and I think we're very successful with that. Also, on backhaul lanes—which is the case, for instance, for the Americas—there are backhaul lanes out of the Americas.

Tobias Meyer: There are backhaul lanes out of the Americas where the headline revenue might be lower, the cost structure is also much lower. We fill backhaul space that would elsewise be empty. Also that growth, while it might look on the headline as being dilutive, can be very accretive, that's exactly what we have seen in Q2. We're not at all worried about yield dilution. We think the growth that we currently see in Express is very healthy. There has been a specific focus to also grow on backhaul lanes, which again might mean lower headhaul or lower yields, still very accretive growth as the cost structure for that volume is also much lower.

Speaker #2: Where the headline revenue might be lower but the cost structure is also much lower. We fill backhaul space that would otherwise be empty. So, also that growth, while it might look on the headline as being dilutive, can be very accretive.

Speaker #2: And that's exactly what we have seen in the second quarter. So we're not at all worried about yield dilution. We think the growth that we currently see in Express is very healthy.

Speaker #2: And there has been a specific focus to also grow on backhaul lanes, which again might mean lower headhaul or lower yields, but still very accretive growth, as the cost structure for that volume is also much lower.

Speaker #6: And just one very fundamental complement to what Tobias just explained. So, I think the foundation for the heavyweight product, as Express was always, is that this is not a cheap forwarding product in our premium network, but this is a heavier shipment in an express network with express pricing, where we then, of course, take into consideration, as Tobias just explained, the cost to produce and stuff.

Melanie Kreis: Just one very fundamental complement to what Tobias just explained. I think the foundation for the heavyweight product at DHL Express was always that this is not a cheap forwarding product in our premium network, this is a heavier shipment in an Express network with Express pricing, where we then, of course, take into consideration, as we have just explained, the cost to produce and stuff. This is an Express priced heavyweight product and hence accretive also to the Express profitability.

Speaker #6: But this is an Express-priced, heavyweight product and hence accretive also to the Express profitability.

Speaker #2: And we have the question.

Tobias Meyer: We have the question on the million-

Speaker #4: 50 million in.

Speaker #6: Yeah, and then we had the question on kind of like those more temporary effects—the 150 in Express, and the low to mid double-digit in Global Forwarding.

Melanie Kreis: We had the question on those more temporary effects, the EUR 150 in DHL Express, and the low to the double digit in DHL Global Forwarding. I think, we are at the start of the quarter still. I think just closing the accounts for July, where I think we can say that was more of a continuation of what we saw in Q2. Now we have August, which is a very weak month due to the summer period. Then we really have to see how the whole thing develops forward into September, then in the transition to Q4. I think for the beginning of the quarter it was a bit more of the same.

Speaker #6: Yeah, so I think—we are at the start of the quarter still. Just kind of closing the accounts for July, where I think we can say that was more of a continuation of what we saw in the second quarter.

Speaker #6: Now we have August, which is a very weak month due to the summer period. And then we really have to see how the whole thing develops going forward into September and then in the transition to Q4.

Speaker #6: But I think, for the beginning of the quarter, it was a bit more of the same.

Speaker #2: Right, Marco, I think that was helpful. Thank you. Next caller, please.

Tobias Meyer: Right, Marco. I think that was helpful. Thank you. Next caller, please.

Speaker #7: Our next question comes from Christian Nedelcu with UBS. Please unmute your line and ask your question.

Operator: Our next question comes from Cristian Nedelcu with UBS. Please unmute your line and ask a question.

Speaker #8: Hi, thank you very much for taking my questions. My first one on Express: can you give us a bit more color on the heavyweight campaign?

Cristian Nedelcu: Hi. Thank you very much for taking my questions. My first one on Express. Can you give us a bit more color on the heavyweight campaign? Just for us to visualize, if we look in the H1, I think your weight per shipment is up high single-digit year-over-year. Double-digit in Q2. How much of that is in your hands? How much of that is the heavyweight campaign versus the broader B2B market recovering and therefore a positive mix to weight per shipment? If you can help us visualize a bit that. The second question, there's some press articles suggesting that Express may lower the fuel surcharges from August for the same jet fuel price or for fixed jet fuel price.

Speaker #8: And just for us to visualize, if we look at the first half, I think your weight per shipment is up by a single digit year over year.

Speaker #8: Double-digit in Q2. How much of that is the heavyweight campaign versus the broader B2B market recovering, and therefore the positive mix to weight per shipment?

Speaker #8: So, if you can help us visualize that a bit. The second question: there are some press articles suggesting that Express may lower the fuel surcharges from August for the same jet fuel price, or for a fixed jet fuel price.

Speaker #8: I haven't seen this officially on your website, but I was just curious if that indeed will be implemented, and if yes, why? And the last one, if I may—you gave us some helpful data points earlier on the call.

Cristian Nedelcu: I haven't seen this officially on your website, I was just curious if that indeed will be implemented and if yes, why? The last one, if I may. You gave us some helpful data points earlier on the call. I'm just thinking directionally at the Express EBIT in Q3. You suggest that some of the EUR 150 million benefits may still be there. You seem very confident on the volume growth year-over-year. I account also for a bit of negative seasonality from Q2 to Q3 EBIT, but I'm still getting EBIT in Express at EUR 1.1 billion or something like that. Am I missing any other headwinds or any other tailwinds I should consider in this analysis? Directionally, can you provide us any color? Thank you.

Speaker #8: I'm just thinking directionally about the Express EBIT in Q3. You suggest that some of the $150 million benefits may still be there. You seem very confident in the volume growth year over year.

Speaker #8: I also account for a bit of negative seasonality from Q2 to Q3 EBIT, but I'm still getting EBIT in Express at $1.1 billion or something like that.

Speaker #8: Am I missing any other headwinds, or any other tailwinds I should consider in this analysis? Directionally, can you provide us any color? Thank you.

Speaker #2: Right. Thank you, Christian, for these three questions. I will take the first two, and then Melanie will add and take the third. So, on the heavyweight—I mean, all of what we do depends on the demand of customers.

Tobias Meyer: Right. Thank you, Cristian, for these three questions. I will take the first two and then Melanie will add and take the third. On the heavyweight, all of what we do depends on the demand of customers. That demand obviously is attracted by a certain value proposition, which we, I think, successfully developed and enhanced over time as it relates to what Express can do for some industrial customers. It's a match of a customer that is looking for a transport solution and us offering a great value proposition. It's not that we have taken on volume that we wouldn't have targeted. Quite the opposite. We continue to hone our pricing also as it relates to B2C. We attract what we think is the right value proposition that is good for our customers and is accretive in the network.

Speaker #2: And that demand, obviously, is attracted by a certain value proposition, which we, I think, successfully developed and enhanced over time as it relates to what Express can do for some industrial customers.

Speaker #2: But it's a match of the customer that is looking for a transport solution and us offering a great value proposition. So it's not that we have taken on volume that we wouldn't have targeted.

Speaker #2: Quite the opposite. We continue to hone our pricing, also as it relates to B2C, and we attract what we think is the right value proposition—one that is good for our customers and is accretive to the network.

Speaker #2: So, that is something that you have seen very consistently and continuously unfolding over the last quarters, and I would not expect that to change.

Tobias Meyer: That is something that you have seen very consistently and continuously unfolding over the last quarters. I would not expect that to change. That's the strategy we are on. We, with the results that we also discussed today, see ourselves confirmed that that works well for our customers and for us. I gave a couple of examples, concrete examples of what type of products these are that we now attract. Obviously we have some still less lower yielding B2C. That is what overall leads to those changes that you see broad-based across the globe and reflected in the Q2 numbers. As it relates to the surcharge mechanisms. The surcharges for us as it relates to fuel but also emergency surcharges are a cost recovery mechanism. That cost recovery mechanism has undergone some stress because the volatility has been quite profound.

Speaker #2: That's the strategy we are on. And we, with the results that we also discussed today, see ourselves confirmed that that works well for our customers and for us.

Speaker #2: I gave a couple of examples, concrete examples of what type of products these are that we now attract. And obviously, we still have some lower-yielding B2C.

Speaker #2: And that is what overall leads to those changes that you see broad-based across the globe and reflected in the Q2 numbers. It relates to the surcharge mechanisms.

Speaker #2: The surcharges for us, as it relates to fuel but also emergency surcharges, are a cost recovery mechanism. And that cost recovery mechanism has undergone some stress because the volatility has been quite profound.

Speaker #2: We've also seen significant regional imbalances in the prices of jet fuel, which we're not used to. And this led to some normal adjustments through the established mechanism, but also other adjustments.

Tobias Meyer: We've also seen significant imbalances regionally, in the prices of jet fuel especially, which we're not used to. This led to some normal adjustments through the established mechanism, but also other adjustments. The fuel surcharge has been reduced by 2 percentage points. Again, reflecting our cost base and our promise to customers that this is a cost recovery mechanism. We do not expect that to have significant impact on margins. Again, we aim to recover the cost that we have through emergencies such as higher insurance cost for flights, aircrafts, the volatility in jet fuel, which in Q2 has had some anomalies and thereby a broader range of the usage of tools that are available to us.

Speaker #2: And the fuel surcharge has been reduced by 2 percentage points, again reflecting our cost base and our promise to customers that this is a cost recovery mechanism.

Speaker #2: So we do not expect that to have a significant impact on margins. Again, we aim to recover the costs that we have through emergencies, such as higher insurance costs for flights and aircraft, and the volatility in jet fuel, which in Q2 has had some anomalies and thereby a broader range of the usage of tools that are available to us.

Speaker #6: Yeah, with regard to Q3, I mean, we're not going to give quarterly EBIT guidance. In terms of the fundamental drivers, I said already that July was a bit more of a continuation of Q2, but now things are getting slower with the onset of the summer.

Melanie Kreis: With regard to Q3, we're not going to give a quarterly EBIT guidance. In terms of the fundamental drivers, I said already that July was a bit more of a continuation of Q2. Now things are getting slower with the onset of the summer, August obviously a very weak month. We will really have to see where we end up also with the September trading, which is an important month. I think the number to beat is Q3 reported last year for DHL Express was about EUR 700 million. We had some cost of change, underlying was EUR 750. I think we should be able to deliver growth on that number. How strongly pronounced that will be, how many temporary effects we will have, that really remains to be seen.

Speaker #6: August has always been a very weak month, so we will really have to see where we end up also with the September trading, which is an important month.

Speaker #6: I think the number to beat is Q3 reported last year for Express, which was about $700 million. We had some cost of change; for underlying, it was $750 million.

Speaker #6: So I think we should be able to deliver growth on that number. How strongly pronounced that will be, how many temporary effects we will have, that really remains to be seen.

Speaker #2: Christian, thank you for your questions. We will now continue with the next caller, please.

Tobias Meyer: Cristian, thank you for your questions. We continue with the next caller, please.

Speaker #1: Our next question comes from Mark Seck with Kepler Cheuvreux. Please unmute your line and ask your question.

Operator: Our next question comes from Marc Zeck with Kepler Cheuvreux. Please unmute your line and ask your question.

Speaker #7: Good morning. I hope you can hear me. I also have three questions. First, on the fuel surcharge again—I guess I understand that, over time, it's kind of washed out. But I guess you had a headwind of $100 million or so in Express in Q1.

Marc Zeck: Good morning. I hope you can hear me. I also got three questions. First on the fuel surcharge. I guess I understand that over time it kind of washes out. I guess you had a headwind of EUR 100 million or so in Express in Q1. Would it be fair to assume that this turns into a tailwind of similar magnitude in Q2 already, or will this only happen in Q3? Another question on Express. Could you quantify growth or negative growth for B2B versus B2C in Express, whether weight or shipment or weight per shipment? Any of these metrics would help. For everything, let's say, that's not Express.

Speaker #7: Would it be fair to assume that this turned into a tailwind of similar magnitude in Q2 already, or will this only happen in Q3?

Speaker #7: Then, another question on Express. Could you quantify growth or negative growth for B2B versus B2C in Express, whether by weight or shipment, or weight per shipment?

Speaker #7: So, any of these metrics would help. And then, for everything that's not Express, we obviously had a change in the De Minimis in Europe, or a change in regulation for De Minimis in Europe.

Marc Zeck: We obviously had a end of de minimis in Europe, a change in regulation for de minimis in Europe for July. Could you quantify if you see any impact from that for, let's say, European parcels or German parcels that come from Asia? Has there been, let's say, volume reduction? Has there been some changes in the way the Asian marketplaces distribute their volume within Europe? Have they set up own logistics centers? Any change really from the changes in de minimis regulation Europe that affected parcels in Europe or Germany would be helpful. That's my three questions. Thank you.

Speaker #7: For July, and could you quantify if there’s—if you see any impact from that for, let’s say, European parcels or German parcels that come from Asia? Has there been, let’s say, a volume reduction? Have there been some changes in the way the Asian marketplaces distribute their volume within Europe, have set up own logistics centers?

Speaker #7: So any update, really, on the changes in the minimum regulation in Europe that affected parcels in Europe or Germany would be helpful. That's my three questions.

Speaker #7: Thank you.

Speaker #6: Yeah, thank you very much. Let me start with the fuel surcharge question. So indeed, there is always a certain timing element. And when we look at the development in the first half of the year, it was actually negative.

Melanie Kreis: Yeah, thank you very much. Let me start with the fuel surcharge question. Indeed, there is always a certain timing element. When we look at the development in the H1 of the year, it was actually negative at the end of Q1, March. It continued negative at the onset of the Q2. In the course of the quarter, it turned. Now, of course, the Q3 already started totally different again. I think for us, it is what it is. I think we have shown that we can management. We don't complain in the challenging quarters. It's also not the big driver in the supportive quarters.

Speaker #6: At the end of Q1, March, it was negative, and then continued negative at the onset of the second quarter. Then, in the course of the quarter, it turned.

Speaker #6: Now, of course, the third quarter already started totally differently again. So I think for us, it is what it is. I think we have shown that we can manage it.

Speaker #6: We don't complain in the challenging quarters, and it's also not the big driver in the supportive quarters. So I think, really, coming back to what we said earlier—repeatedly—the good Express performance in the second quarter is really predominantly driven by weight-per-day growth returning into a cost-optimized network with good yield action.

Melanie Kreis: I think really coming back to what we said earlier repeatedly, the good Express performance in Q2 is really predominantly driven by weight per day growth returning into a cost-optimized network with good yield action, and that really gives us nice operating leverage. I think on the B2B, B2C development. As Tobias already explained, we are now really focusing on what has always been the core of the Express business, on B2B growth. We still think that there will be, after the normalization post-COVID, growth also from e-com in Express, but it's not going to be this turbocharger growth driver, which it was for a couple of years. That is why we are focusing on B2B. I think the important difference between B2B and B2C in Express is the average weight. The B2C shipments are significantly lighter.

Speaker #6: And that really gives us nice operating leverage. I think on the B2B, B2C development—so, as Tobias already explained, we are now really focusing on what has always been the core of the Express business: B2B growth.

Speaker #6: We still think that there will be, after the normalization post-COVID, growth also from e-com in Express, but it's not going to be this turbocharged growth driver, which it was for a couple of years.

Speaker #6: And that is why we're focusing on B2B. I think the important difference between B2B and B2C in Express is the average weight. The B2C shipments are significantly lighter.

Speaker #6: But coming also back to the earlier discussions, both for B2B and for B2C shipments in Express, there is a very strict pricing discipline. So neither do we transport heavy stuff nor do we transport e-com stuff.

Melanie Kreis: Coming also back to the earlier discussions, both for B2B and for B2C shipments in Express, there is a very strict pricing discipline. Neither do we transport heavy stuff, nor do we transport e-com stuff at the wrong prices, and hence the pricing discipline is the same.

Speaker #6: At the wrong prices, and hence, the pricing discipline is the same.

Speaker #2: Then on the third question, the end of the minimus in Europe, which also was paired with some changes in terms of data requirements—particularly for our more consumer-facing business in the coastal area—had significant impact, but that's small overall.

Tobias Meyer: On the third question, the end of the de minimis in Europe, which also was paired with some changes in terms of data requirements, which particularly for our more consumer-facing business in the Post & Parcel area, had a significant impact, but that's small overall. I can say that the impact overall was not as pronounced as we might have expected. There was not much uptrend end of June as one might have expected that there's a kind of rush to the gate. Nor was there a significant drop-off in the initial days and weeks of July. However, as expected, there is some softening due to the increase of prices for consumers and the additional hurdles, especially for SMEs and private individuals to ship into the European Union. That is well in line with what we expected, maybe a little bit softer.

Speaker #2: I can say that the impact overall was not as pronounced as we might have expected. So, there was not much of an uptrend at the end of June, as one might have expected—that there's a kind of rush to the gate.

Speaker #2: Nor was there a significant drop-off in the initial days and weeks of July. However, as expected, there is some softening due to the increase in prices for consumers and the additional hurdles, especially for SMEs and private individuals, to ship into the European Union.

Speaker #2: But that is well in line with what we expected, maybe a little bit softer. As Melanie explained, we now have to see how this pans out in August.

Tobias Meyer: As Melanie explained, we now have to see how this pans out in August. We currently experience a normal seasonality, and that entails that the initial days of August are quite soft, as many people are on vacation. A relatively normal seasonal pattern. I do think there is some observable shift to fulfillment in the EU, especially in Eastern Europe, but there's also continued inflow via China fulfilled shipments into the EU, given that the cost competitiveness of those China marketplaces is still significant and existing also with the regime that we have now entered as it relates to EU customs.

Speaker #2: We are currently experiencing normal seasonality, which means the initial days of August are quite soft, as many people are on vacation. So, it is a relatively normal seasonal pattern.

Speaker #2: I do think there is some observable shift to fulfillment in the EU, especially in Eastern Europe. But there's also continued inflow via fulfilled shipments—China-fulfilled shipments—into the EU, given that the cost competitiveness of those China marketplaces is still significant.

Speaker #2: And existing also with the regime that we have now entered, as it relates to EU customs.

Speaker #1: All right. Well, thank you, Mark. We still have a couple of callers left. Luke.

Martin Ziegenbalg: Well, thank you, Marc. Still have a couple of callers left. Luke.

Speaker #5: Our next question comes from Hugo Watkins with BNP Paribas. Please unmute your line and ask your question.

Operator: Our next question comes from Hugo Watkins with BNP Paribas. Please unmute your line and ask your question.

Speaker #7: Yeah, thank you. Could you just talk through the moving parts on free cash a little more, and why the $3 billion guide wasn't moved along with the full-year EBIT guidance?

Hugo Watkins: Yeah, thank you. Could you just talk through the moving parts on free cash flow a little more and why the EUR 3 billion guide wasn't moved along with the full year EBIT guidance, just particularly where you are after the H1 of the year and the potential for positive movements in working capital in the H2? Thank you.

Speaker #7: Just particularly where you are after the first half of the year, and the potential for positive movements in working capital in the second half.

Speaker #7: Thank you.

Speaker #6: Okay, yeah, so thank you for that question. I think what we have seen now in Q1 and Q2 is this very nice flow-through of operating cash flow before changes in working capital.

Melanie Kreis: Okay. Yeah. Thank you for that question. I think what we have seen now in Q1 and Q2 is this very nice flow-through of operating cash flow before changes in working capital. We have the operating performance really arrive in the cash flow statement, which is good, and now depending on how the H2 of the year develops, that should of course also be an important factor. We have to see how working capital develops. We now have to see how is the revenue development in Q3, how do we work through the whole IEEPA effect in the course of the H2 of the year. Of course, we will also have to see how strong will be the revenue growth in the Q4 towards the year-end and how much working capital cash out will we see there.

Speaker #6: So, we have kind of like the operating performance really arrive in the cash flow statement, which is good. And now, depending on how the second half of the year develops, that should, of course, also be an important factor.

Speaker #6: We then have to see how working capital develops. We now have to see how the revenue develops in Q3, and how we work through the whole IEPA effect in the course of the second half of the year.

Speaker #6: And then, of course, we will also have to see how strong the revenue growth will be in the fourth quarter towards the year end, and how much working capital cash out we will see there.

Speaker #6: I think what is very important is that we have maybe been a bit conservative on the free cash flow number, because we foresee an avalanche of CapEx coming, right?

Melanie Kreis: I think what is very important, we have not been maybe a bit conservative on the free cash flow number because we foresee an avalanche of CapEx coming. Right? Yes, we still have some CapEx projects in the pipeline as you would expect for a growing business. We are not in a backlog position where we now have to do a crazy catch-up on the CapEx side. It's really a bit natural CapEx development in the H2 of the year. It's what will happen on the working capital, depending on the phasing of revenue growth in the H2 of the year, with the component of the IEEPA stuff in there. It is the OCF before changes in working capital.

Speaker #6: So yes, we still have some CapEx projects in the pipeline, as we would expect for a growing business. But we are not in a backlog position where we now have to kind of do a crazy catch-up on the CapEx side.

Speaker #6: So it's really a bit of natural CapEx development in the second half of the year. It's what will happen on the working capital, depending on the phasing of revenue growth in the second half of the year.

Speaker #6: With a component of the IEPA included in there. And then it is the OCF before changes in working capital.

Speaker #1: Great, thanks, Hugo. And we continue, I think, with Harry from Deutsche.

Martin Ziegenbalg: Great. Thanks, Hugo. We continue, I think, with Hari from Deutsche.

Speaker #5: Our next question comes from Harishankar Ramanmurthy with Deutsche Bank. Please unmute your line by pressing star six and ask your question.

Operator: Our next question comes from Hari Shankaran Ramamurthi with Deutsche Bank. Please unmute your line by pressing star six and ask your question.

Speaker #1: Harry, can't hear you.

Martin Ziegenbalg: Hari, can't hear you.

Speaker #7: Sorry.

Hari Shankaran Ramamurthi: Sorry.

Martin Ziegenbalg: Hello.

Speaker #1: Hello?

Hari Shankaran Ramamurthi: Had on mute. Good afternoon, everyone. Thanks for taking my questions. Maybe a quick couple of them. I believe some of your peers have been highlighting that the de minimis exemption impact on the Asia-US lanes is now back to normal, as in back to where it was before the exemption was removed. It would be interesting to have your take on the same. Secondly, on the working capital front, was just wondering, because the outflows in Q2 seem to be on the back of elevated rates and elevated activities, is it fair to assume that if rates remain elevated, you'll still see a normalization into Q3?

Speaker #7: Good afternoon, everyone. Thanks for taking my questions—maybe just a quick couple of them. I believe some of your peers have been highlighting that the de minimis exemption impact on the Asia-US lanes has now returned to normal, as in, back to where it was before the exemption was removed.

Speaker #7: So, it would be interesting to have your take on the same. And secondly, on the working capital front, I was just wondering—because the outflows in Q2 seem to be on the back of elevated rates and elevated activities—is it fair to assume that if rates remain elevated, you'll still see a normalization into Q3?

Speaker #1: All right.

Tobias Meyer: All right. Well, thank you for these questions. I'll take the first, Melanie, the second. Obviously on the US, we have now the change cycling out on a year-on-year basis. We saw a significant drop in the China-US trade, definitely also for B2C. Way beyond that has now cycled out, and in that sense, we are back to normal, but not on the same level. The growth has gone to other lanes. There have been substituting effects given that such goods are often not manufactured in the United States. You will have seen growth on other trade lanes that have substituted that.

Speaker #2: Well, thank you for these questions. I'll take the first, and Melanie will take the second. So, obviously on the US, we now have the change cycling out on a year-on-year basis.

Speaker #2: We saw a significant drop in China-US trade, definitely also for B2C. But beyond that, that has now cycled out, and in that sense, we are back to normal.

Speaker #2: But not on the same level. The growth has shifted to other lanes. There have been substitution effects, given that such goods are often not manufactured in the United States.

Speaker #2: So, you will have seen growth on other trade lanes that have substituted that. But we are in what I would call a steady state situation as it relates to the US.

Tobias Meyer: We are in a, what I would call, steady state situation as it relates to the US, and it's also important to see that the de minimis in the United States was a true de minimis, where you have a significant step-up in cost on the European side. We always had an import VAT. We now have the minimum amount of EUR 3 customs duties, which elevates the cost for very low-value items, but is less relevant for mid-priced or more expensive items. This is also why the impact is not expected to be as significant, at least not at this stage, than with the change that we have seen in the United States. Again, for us, the B2C play, especially for express, not the strongest factor. What we currently see also as it relates to the United States is, by and large, B2B-driven.

Speaker #2: And it's also important to see that the de minimis in the United States was a true de minimis, whereas you have a significant step up in cost on the European side.

Speaker #2: We always had an import VAT. We now have a minimum amount of €3 in customs duties, which elevates the cost for very low-value items.

Speaker #2: But it's less relevant for mid-priced or more expensive items, so this is also why the impact is not expected to be as significant, at least not at this stage.

Speaker #2: Then, with the change that we have seen in the United States—again, for us, the B2C play, especially for Express, is not the strongest factor.

Speaker #2: What we currently see, also as it relates to the United States, is by and large B2B-driven.

Speaker #6: Yeah, so with regard to working capital, I mean, what we have seen in Q2 is almost textbook—what you would expect. And I mean, obviously, particularly in Express and Forwarding on the airfreight side, we have payment terms with the airlines for fuel, which are relatively short.

Melanie Kreis: Yeah. With regard to working capital, what we have seen in Q2 is almost textbook what you would expect. Obviously, particularly in express and forwarding on the airfreight side, we have payment terms with the airlines for fuel which are relatively short. Then we have the standard payment terms with the customers. In a growing business, that structurally leads to a cash-out in working capital. If revenue would now stabilize quarter-over-quarter, we shouldn't see a continuation of this build-up, because it begins to sink again more. We have to see what happens in Q4 when we probably get, again, also into the seasonal growth mode. What we are watching very closely is there anything which goes beyond the normal business growth working capital drain? Do we see strange things on the DSO, on the DPO side?

Speaker #6: And then we have, yeah, the standard payment terms with the customers. So, in a growing business, that structurally leads to a cash out in working capital.

Speaker #6: If revenue would now stabilize quarter over quarter, we shouldn't see a continuation of this build-up. Because if it begins to sink again more, then we have to see what happens in Q4 when we probably get again also into the seasonal growth mode.

Speaker #6: What we are watching very closely is: Is there anything which goes beyond the normal business growth working capital drain? So, do we see strange things on the DSO or on the DPO side?

Speaker #6: And that is not the case, but that is obviously, clearly, something we are watching very closely, division by division. And I think ultimately, if you grow and you have a working capital out due to the growth, you should also see the benefits in the OCF before changes in working capital, so that it's overall a healthy development.

Melanie Kreis: That is not the case, but that is obviously clearly something we are watching very closely division by division. I think ultimately, if you grow and you have a working capital out due to the growth, you should also see the benefits in the OCF before changes in working capital. That is overall a healthy development, and that is what we're focused on.

Speaker #6: And that is what we're focused on.

Speaker #1: So, good numbers—attracting great questions. But we've come to only two callers remaining. Luke?

Tobias Meyer: Good numbers attracting great questions, we've come to only two callers remaining. Luke?

Speaker #5: Our next question comes from Chloe at City. Please unmute your line and ask your question.

Operator: Our next question comes from Chloe at Citi. Please unmute your line and ask your question.

Speaker #4: Hi, thank you for taking my question. My question is around Express. So, if we assume volumes continue to recover from here, how much have we utilized of the current capacity? And I'm just wondering, how much operational leverage do we have with the current capacity, if you can help quantify?

[Analyst] (Citi): Hi. Thank you for taking my question. My question is around Express. If we assume volume continue to recover from here, how much have we utilized the current capacity? I'm just wondering how much operational leverage do we have with the current capacity, if you can help quantify. Also, a second bit around Express is that we have seen a good margin expansion so far with the Fit for Growth program and also the volume recovery. If we think about more longer term in terms of margin, is mid-teens still a reasonable target, or are we able to see something higher? Thank you.

Speaker #4: And also, a second bit around Express is that we have seen good margin expansion so far. With the Fit for Growth program and also the volume recovery, if we think more long-term in terms of margin, is mid-teens still a reasonable target, or are we able to see something higher?

Speaker #4: Thank you.

Speaker #2: So, on express utilization, this is a tricky question because we would aim, going forward, to achieve a higher healthy top utilization than in the past, through also growth on backhaul lanes.

Tobias Meyer: On Express utilization, this is a tricky question, because we would aim going forward to achieve a higher healthy top utilization than in the past through also growth on backhaul lanes. With that, there is some operational leverage left. We also have still capacity, as it relates to most facilities in Europe, for instance, where we obviously have a very strong footprint. We've also recently just taken into operation a larger facility in Shenzhen. The ground infrastructure, I think, generally is in good shape. There might be certain locations and certain weight bands where some expansion is needed, but there's some operational leverage left as it relates both the air network as well as the ground.

Speaker #2: And with that, there's some operational leverage left. We also still have capacity as it relates to most facilities in Europe, for instance, where we obviously have also recently just taken into operation a larger facility in Shenzhen.

Speaker #2: So, the ground infrastructure, I think, generally is in good shape. There might be certain locations and certain weight bands where some expansion is needed, but there's some operational leverage left as it relates to both the air network as well as the ground.

Speaker #2: But again, especially as it relates to the air network, we would also aim higher to manage growth in a more balanced way, and therefore exceed what we in the past considered a healthy level of utilization.

Tobias Meyer: Again, especially as it relates to the air network, we would also aim higher to manage growth in a more balanced way, and therefore exceed what we in the past considered a healthy level of utilization beyond which, if we go too high, we have a service and cost impact, which we obviously would want to avoid.

Speaker #2: Beyond that, if we go too high, we have service and cost impacts, which we obviously would want to avoid.

Speaker #6: Yeah, with regard to the express margins, I mean, first of all, let me say that we are quite pleased with this 16.8% express margin we had in the second quarter, also in comparison to the rest of the market.

Melanie Kreis: Yeah. With regard to the Express margins, first of all, let me say that we are quite pleased with the 16.8% Express margin we had in the second quarter, also in comparison to the rest of the market. Yeah, I think we have obviously shown the strength of the operating leverage flowing through. Having said that, as we said repeatedly before, I think the most important number for us on Express is the absolute number, and I think it's fantastic to see that very strong EBIT growth in absolute terms. The EUR 1.2 billion in the quarter is probably the even more important number. We now focus on delivering good EBIT growth, which should give us also a healthy margin. As we all know, the Express margins are also impacted by elements like fuel surcharge and currency and so on.

Speaker #6: So, yeah, I think we have obviously shown the strength of the operating leverage flowing through. Having said that, as we said repeatedly before, I think the most important number for us on Express is the absolute number.

Speaker #6: And I think it's fantastic to see that very strong EBIT growth in absolute terms. So the €1.2 billion in the quarter is probably the even more important number.

Speaker #6: And we now focus on delivering good EBIT growth, which should also give us a healthy margin. But as we all know, the express margins are also impacted by elements like fuel surcharges, currency, and so on.

Speaker #6: So, we will keep measuring predominantly the absolute EBIT contribution.

Melanie Kreis: We will keep measuring predominantly the absolute EBIT contribution.

Speaker #1: Great, thank you. Luke, looks like we're going to conclude the Q&A round with a call from Cedar.

Tobias Meyer: Great. Thank you. Luke, looks like we're going to conclude the Q&A round with a call from Cedar.

Speaker #5: Yes, our final question comes from Cedar Ekblom with Morgan Stanley. Please unmute your line and ask your question.

Operator: Yes. Our final question comes from Cedar Ekblom with Morgan Stanley. Please unmute your line and ask your question.

Speaker #7: Thanks very much. Hi, guys. Two very simple questions on the weight campaign. Could you quantify the margin differentiation that you make on a heavyweight shipment versus the more traditional shipment?

Cedar Ekblom: Thanks very much. Hi, guys. Two very simple questions on the weight campaign. Could you quantify the margin differential that you make on a heavyweight shipment versus the more traditional shipment? I take the point on sort of the revenue per kilogram being lower, but also the cost to serve being lower. It would be helpful to get a bit of guidance on that. Then could you quantify what % of your business today you would classify as your heavyweight offering, and where you think that can go? Or if you're not going to give us that kind of a number, maybe the growth in your heavyweight business relative to the growth of the overall Express offering, just so we can get a bit more feel for the mix improvement that the business is enjoying at a margin level. Thank you.

Speaker #7: I take the point on the revenue per kilogram being lower, but also the cost to serve being lower. It would be helpful to get a bit of guidance on that.

Speaker #7: And then, could you quantify what percentage of your business today you would classify as your heavyweight offering? And where you think that can go? Or, if you're not going to give us that kind of a number, maybe the growth in your heavyweight business relative to the growth of the overall Express offering—just so we can get a bit more feel for the mix improvement that the business is enjoying at a margin level.

Speaker #7: Thank you.

Speaker #6: Yeah, so I think on the first question, Cedar, as I tried to say before: we look at the profitability of the network beforehand and we make sure that whatever shipment goes into the network is priced in the right way.

Melanie Kreis: Yeah. I think on the first question, Zita, as I tried to say before, we look at the profitability of the network before, and we make sure that whatever shipment goes into the network is priced in a right way so that the overall margin develops in the right way. Those pricing mechanisms also apply to the heavyweight shipments. Like we said before, it doesn't make sense for us to differentiate between an e-com profitability and a B2B profitability. I think the same is true for the heavyweight stuff. It's really about optimizing the holistic profitability of the network. On the second question, more details on how many of those heavy things do we have? I would get back to my advertisement from earlier. I think John, in September, will give some more details on the role of heavyweight in the network.

Speaker #6: So that's how the overall margin develops in the right way. And those pricing mechanisms also apply to the heavyweight shipments. And, like we said before, it doesn't make sense for us to differentiate between e-com profitability and B2B profitability.

Speaker #6: I think the same is true for the heavyweight stuff. It's really about optimizing the holistic profitability of the network. On the second question, more details on how many of those heavy things we have.

Speaker #6: I would get back to my advertisement from earlier. I think John, in September, will give some more details on, yeah, the role of Heavyweight in the network.

Speaker #6: Of course, it makes a huge difference when you look at it in terms of number of shipments. It's a tiny fraction when you look at it in terms of contribution to the weight.

Melanie Kreis: Of course, it makes a huge difference when you look at it in terms of number of shipments. It is a tiny fraction when you look at it in terms of contribution to the weight. It is a more noticeable impact. I would really use that opportunity again to say, mid-September, John in London, I think he will talk a lot more about heavyweight growth and Express.

Speaker #6: It is a more noticeable impact. But I would really use that opportunity again to say, mid-September, John in London—I think he will talk a lot more about heavyweight growth in Express.

Speaker #1: Thank you, Melanie. What a wonderful way to close our Q&A round. I want to thank each and every one of you for your interest and your questions.

Martin Ziegenbalg: Thank you, Melanie. What a wonderful advertisement to close our Q&A round. I want to thank each and every one of you for your interest and your questions, and I want to close the call by passing over to Tobias for his closing remarks.

Speaker #1: And I want to close the call by handing over to Tobias for his closing remarks.

Speaker #2: Yeah, thank you for your interest and your great questions. I would conclude by saying we are satisfied with the performance in the second quarter.

Tobias Meyer: Yeah. Thank you for your interest and your great questions. I would conclude by saying we are satisfied with the performance in Q2. Personally, I'm even more satisfied with the great progress on the strategic initiatives, the enhancement of the value proposition that we see with DHL Express, but also and especially with DHL Supply Chain and DHL Global Forwarding. There is more work for us to do, which is great because we have more growth opportunities on the radar that we want to unlock, and there are certain areas where we are very focused on further enhancing performance. It is not only the volatile environment around us that keeps us busy, but the continued execution on an ambitious plan, on a strategy to further accelerate profitable growth.

Speaker #2: Personally, I'm even more satisfied with the great progress on the strategic initiatives— the enhancement of the value proposition that we see with DHL Express, but also, and especially, with DHL Supply Chain and DHL Global Forwarding.

Speaker #2: There is more work for us to do, which is great because we have more growth opportunities on the radar that we want to unlock.

Speaker #2: And there are certain areas where we are very focused on further enhancing performance. So, it's not only the volatile environment around us that keeps us busy, but also the continued execution on an ambitious plan—a strategy to further accelerate profitable growth.

Speaker #2: That's what we set out to do, and we're obviously pleased that now, with the second quarter, we also see it in the reported numbers.

Tobias Meyer: That's what we set out to do, and we're obviously pleased that now with Q2, we also see it in the reported numbers. We are confident to continue on this successful path as the year goes by and we enter the midterm horizon. With that, again, thank you for your interest, and wish you a great day.

Speaker #2: And we are confident that we will continue on this successful path as the year progresses and we enter the mid-term horizon. With that, again, thank you for your interest.

Speaker #2: And wish you a great day.

Operator: This concludes today's call. Thank you everyone for joining. You may now disconnect.