DHL Group Aktie

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the DHL Group conference call. Please note that the call will be recorded. You can find the privacy notice on dhl.com. [Operator Instructions]

I would now like to turn the conference over to Martin Ziegenbalg, Head of Investor Relations. Please go ahead.

Thank you, and a warm welcome from my side to our Q1 '26 call, as it says on the title. I've got with me our Group CEO, Tobias; and the Group CFO, Melanie. You know the procedure, and let's start right away with your part, Tobias.

Good morning. I'm pleased to inform you about a good quarter. We started with good momentum in the year of 2026 building already on the trends of Q4 of 2025. So group revenue increased 2% on an organic basis, and this is led by DHL Supply Chain, especially very good momentum in the Americas and our e-commerce division.

Group EBIT is up a good 8% year-on-year. Here, Express made a particularly important contribution. It's the seventh consecutive quarter of EBIT growth in our Express division. And we are on a very good momentum, as it relates to the strategy and what we wanted to achieve in DHL Express. And you also see good cash flow in the quarter. So good earnings quality with a free cash flow of EUR 1.2 billion, which for Q1 is a very good figure for us also if you compare this historically.

This has been a quarter that has been, again, quite volatile, relates to the external conditions that we had to deal with. We obviously had the conflict in the Middle East. That impacted our operations there. Now, this is a relatively small part of overall group revenue. But there are obviously a broader implications, especially as it relates to the trade lane from Asia to Europe. I think we have been able to deal with that very well. It was a quarter with excellent quality and excellent customer feedback. So I'm very proud how our colleagues in the Middle East have handled the situation, but also more broadly how our operating divisions have reacted to the changing environment and continue to execute on the measures that we've talked about earlier, the ability to shift, especially in our asset-intensive Express network to continue to work on cost and structural improvements as well as the established yield mechanisms.

We're also making good progress, as it relates to the execution of our strategy despite demanding day-to-day. We are continuing to execute on Fit for Growth measures, the implementation of AI being part of that, but also the legal setup of the group, which will be voted on during the AGM, at least this part measure that relates to P&P. And we have continued to invest, especially in our Supply Chain division. This was a very good quarter in terms of customers signing. And as a result of that, we continue to invest to build the infrastructure that is needed to support those operations. So overall, despite a difficult backdrop of external factors, I think a really good quarter and a good start into the year.

On Page 3, some more details on how the situation in the Middle East impacted us. Obviously, in the short term, with such a tragic military conflict, our concern is about the safety of our employees, but then to continue operation for our customers. We obviously had a significant volume shortfall, activity shortfall in the initial 2 weeks of the conflict, logical outcome of that military activity and the closure of airspace and sea routes.

After that period, we saw volume recovering. Very good reaction, which I'll talk about in a second in terms of how we handled the situation operationally. And that also brought some opportunities. But now in this space in transitioning to the long term, I think a worry across the industry and more broadly regarding the macroeconomic impact that the situation has, especially as it relates to the price of energy for us, that being especially the price of kerosene, jet fuel and diesel.

Page 4 gives you a little bit of details and the sense of how we operationally reacted to the situation on the air side that being Express in global forwarding air freight. In Express, our regional hub is in Bahrain, which was obviously significantly impacted by the military activities with airspace being closed for several weeks. We shifted operations using Riyadh and Muscat as primary airports of entry for our dedicated fleet, which we're able to evacuate some aircraft out of Bahrain after some days into the conflict, and those then being productively deployed into Riyadh and Muscat.

So the network -- road network that we have in the region was extremely helpful in this situation to connect via road, Riyadh and Muscat, to those areas, the UAE, Qatar, Bahrain, but also Kuwait, where airspace was closed. So that enabled us to provide good service to our customers. And given that not all competitors were able to provide such a setup, it was also visible that our customers were very pleased.

On the ocean side, a similar setup with ports in Oman and the Red Sea ports of Saudi Arabia being used for ports of entry into the regions. And then we secured additional trucking capacity very early in the conflict to distribute containerized cargo across the region. Obviously, with the Strait of Hormuz still being closed on the ocean side, there's continued disruption and still cargo that has not reached the region.

And on the air side, the capacity shortfall of the Middle Eastern carriers is something that we continue to see, and that continues to impact the trade flows from Asia to Europe, and then, obviously, the impact of the fuel price, both in its volatility as well as its level is something that concerns our customers. You know that we have established mechanisms to pass higher costs on to customers. Some of those mechanisms have a certain latency. But again, that's something that we're used to. Overall, the Middle Eastern situation not having a significant impact on our Q1 earnings.

Page 5 shows a little bit more about the volume and revenue development that we have seen for the group and DHL Express specifically. So the group on the left side achieved 2% organic growth in the first quarter. We obviously continue to face headwinds, especially when it comes to FX. Now, that's going to cycle out, as we go along from Q2 onwards. We will have less of FX headwinds, at least with current exchange rates relative to last year. And also on the volume side, we have easier comparables. So if you look to the first quarter, we were about 4.5% organically above the first quarter of 2024. And would we continue with that momentum, you would see a significant change in the year-on-year comparisons with Q2.

On the Express side, we are very pleased that our measures as it relates to the focus on smart industrial growth are playing out as we plan. We see now significant growth in the weight per day of time-definite international in the rest of the world, that excluding those destination U.S. lanes. And also, as it relates to Destination U.S., we see a significant improvement as we would expect with now the effects of the U.S. tariff changes annualizing.

What has helped us to a great extent also to stay cost competitive and to grow in areas that are profitable for us is our modern fleet. On Page 6, you see the transition that we went through with significant investments that we made as a group over the last 6 years, now being a very large 777 operator and having the most modern and fuel-efficient fleet in our industry. With current jet fuel prices, this is obviously extremely helpful to act profitably and to be cost competitive for our customers. This is the perfect fleet to support our commercial strategy of smart industrial growth and explains why we have this continued margin expansion in DHL Express. It is a contributing factor to the success that we have seen in Q1 and the ongoing positive momentum this brings.

Page 7, some highlights in terms of continued focus on executing our strategy. Despite the turmoil in the Middle East, we remain focused on regions that benefit from the geopolitical situation we are in, our GT20 countries. So those countries with geo-tailwind, we continue to work intensively to improve our market position in those countries, close capability gaps, especially as it relates to the focus sectors that we have globally and where we want to make sure that we're particularly successful in those geographies. Also by working even better together across the divisions and thereby delivering end-to-end solutions to our customers. Again, on the customer side, this was an extremely successful quarter with very good feedback and very good quality, objective quality KPIs across all divisions, and that supports, obviously, this strategy.

Sector focus, last time we talked about life science and health care. Today, a snapshot on data center logistics. This is a value chain that is still unfolding. We see particularly high demand in North America to stage inbound to manufacturing, you could say. Inbound to construction might be a better word. Supplies there so to bring the components of data centers close to the location of usage, store them locally to have them just in time available when the construction of the data center progresses. So that's a significant activity that we are engaged in.

Next to the international transportation of such goods that not only being server racks and servers themselves, but a lot of equipment around it, especially electricity related. These are significant components and significant tonnage that is typically transported by air, where the collaboration of DHL Global Forwarding and DHL Supply Chain is very helpful for our customers and highly appreciated.

As it relates to the guidance for the rest of the year, we uphold what we communicated earlier that we want to increase EBIT, group EBIT above the 2025 level, so above EUR 6.2 billion. The split on DHL P&P and group function remains unchanged. So does the outlook on free cash flow on CapEx, on the tax rate, term outlook. We remain conservative in light of the volatility around us and the potential adverse effects of higher energy prices on global GDP growth, whilst we obviously recognize that we had a very good start into the year and have good momentum.

With that, over to Melanie for some more details on the divisional development.

Yes. Thank you very much, Tobias, and welcome to all of you out there also from my side. Let me indeed briefly provide some more relevant details on our Q1 numbers, starting on the divisional overview on Page 9. So Tobias talked about the nice EBIT growth we saw at group level in Q1. That was mainly driven by another strong quarter from DHL Express. We really see how the team's actions on Fit for Growth have structurally brought down the Express cost base, resulting in the seventh consecutive quarter of underlying year-over-year profit growth in a slightly improving, but not yet growing market environment. Global Forwarding performance compares well with its closer peer group. So when we look at the numbers, we, of course, see a lot of market trends at work here.

In the shorter term, the Middle Eastern changes have been more supportive for air freight versus a temporary burden on ocean freight gross profit. And I will come back later to the more structural growth path laid out by Oscar for the division. DHL Supply Chain has seen another strong quarter with growth in revenue, EBIT and new business wins, and that's despite the expected dollar-driven currency headwinds. This really shows how the structural trends like e-commerce, life science, health care, data center infrastructure, which Tobias just talked about, how those trends underpin supply chain growth and how our team is at the forefront of robotics, automation and use of data to drive growth for our customers at strong and rising profitability.

Reported revenue growth at DHL eCommerce will be skewed by our U.K. deal with every until the fourth quarter. So what is important for us here is that we continue to drive organic growth at 5% in Q1. In this growth phase, EBIT performance was roughly stable in Q1, and the business continues to be free cash flow positive. So it keeps generating the cash needed for its growth investments.

Last, but not least, we have seen another strong performance from P&P. Strong in the sense that given the lack of price increases on regulated letters, EBIT is holding up well. And here, this shows the benefits of our structural Fit for Growth measures on core network and indirect costs as well as good parcel growth with a 6% increase in volume and 8% on revenue. So to sum it up, overall, as Tobias already said, we are very pleased to start the year with this Q1 performance.

Let me come back to Express with some more important observations on Page 10. We are showing you a look back at the development since 2019. And as you know, we have driven a significant revenue and EBIT increase, even though TDI shipments were down over the period. So the question is how did we do this? On the revenue side, the basis has been a sustained increase in weight per shipment, as you can see on the slide here as well as our consistent yield management. And the margin increase reflects the earlier-mentioned cost measures as well as efficient network flex.

So let me be very clear here, with higher profitability despite lower shipments is not a coincidence, but the result of how we steer sales, pricing, network cost in close alignment. And better data and analytics certainly help in the steering with a key KPI being weight and not shipments. And this is why we have decided to reflect our internal steering discussions also in the external reporting, with a change in our external main growth KPI from shipments to weight because weight per day is the KPI that is more relevant for network profitability.

Let me also quickly come back to DHL Forwarding. Page 11 shows you some extracts of Oscar's Capital Market Briefing, which we held in London a few weeks ago. The full presentation is, of course, available on our IR website. I will not go back to all the detailed measures and levers that Oscar explained. But what I think is important for you to know as our shareholders is Oscar's ambition to grow EBIT and cash flow of this division significantly, driven by a combination of above-market volume and GP growth while bringing profitability further up to industry levels. The main drivers to do that are 2 larger turnaround topics that Oscar already tackles, road freight and U.S. air freight, but more importantly, a structural profitable growth acceleration in the business.

And I think this is the most important observation from me here, optimizing our Global Forwarding performance is not about trading off between growth and profitability. It is about growing in the right verticals, regions and products into lean and efficient structures, so to drive top line growth at increasing margins. And that is actually exactly what Oscar has successfully done in supply chain over the last years.

Now, on Page 12, we have added for completeness, a summary of our P&L and cash flow statement with the main observation here that there are actually no real unusual effects to point out. It is a very strong operating performance from top to bottom line with our share buyback program, again, nicely supporting earnings per share growth on top of that. And while I would ask you to not simply extrapolate the strong Q1 free cash flow number, I think this cash generation is just another testimony of the clean operating strengths that our Q1 numbers show.

So our conclusion on Page 13 is rather simple today in a not always so simple world. Q1 was a good start into the year that allows us to confirm with confidence our 2026 targets issued a few weeks ago. In the current circumstances, cost capacity and yield drivers remain in focus as a secure, profitable growth independent of market tailwinds. And yes, we also see some traction on the growth side with a sequential improvement in Express shipment and rate, the start of the gradual annualization of the '25 tariffs, and of course, our strategic focus on the GDP plus growth opportunities as laid out in our strategy 2030.

And with that, we look forward to your questions. Thank you.

[Operator Instructions] Our first question is from Andy Chu from Deutsche Bank.

Two questions, if I could, please. The first one is on the Fit for Growth program, which has been running for several months. Do you think there's the scope here to increase that EUR 1 billion cost target? And then switching topics to share buybacks, I can understand why your targets remain conservative. But in terms of your balance sheet position, the strong free cash flow generation, you typically have a sort of multiyear share buyback program, but the current one runs out at the end of this year. So when might we expect an update, please, on share buybacks?

Okay. So yes, thank you for those 2 questions. On the Fit for Growth program, I mean, what we already said in March was that we are very pleased with the traction of the program. It was visible ramping up in our '25 quarterly announcements, and we see the continued good progress in Q1. So we are pushing and looking for further opportunities. As we already said before, we don't expect a lot of cost of change this year. This is why we're not flagging that separately. But yes, so this is obviously, again, strongly supporting our Q1 results in Express, but also across the group.

On the share buyback, as we said in March, we still have well over EUR 1 billion left in the current share buyback program, so we didn't see the necessity nor the timing to talk about any further upside on that topic. So yes, I think we are pleased with where we currently are.

Our next question is from Muneeba Kayani from Bank of America.

I wanted to ask, you said that in Q1, you had limited impact from the Middle East. Can you talk to us about kind of how to think about that in Q2? What have you seen in April? And could there be a bit more of a benefit in Express and Forwarding in the second quarter from the air freight market and as your fuel surcharges would have caught up now in Express? So that's my first question.

And then secondly, on Slide 5, and thank you for showing the weight data now. So we're seeing rest of the world weight picking up in Q1. What trade lanes is -- are driving that pickup, if you could help us understand? And kind of has April seen that growth momentum continuing?

Thank you, Muneeba, for these 2 questions. On the Middle East, I think the overall impact of our operations there needs to be seen in light of the weight that this has the contribution of the GCC countries is a low single digit of our total revenue. So it's not as decisive. Obviously, there's a broader impact, as you also mentioned on the air freight market, Asia. Europe, we continue to see elevated rates. As the Middle Eastern capacity is not available, the hub carriers in the Middle East do not provide the same amount of capacity than we are used to. And that definitely continues to have an impact also now. We obviously remain cautious because the jet fuel situation raises prices, raises cost for our customers at some point that also has effects on the demand side. But certainly, the air freight market from Asia to Europe remains strong.

And also, on the Express side, we explicitly highlighted that we see ourselves well positioned with the fleet that we have. So relative to competition, I think we're in a good spot here. How the overall market will turn out, I think we have to see. It remains very volatile. But as we highlighted, we believe that we developed a good momentum in the first quarter, and that continues. As it relates to the specific question on the weight development with Express and the rest of world, that is pretty broad. That excludes also exports from the United States, for instance, but it really cuts across. So I would not want to highlight anything particular. We really see good momentum across a couple of trade lines. We also see good momentum in the day definite business that we have in Europe, for instance, which is not included here. This is TDI only. So outside these lanes to the United States, we see overall good momentum.

Our next question is from Cedar Ekblom from Morgan Stanley.

I've got a question on supply chain. So we've had a very solid organic growth trend, continuing trends that we've seen for a couple of quarters. Margins were down a little bit. And I want to understand how we should think about the shape of margin development from here? I appreciate that as you win new contracts, those can be sometimes a little bit margin dilutive. And then as your customer gets more comfortable with the offering, that tends to go up over time. So with that pretty strong top line trend and your sort of best-in-class position in the market, how should we think about that margin in the next couple of years? Could it push towards 7% at EBIT, which is above your sort of midterm targeted range? And if it can't, what is the thing that's holding the margin back?

So, Cedar, I think this is pretty easy. We have a certain trend established, and I would see no reason why there would be a significant deviation from that trend line. As you rightly said, we had very solid growth. It varies a little bit which region is delivering, contributing more to that growth in the last quarter. Despite the FX headwind, we had very good contributions from the Americas.

Overall, we expect that momentum, that positive momentum to carry on, and that would also apply for the margin. New business is not necessarily dilutive. In the past, especially in Europe, it was quite opposite that some prolongations have been dilutive. We worked actively to find measures that those prolongations are not dilutive anymore, for instance, with the campus setup so that you do not have the risk of redundancies and related restructuring costs when the customer leaves you. So those are those measures that we've taken over the years to really improve the business model to avoid margin dilution as contracts are renewed.

So across the portfolio now, those renewal or first wins do not have a decisive effect. What plays more a role are our structural measures, our investments also in robotics and the enhancement of our offering through additional features like real estate solutions. That has helped us to improve margins over time.

Our next question is from Jacob Lacks from Wolfe Research.

So you listed fuel availability as a potential impact in the medium term. At what point, if ever, does this become a constraining factor on your network? And bigger picture, do you view higher fuel pass -- higher fuel prices as a true pass-through for Express? Or could it even be a bit of an EBIT positive when surcharge is fully reset? And then one on -- one more on the TDI weight, down, too. How does this compare between B2B and B2C in the context of we've now seen a few consecutive months of PMIs above 50 in both the U.S. and Europe? Is this materializing in your B2B trends?

Thank you, Jacob, for those 3 questions. So fuel availability, I think we have to differentiate between large hubs or airports, where we have our own base, where we have dedicated infrastructure as the case in Leipzig for fuel supply there. We have an intense dialogue, and we have more visibility and more certainty about that supply continuing and being sufficient to fully support our operations versus more bespoke locations, especially in Asia, where we do not have such a setup and are very much dependent on the availability of fuel through the local supplier that typically being a regulated market, and our choices being limited.

We have seen in some Asian airports constraints, either constraints that were announced, so no fuel being available for additional flights, but also some structural shortages. We still then have the option to tanker in, so to fuel up the inbound flight to a sufficient level that also supports the outbound flight. It is possible for regional and short-haul flights, not possible for intercontinental flights for obvious reasons. So we had a couple of situations where that was the case.

I think relative to other airlines, I see ourselves in a good position. But I think we all recognize that if there's a continued shortfall of 10 million, 12 million barrels of crude every day, something has to give at some point. And that's also why higher prices are a logical outcome that then allow for fuel to be distributed to those areas where there is the biggest demand and the highest willingness to pay, where a lot of operations, I think, would fall clearly into that category.

We pass on fuel to our customers. The recovery in Express and Global Forwarding is pretty good over time, but obviously, there is some latency. So our recovery kicks in a little bit later than what we pay. We pay generally the spot price, even though we have longer-term contracts. That's the usual way jet fuel supply works. So the latency would benefit us would there be a substantial drop in jet fuel and diesel at some point in time.

To your third question, the growth in Express has been supported by B2B. That's the really driver of the recovery of weight as we planned for. So that's clearly execution according to our plans and the specific focus that John Pearson has outlined for the division.

Our next question is from Cristian Nedelcu from UBS.

My questions, they are all on Express. First one, if I calculate well on your May fuel surcharges, it seems that the Express prices year-over-year will be up mid- to high teens. And please correct me if I'm wrong. But I guess my question is a bit conceptually based on what you've seen historically, what's the type of demand elasticity that takes place when you have this type of meaningful price increase? Are there any comments there?

The second one on Express intra-Asia. We have some of the Southeast Asia countries, which are rationalizing fuel. Some of your competitors seem to be adding more capacity in Asia. Overall, could you tell us a bit more how much of the Express volumes is on intra-Asia routes? And maybe what trends are you seeing there in terms of demand in April? And then, what do you expect going forward?

And the last one, if you allow me, coming back to the weight per shipment, I think it was up 4.5% in Q1, and you flagged your program on focusing on heavy weights. Could you help us a little bit visualize? I mean, where are you on the road map of progressing in this program? I mean, I'm thinking conceptually, you're already getting in some heavyweight shipments, but will you -- will that sequentially further increase in Q2 and Q3? Could this weight per shipment actually see mid- to high single-digit growth year-over-year, as we progress through the year as you bring in more heavy shipments? Any color to help us there on the trajectory of bringing in heavy shipments in your network?

Cristian, thank you for those questions. So on the elasticity of demand as it relates to price, I think that's not easy to answer because Express is not an isolated element, but obviously adjacent to the general air freight market. I think in the general air freight market, we know that there are some segments that have a certain amount of elasticity. I believe we currently see some of that in the e-commerce segment, Asia, Europe.

As you know, our exposure to that is very limited. But looking at the broader market, I believe that there is some demand destruction through the current price level that might also be preparatory steps towards July 1st and the changes in the EU customs regime that the EU Commission has also taken some decisions on this week. So it might be a mix, but I would read some price-related demand destruction into that segment development over the recent days.

As it relates to Express, especially in the short term, that elasticity historically is rather low, and I would also read the current developments accordingly.

As it relates to Asia, I think there is no exception to the general business trends. Our participation in that market is roughly proportional to GDP. Our market share is a little bit higher also as it relates to intra-Asia movements than our global market share, but not decisively so. So we participate in that market, and it's one of those lanes where we see the trends that you also see globally unfolding, which brings me to the third point, our focus in Express on smart industrial growth.

I think it's important to recognize that we are not focusing on 5, 10-ton shipments that are traditionally in the air freight market. This is really targeting specific use cases of industrial customers, where we believe the Express, the integrated model has a better value proposition. In our last call, I talked about the incremental share gain that we have seen over the last 40 years, the integrators taking 0.3%, 0.4% of market share from the broader air freight market traditionally and that not having happened since COVID.

I think we simply get back onto that trend and show that the Express model has a better value proposition for some of those industrial customers. And the program related to that only just started. So we would see that continue to unfold in the coming quarters. So that is a process -- that is an initiative that is still ongoing, and we would expect it to impact particularly weight per shipment incrementally and gradually as we go along.

Our next question is from Marco Limite from Barclays.

Marco, can't hear you yet. Marco?

Marco, please go ahead. [Operator Instructions]

Can you hear me now?

Please go ahead.

Now we can hear you.

Okay. Apologies for that. My question is on your cost savings program. So clearly, a bit this quarter is driven from Express OpEx. So I wanted just to check with you whether you think you are now at the full run rate of your EUR 1 billion Fit for Growth program. And actually, if you think that you are outperforming on the EUR 1 billion Fit for program, so you're actually getting more than EUR 250 million cost savings in Q1.

And my second question is on your free cash flow. Clearly, a very strong print in Q1. Melanie made a comment earlier that we shouldn't read through into this print too much for the full year. But do you think that you can deliver a better outcome than EUR 3 billion this year?

Okay. Let me start on the cost saving, and then, I hand it over to Melanie. So I would say 2 things to that. A, also, if you compare us against our competitors, it's important to note that we obviously report in euros, and they report in U.S. dollars. That also has an impact on how to read cost, especially aviation cost. That being said, and Melanie already repeated that, we see ourselves well underway with the Fit for Growth program ahead of schedule. And there's obviously opportunity to get more.

Now, we called out this program with specific measures at the time, but it should not create the impression that we wouldn't work on cost elsewise either. So even if that program at some point comes to an end, obviously, we'll push for the deployment of new technology and further improvement in our operations. So it's more than a matter of highlighting things and bucketing things and creating transparency around that. There's obviously additional ideas that we do have for structural improvement, and this will continue. Again, we see ourselves well underway and ahead of our original plans, as it relates to Fit for Growth.

And I think, if I may add on that point, I think that is in line with what we have done on other topics in the past, right? So if we kind of like want to get a cultural change on a topic into the organization, we start with a dedicated program, and that was Fit for Growth, and that was really a rallying cry across the organization. I think this is now becoming much more embedded into business as usual, this cost mentality, and that is why we are driving it less as a dedicated program now and more as an ongoing exercise.

On the free cash flow, yes, as I said, a very pleasing start into the year. Some of you have been around for a long time and recall Q1 where free cash flow was actually not so nice to look at. So we're very proud that we are now generating cash, not just in the last month of the year, but on a more distributed basis. I think it is a testimony to the underlying health of our business, and that allows us to reiterate our free cash flow guidance for the full year with confidence.

Our next question is from Alexia Dogani from JPMorgan.

Just coming back to Express and Tobias' comments on the value proposition, do you feel you are now at the right kind of cost base to pursue market share gains by basically emphasizing this value proposition? And you've talked about in the past about health care, and being a predominantly air freight sector, are you making any progress in converting some of these and -- yes, air freight volumes into Express volumes? And related to that, obviously, it's encouraging to see trends improve, but they remain negative. When we look at the trajectory over the next couple of quarters and year, do you think because of these initiatives, you actually can start to see TDI shipment growth or weight growth as you're focusing more on that now?

And then apologies if it was touched upon already, but can you give us a little bit some comments on your -- on the AI opportunity set? Obviously, you've done a good job with Fit for Growth, where you've addressed the kind of the asset element of the cost base. Is there -- yes, what projects do you have ongoing that can increase productivity further in the asset-light segment?

Yes. Thank you, Alexia, for these questions, starting with Express and the value proposition. So I think we have improved the component of cost. I think there's further incremental steps to be done. But also, obviously, the work on quality. So I think we see ourselves overall in a good position now, but also a further improving position with those balanced measures that have helped us on the cost, but have also helped us on the quality side, which for us is very important.

Express is a premium provider, as most of the services that we as DHL are offering in the market, quality is very important. So it is extremely important for us that we balance this well and we deliver a good value proposition to our customers by combining great quality with a good cost position.

On life science and health care, this is clearly not decisive for Express at the moment. And this will take more time to build infrastructure, to build processes. So as it relates to the developments that you've seen in the quarter, there is no significant impact from our life science and health care initiative.

As it relates to Express, this will take some more time given that this is really a structural improvement that we do there, infrastructure projects still initiated and ongoing. So that will take time to have an impact on the business. As it relates to the weight per day development and the overall growth of Express, we do expect that to turn positive. I highlighted, Page 5 with the comparables against 2024. So you see that into Q2, our year-on-year comparison becomes significantly easier. So that would point to a year-on-year improvement, simply also because Q2 of 2025 was much softer. So as it relates to the gradual development of Express, you, I think, should expect that, that the year-on-year comparison turns more favorably.

The last question on AI. That's something that is deeply embedded in multiple areas. It is supporting some of the Fit for Growth measures, but going way beyond that, again, for us, very important, not only to see the opportunities on the cost side, which we clearly do, but also to see the opportunities to make processes and value proposition better. We highlighted last time the improvements we see as others do in the area of customs, but it also extends into other operational areas.

I'll give you 1 concrete example, which is the maintenance of our vehicles, where AI helps us to do that much better to judge better what needs to be repaired and to compare ad hoc -- combined ad hoc repairs with regular maintenance, renewal of tires and so forth that is needed. So that helps us now to reduce the number of repair shop visits and reduce costs. The number of those initiatives is very large, and they unfold over time. But both in core operational processes in forwarding and other areas as well as the supporting processes, we see the continued benefit of AI.

Our next question is from Parash Jain from HSBC.

And Tobias, my question is more around what are your ongoing discussion with the customers regarding the potential impact or second order impact of rising fuel prices across the economy. Also, when you look at your supply chain business, it appears to us that inventories is benign, but what are you seeing in terms of the customers' inventory level? And what does that tell us going into the second half?

And I appreciate that you maintained the guidance, which was provided just when the war started. So the fact that you reiterated the same, what are some of the key assumptions that has gone with respect to how long will this war last versus where the oil price settles? What are the scenarios with respect to demand? So if you can provide some color based on what your different businesses are seeing.

So on the last part, look, we are humble logistics people, and we focus on competing in our industry. We do not do many scenarios how the planet could evolve over the coming years. We look at experts, macroeconomists to tell us what they see as scenarios for the global economy. And as we have highlighted in previous calls, we have learned that taking a conservative view on some of those macro developments, it's generally a good stance for our business, as it relates to capacity planning and the ability to react. That has not changed. And this is how we look at the year as a year that we continue to expect to be operationally demanding and volatile and not giving us much macro tailwind.

I'm not sure whether I understood the question around the customers and the inventory level, the inventory level referring to fuel or goods. Overall -- okay, overall, the -- I do not see that being a significant discussion point yet in most customers' discussions, maybe with the exception of price-sensitive goods, consumer goods being transported. The industrial value chain is quite inelastic to those short-term and mid-term developments in price.

And we highlighted earlier, whilst the jet fuel price, obviously, is up very considerably, if you look at our overall cost structure across the group, this is a moderate impact. So yes, especially the general air freight product there, it's a bigger component of the overall cost structure in a lot of other areas. If you think about supply chain, if you think about parcel, it is not such a big component that would significantly influence the decisions of our customers. So general air freight market to be seen.

The volatility, and we've seen this again and again, typically counteracts in terms of creating a need for more air freight as well. So I think we need to see that as a compensating factor that some demand destruction due to higher prices driven by jet fuel prices might be counteracted by higher -- a certain shift from air to ocean. If the economy stays very volatile, if disruptions continue, at least this is what we have seen in the past in similar situations.

Our next question is from Chloe Fu from Citi.

I have 2 questions, please. My first question is, if you see tightness in the current Express network due to the reduced supply availability related to the conflict and also the improved sequential volume, if you could just give a bit of color on how utilization has improved in your network?

And my second question is related to your fuel pass-through mechanism. Obviously, the fuel price in Asia is much higher than the U.S. And I was just wondering if it causes any issues? Or is it well captured by your fuel cost pass-through mechanism?

Thank you for those 2 questions, Chloe. So I think in terms of tightness in the Express network, capacity constraints, we don't see that. So as always, in such situations, the colleagues have done a great job in rejigging the network. I think we have showed some of the changes we made to our configuration in the Middle East. So we have done a good job in rebalancing capacity and do currently not see utilization challenges.

On the fuel surcharge mechanism, yes, so I think this is a well-established mechanism. We have tightened it a bit further. So we take a 4-week average of the fuel price, and then, with 2 months' time lag, we adjust the table. We do that now on a weekly basis. So we feel that we are overall well covered with that established mechanism.

Our final question is from Marc Zeck from Kepler Cheuvreux.

Hope you can hear me. I am sorry I was only able to join late. Please excuse if there's any question that was already asked of it, let's say, 2.5. On Express, you've got now an EBIT margin of 13% in the first quarter roughly. Historically, it's a -- for the summer months, Q2 and Q3, on average, you would have the same EBIT margin Express as in the first quarter? Would that be a fair assumption, Q2 a bit higher, Q3 a bit weaker, but on average, summer months more or less the same at margin in Express?

And then a follow-up on Express. Could you remind me what is your exposure here related to U.S. AI CapEx spend, everything that is in servers or semis or anything? Is that a major driver currently of your success also from a margin perspective in Express? Or is it rather a minor part of your business?

Then the real second question on the German consumer. I guess in parcel volumes so far in Q1 were still pretty healthy. Could you provide a bit of color how this have, the parcel volumes, in Germany have developed throughout the quarter? Was there basically same volume in March as in Jan and Feb? Or was there a weakening? What do you see currently in the early days of April in terms of parcel volumes in Germany? That's my question.

Thank you, Marc, for those questions. So as it relates to Express, we do not see any significant changes to a normal seasonal pattern. As you know, we wouldn't get into quarter-by-quarter forecast on such things, but we would not have reason to believe currently why the seasonal patterns across our business, this should be different than as per usual.

The second question in terms of exposure of Express to AI CapEx spend for Express, this is relatively low. These are typically large projects and larger movements. I think Express gets more relevant as those facilities are in operations, as spare parts are supplied urgent, maybe emergency spare parts. That's typical type of Express business. A transformer, 100 server racks and so forth, that is not something that Express would typically do within the normal regular products of TDI.

It might well happen that over the weekend there's a charter operation of some sort, which is then executed by Global Forwarding, but it's not in any way a major driver that AI CapEx spend for Express in the first quarter, which brings me to the German consumer, which is obviously an animal that also has a tendency to be not so easy to forecast in its behaviors and actions. There are also in the parcel market, effects of weather, the phasing of holidays and so forth that make it rather difficult to forecast and read a single week.

I would say that we have seen, I think, across Europe a little bit in easing of the inflow of Asian e-commerce. Now, traditionally, that is replaced by more local buying after some weeks or months, would that continue? Elsewise, we do not see any unexpected changes or changes to trends that we have seen in the first quarter. But what I said earlier obviously applies that with the situation around energy, I think there is a worry that macroeconomics have shared with us on how this impacts the broader economy, and Europe and Germany, especially overall being in a relatively weak position, weak underlying growth. So some consumer reaction at some point we can obviously not exclude. But so far, we see the trends that we discussed continuing with the exception of maybe some slower inflow of Asian e-commerce, where we are engaged on the last mile in Germany and elsewhere to distribute that to consumers.

This concludes the Q&A session. I will now hand back to management for closing remarks.

Okay. Well, thank you very much for the very focused and disciplined Q&A session. We are looking forward to seeing you over the next couple of weeks on road shows and conferences. And now, I want to hand over to Tobias for his closing remarks.

Yes. Thank you also for these good set of questions, which I think were very complementary and touched upon nearly everything that we would also find worthwhile to talk about. So thank you for that.

Overall, I think we had a good first quarter. Also compared to competition, we see ourselves in a good spot. And with confidence, we enter the rest of the year despite the volatility around us and the concerns that we also discussed on this call. We see our value proposition in multiple segments gradually improving and the work and strategic focus that we had paying off.

We highlighted some specific points in this call, including those longer-term investments that now really improve our cost structure, the 777s were mentioned, but there are others that have also a contribution like our investments in modern infrastructure. So that is paying off and that we also see continuing over the quarters to come. And that's why we also in this rather turbulent and uncertain situation, as it relates to the world economy, that's why we stay confident regarding our goals for the year and our value proposition in the markets we operate in.

With that, I thank you for your interest in this session and into our company overall.

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

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the DHL Group conference call. Please note that this call will be recorded. You can find the privacy notice on dhl.com.

[Operator Instructions]

I would now like to turn the conference call over to Martin Ziegenbalg, Head of Investor Relations. Please go ahead.

Thank you, and a very good morning from my end to everyone participating in this call. Thank you for your interest. As the title says, I have with me here our group CEO, Tobias Meyer; and our Group CFO, Melanie Kreis. We will start with the presentation, starting by Tobias and following with the Q&A. And with that, over to you, Tobias.

Thank you, Martin. Good morning, everybody. Thank you for your interest in DHL. 2025 turned out to be a bit different from the macro assumptions than many had told us. But despite that, we delivered on guidance, particularly through effective cost and yield management in all of our divisions. So that for the full year, EBIT increased to EUR 6.2 billion, and we have a 8% year-on-year growth in the earnings per share. We continue to generate good cash flow. You will have seen that cash flow, free cash flow, net M&A increased to EUR 3.2 billion and execute our policies -- our finance policy to provide good shareholder returns. As it relates to the outlook, I think 2025 really made us in many aspects, a better company and we have a more solid base to tackle the opportunities that our industry offers that's what we will stay focused on the 1 side, resilience in a volatile world, and we expect 2026 to remain volatile, but execute on our growth initiatives.

With that, on the next page, you see some key numbers that you will already have absorbed on EBIT ROIC up 20 basis points, free cash flow I mentioned. We also delivered on the nonfinancial growth that we set ourselves with employee engagement of 82, realized decarbonization factor of 2.1 million tonnes. That's slightly above our target as well. And the cybersecurity rating at really top of the range, top of our peer group with 780. We do remain committed to attractive shareholder returns on Page 4 of the presentation, you see our historical dividend increase. We thought that after waiting through the period of post-COVID normalization, it's now the right time to get back into a gradual increase of the dividend and stay on top of the corridor that we set ourselves in terms of the payout ratio.

We also stay committed to our share buyback programs. We have EUR 1.5 billion of remaining to be spent. So also continuity on that side. As it relates to the development of the operating environment, Page 5 gets an indication what we dealt with in the year of 2025, the example of DHL Express, the weight per day development on the destination U.S. lanes stands at minus 26% for the entire year. You obviously see the significant drop after the changes in U.S. tariff policy, the so-called Liberation Day and the impact that, that had.

But it's also important to note that the rest of the world has been very resilient. So we do see growth out of several origins in Asia. We are very engaged to also increase our competitiveness on intra-European trade. So that worked out well. But it is a world that is quite heterogeneous as it relates to growth trends and the resulting actions we have to take as it relates to capacity management. We do believe that Strategy 2030 on the next page is still a very fitting answer to the challenges that the world poses to us.

Our top line growth accelerators remain extremely relevant from an industry focus, but also from a geographical focus, our geo tailwind 20 set of countries are really those where things are happening in a positive sense. So we remain very committed to that program, but also the profitability accelerators obviously had to be a big focus in 2025 as it relates to the adjustment of capacity, but also our structurally orientated Fit for Growth program really delivered very, very well. We're very happy with that. And also the group set up the alignment of the legal structure is very well underway.

To deep dive a little bit into some of those profitability accelerators on the following Page 7, you see a Fit for Growth execution. We were faster, also needed to be faster on some measures, aviation airfreight, particularly significant structural reset in Europe and the U.S. through network redesigns, air to truck, but also structural levers in the optimization of our fleet and aviation setup, which partners we operate with that all made us more efficient. The fleet renewal, obviously, being a part that many of you are familiar with.

On the ground side, ground operations, warehouse, sorting and handling Similarly, and more broadly as it relates to the divisional relevance, we executed that very well. P&P in the first half, significant adjustments also, given the flexibility of the new postal law that were executed very swiftly and I think overall very well. And there's the longer-term trend of standardization, automation and robotics, which remains very relevant for us across the divisions and will deliver additional benefits.

Support functions, a lot and a deep dive on that a little bit on AI, the digitalization we have been driving for many years provides an excellent basis for that. We continue to be frugal as it relates to discretionary spend and especially overhead. We do this in a very continuous way to really create lasting sustainable impact for us. This is not a short-term exercise. We want to create a better company. And I think that's what we did in 2025. Again, this will continue into this year with some additional benefits to be seen.

As it relates to the deployment of technology, AI is also very relevant for us. I think we are very excited by this technology, but we don't get carried away by that excitement, but have I think a very clear focus on where we deploy own resources where we have in-house engineering, these are particularly areas that are bespoke to us or have high opportunity for deeper integration of AI functionality. So we're working on agentic multimodal models. I think the entire industry is excited about the deployment in customs. That is definitely the case for us as well. Customer service as well. What's important to us is efficiency is great. But the opportunity is way beyond that, that we get in customs better compliance, better documentation, a better value proposition for our customers in recruiting similarly great efficiency gains by helping the process, but what we're really looking forward to is hiring more fitting people for the respective roles.

In vehicle maintenance and repair, this is an area where we will have double-digit million impact in Germany alone by just having AI know the condition of the vehicle, know what we can bundle when we do repairs with maintenance and execute that in a much more stringent way with the repair shops. So these are those areas which are not so often talked about but really have a significant impact. What is a big program for us into 2026 is the delivery buddy to bring AI onto the hand scanner of the courier and thereby provide better guidance about specific locations, share the experience that we've collectively built up in the organization about the specifics of a premise of a location of a city, that's something that will make our service not only more efficient, but also truly better. And that's the part where we deploy own resources to really deeply reengineer the process and integrate AI into our platform.

And number two, we are more opportunistic deploying what is offered to us. We have great partners. Not all partners in this space deliver great value, but we found some, and that's developing very well. And then we also spend a lot of time on people and culture to ensure we have great engineers. We have great managers that know how to make use of this technology, and we have a workforce that is ready to adopt it.

We want to have our own value-add in this space. This is why we're ramping up resources as it relates to AI practitioners on use case implementation, as it relates to trained experts in our IT services, shared service functions with also deep technical expertise that can help us to make this part of our journey. So that's what we're looking for to integrate AI deeply in an industrial scale into our processes. And this is why we're looking forward really to a decade of AI-driven improvements across multiple processes where we are very focused from a group perspective on some projects that are of broader relevance for our divisions across.

In terms of top line accelerators on the following page or update on the programs that most of you will be familiar with, e-commerce, our focus areas remain the same, which means for Express the top end of the spectrum in terms of value, in terms of urgency, whereas P&P and e-com play in the standard parcel space, which is scale-driven. We had changes in the year of 2025. In our European footprint, we continue to drive that. We want to be part of the consolidation play in Europe and offer a really great pan-European service where there are few that spend, that entire spectrum.

Geographic tailwinds, I talked about, it's 20% of group revenue and there are some countries where we really want to further broaden our footprint. Life science & Healthcare, great progress in terms of the setup, you will see significant investments in equipment and infrastructure. This will take time to execute. This is an industry that is rather conservative due to quality reasons but this also makes this a sticky business once it's converted. So that's something that we remain very excited about, but also now it takes time to build this unique offering that we are shooting for.

Data center and new energy, more opportunistic in the sense that we have a lot of those capabilities that are needed, significant growth with hyperscalers in 2025 and also with new energy particularly in those specific areas like battery transportation, also battery storage solutions, which have high requirements when it comes to safety and compliance. And those are areas where we particularly grew also in wind energy, which is more in industrial projects type of engagement. That's an area that developed very, very positively in 2025.

This is also why we are confident despite the geopolitical turmoil, that 2026 will be a good year for us. On Page 10, you see the guidance for this year. We are shooting for EBIT for the group in excess of EUR 6.2 billion. You see the split up for DHL P&P and group functions, free cash flow in excess and around the EUR 3 billion mark with gross CapEx between 3% and 3.3% and the tax rate as per usual, around 30% and also our midterm outlook unchanged.

So overall, a year behind us that surely had its volatility and changes in the macro environment, I think we can say that we adjusted well to that and enter 2026 with a platform and business base that gives us confidence to execute along our strategic priorities.

And with that, over to Melanie for some more details on the divisional performance and the financials.

Thank you very much Tobias, and good morning, and a very warm welcome to all of you dialing in also from my side. I will start my part with a quick recap of the last quarter, Q4 2025, where we have seen the expected seasonal acceleration. When you look at our biggest EBIT contributing division, DHL Express, we have now seen the sixth consecutive quarter of EBIT growth adjusted for nonrecurring items. So that's a very encouraging development. And for me, that shows the effectiveness of the yield, cost and capacity measures executed by the DHL Express team.

Post & Parcel Germany and DHL e-commerce have also achieved another successful peak season locking in the highest operating contribution of the year in the fourth quarter. So for these three network divisions, the strong Q4 performance, hence, reflects the usual seasonal volume increases, but also continued cost focus and our targeted peak season surcharge mechanisms. For DHL Forwarding Freight, the market circumstances, especially in ocean freight, are well known. Beyond that, we clearly see independent of cyclical swings, further structural improvement potential for this division with a similar scope for accelerated digitalization as Oscar De Bok has successfully implemented at DHL supply chain.

Speaking of which, DHL Supply Chain has delivered top and bottom line growth in the quarter and for the full year, showing the intact structural tailwinds in the business, both from the demand side with another year of strong new contract signings as well as from automation and digitalization benefits on the cost side. This has also contributed to the 7% operating EBIT increase for the full year '25, as shown on Page 12.

As you know, and as we have disclosed transparently, we had a series of nonrecurring items this year, mainly cost of change related to our successful Fit for Growth program, but also net effects from M&A and some other topics. Stripping these items out, we managed to increase group operating profit by 7.1% year-over-year to EUR 6.2 billion. And that has also set the minimum level of EBIT we want to achieve in 2026 as Tobias has just shown on our guidance page.

2025 EBIT was, however, up also year-on-year on a reported basis at 3.7%, as you can see on Page 13. The operating profit increase, together with the benefits of our ongoing share buyback program has driven an 8% increase in reported earnings per share for the full year 2025. So that is only slightly below our 10-year CAGR of 9% for earnings per share growth. Group ROIC increased 20 basis points year-over-year in '25 also reflecting the ongoing investments in our growth initiatives that Tobias explained earlier.

And this is also nicely visible in our cash flow summary on Page 14. We again spent close to EUR 3 billion on net CapEx and close to EUR 1 million on net M&A as we invest in those topics that will drive our accelerated growth going forward. At the same time, strong CapEx discipline on any capacity-related investments is one of the main drivers for our once again strong cash generation. Free cash flow, excluding M&A, came in ahead of target at EUR 3.2 billion and has allowed us to also return significant amount of capital back to our shareholders in the form of our regular dividend and our share buyback.

Also here, the factual 10-year view speaks for itself, as you see that we achieved a structural step-up in our cash flow conversion. And I would really like to reiterate that point. Quite honestly, also because we still see a lot of valuation models looking back at 10 or even 12-year average valuation multiples. So you see on the left side of Page 15, our 10-year step-up on EBIT and free cash flow. What I think is, however, at least as important as the absolute increase in these numbers, is the structural transformation that our group has accomplished in the last decade.

For me, that means that DHL shareholders do not only invest in a company with higher EBIT margin and cash flow, our shareholders are owners of a structurally improved company. In terms of business mix, earnings and cash flow resilience and what is not to be underestimated, and agile, adaptable and international culture that has allowed us to successfully navigate through all external volatility over the last years.

Before I finish, a quick reminder regarding the process on One of the last technical steps of this historic group transformation. Our planned alignment of legal structures is progressing fully on schedule subject to the AGM vote on May 5th, we will, hence, this year, also officially renamed the listed group entity into DHL AG, the P&P Germany operations, legally becoming the Deutsche Post AG subsidiary similar to the status of the other divisions. So all on track here and in line with our plans and intentions as previously explained. And that already brings me to three quick conclusions from my side on Page 17.

We expect further profit growth in 2026, while the dynamic circumstances required continued close steering of costs, yield and CapEx. This will allow us to keep a good balance between attractive shareholder returns and continued targeted investments into growth. Because in the end, you can't shrink to greatness. We are, therefore, fully focused on leveraging growth opportunities in those countries, trade lines and sectors where our logistics expertise will allow us to drive sustainable, accelerated growth as outlined in our Strategy 2030.

And with that, we are looking forward to your questions.

[Operator Instructions] We'll take our first question from Alexia Dogani with JPMorgan.

I'll ask three if that's okay. Just firstly, on Express, Clearly, your efforts this year have been focused on improving cost competitiveness to regain market share from airfreight, can you give us a little bit of progress in which verticals you're already managing to do that? Or is this something that we have to look forward to in 2026.

Secondly, on your Fit for Growth achievements this year. I believe the structural cost out was around EUR 600 million. That's ahead of what had been indicated before of basically slightly ahead the cost of change charges. Can you discuss what went better and you were able to achieve these savings earlier?

And then thirdly, could you give us some comments on the current situation in the Middle East, perhaps kind of the first derivative effects of the market being closed, but also potentially if the duration of that market being closed for longer what are the implications for airfreight capacity globally translation to Express and any kind of other relevant comments there?

Yes. Thank you, Alexia, for those three questions. On the first one, indeed, steps to cost competitiveness in Express are very favorable. We would look at the task at hand, so to say, differently. It's not about regaining from airfreight. The way and what we're trying to do is more if you look at the 40-year trend of the integrated industry, the integrated industry has taken share from the general air freight market. We started as document companies then went into different verticals over time, kind of an S-curve transformation, not entirely dissimilar from what happened in e-commerce.

And since COVID, the integrated industry is not back on that trend. And that's what we are trying to do with smart industrial growth to focus particularly on B2B verticals to hone the business model of Express with additional features, but also the attention to industry verticals. That has now been initiated and that should lead over the quarters to a gradual increase in the weight per shipment. And some of those elements will definitely take effect this year. Some will take later as it relates to cold chain transport, for instance, in Express. This is something that is yet to come from its effects.

As it relates to Fit for Growth, absolutely, we are ahead of the original plan, particularly in Europe for Express, but also for P&P, those adjustments went quicker than we had originally maybe slightly conservatively foreseen. So that's particularly the area also in the United States, the adjustments needed were executed very swiftly. And also on the technology side, some of the programs that we have been driving went indeed very well from an executional point of view. So it's fully in swing especially as it relates to those more tech-dependent programs. That's what's going to support the progress in 2026 and provide us with a very healthy base also for further growth, which obviously is what we intend to do in Express and beyond in 2026 against a still volatile environment, which then also brings me to your third question on the Middle East.

Now how those things develop is not easy to see. Definitely, the current situation is heavily constraining air activity in some countries, but also obviously, ocean-going vessels through the Strait of Hormuz are constrained. What happens now operationally is we had some partial opening of airspace and airports to move planes out obviously, Saudi is largely open or open we have, and that helps us a lot on the Express side a very well-established road network in the Middle East, which enables us to bring cargo to those airports that are open. That's very vital at presence to keep the region connected.

And I would expect that to continue and further expand if constraints in some countries like Bahrain, Kuwait and UAE, those constraints would remain for longer. On the Ocean side, that will have consequences especially if cargo is offloaded to enable vessels to move on loops that do not include the ports of the Gulf region. Some carriers have started such offload processes. This creates some chaos that needs to be dealt with. As you know, that's also sometimes an opportunity because it creates urgencies for certain cargoes, but it's too early to see how this unfolds. If the constraints would stay longer, there's definitely a lot of work to be done.

And when you say offloaded cargo, I mean that cargo, how will it find its way to the region? Is it just a move to potentially air or road to clear the inventory?

Well, that might take -- might require different cargo to replace that because those offloads would then happen in a port that is typically not in the region or might be in the region and then you could obviously use road transport offloads more on the Asian side on the Indian subcontinent would then require ultimately to load it on a vessel that has a string into the Gulf, but that would mean significant delays. So that's what we start to see now. I think it's really too early to tell whether that is a phenomenon that takes a broader hold so far, people have more taken a wait-and-see mode, but that can last for another couple of days, not a couple of more weeks.

Our next question comes from Muneeba Kayani with Bank of America.

Melanie and Tobias. So first question around the moving parts on the guidance, please. So the Fit for Growth had kind of over EUR 600 million benefit last year. So is it right to think that your guidance assumes kind of a EUR 400 million benefit from Fit for Growth in 2026. And then related to that, what have you assumed in terms of your cost of change assumption in '26 compared to the EUR 245 million that you had last year on reported EBIT. So that's the first question.

And then Secondly, if I could follow up in terms of the Middle East, specifically, we've heard earlier this week that 18% of global capacity in air cargo was impacted. We've heard that come down to something like 8% yesterday. Would you agree with that in terms of market impact. And then specifically for DHL, is your capacity impacted like do you have planes in the Middle East? And how do you see the fuel spike impact on the Express business, please?

Yes. Thank you very much. Muneeba, let me start with the guidance question and the moving parts there. Yes, I mean, of course, there are numerous external factors, the whole macro situation. There are some known topics like the fact that in P&P, we have a year without a price increase. So many moving parts. With regard to the Fit for Growth questions, yes, I can follow your math that if we say we finish kind of like the EUR 600 million in '25, there should be something like EUR 400 million left for '26. I think we also have to be conscious of the fact that particularly in the first half of the year, we will still see the annualization of some of the headwinds from '25 on the currency side, the tariffs, the de minimis abolishment.

So like in '25, we will also need Fit for Growth benefits to help us compensate for those. With regard to cost of change, I mean, if we come up with new good ideas for further improvements and there is some cost of change attached to it. We will, of course, do it. However, I would expect that to be an order of magnitude which will not warrant a separate flagging the way we did it in '25. So more of a return to this being included in our normal reported figures.

Yes. And on the Middle East, I've seen those numbers as well. We will not engage in that discussion because it changes day by day, hour by hour. We had plans in places that were closed. That's been a discussion whether you can move the plane out empty or whether that location reopens. Again, that's very dynamic. It's clearly not yet over. So some impact is going to be there. I think what's more relevant is the question of spillover from ocean freight and what happens on the ocean freight side because some of those countries are highly dependent on essentials. The region is not self-sufficient on food, for instance.

So that is something that will be significant if the ocean freight situation does not change over the coming days. Air cargo operations, as I said, for us, we have flexibility. We have a broad footprint in the region. And what happens in each location can change hour by hour.

Yes. And I think on the fuel surcharge, as you asked for that specifically. I mean, we have a well-established mechanism. So there are then some time elements in a period of rising fuel price, but by and large, we have well-established mechanisms in place to deal with that.

Next question comes from Jacob Lacks with Wolfe Research.

So your slides show U.S. TDI import trends remained weak through December. Has there been any improvement since the start of the year, just given the ruling against IEEPA tariffs and some better readings in the macro indicators? Or has the step down in tariff rates not really been enough to incentivize new demand?

And then a follow-up. One of your competitors last month discussed the goal to mix more towards cross-border freight in Europe over the next few years. Have you seen any change in the competitive parcel environment in the European TDI market?

Okay. I think on the impact of the Supreme Court ruling, that's too early to see a real impact. I think everybody is now working through the implications. So in terms of what we saw going into the year was more of a continuation of what we had already seen in the fourth quarter.

With regard to the European competitive situation, we haven't seen a change on the ground. So we also saw these announcements that in terms of material impact on our daily business, we haven't seen it.

And overall, I think the -- particularly in the B2B market, it's a very healthy setup in Europe. As Melanie said, no significant changes. I think we have an excellent offering. If you look also at our presence in secondary markets, the connections via Leipzig are unmatched by any competitor. So the service aspect of that, I think, gives us some confidence on the TDI side and DDI overall, as it has in recent years, outgrown. So the cross-border element has outgrown domestic markets. That's the case in B2B, but also in B2C. And we see those segments very positively also into this year.

Next question comes from Marco Limite with Barclays.

Hello. Hello, can you hear me?

Yes.

Okay. I have a follow-up question on Iran. So actually a few questions from Iran. First of all, whether you can disclose what percentage of your group revenues or EBIT is directly exposed to the Middle East? Is the first question.

Second question, when we think about disruption, clearly, volumes into the Middle East are going to be disrupted and are going to change. To what extent, the Middle East tensions also affect other trade lanes, for example, I don't know, Europe to China, for instance. Is there any, let's say, transit and offloading reloading of cargo in these regions and so on. So does that affect also Europe to other Asian countries operations. And then when we think, I mean, thinking about the potential disruption coming from the Middle East, again, how do you -- what's your sense about the potential positives coming from better pricing versus headwinds coming from demand? Do you think you are going to be more exposed to positive from disruption or to the negative coming from demand?

And just a final question, very quick on cost savings. Clearly, EUR 600 million is above the previous guidance. Just curious whether the step-up versus the previous guidance as to be, let's say, attributed only to Q4? Or you have been running on a higher rate since Q2? And what is the run rate in Q4 in the context of the EUR 1 billion?

Yes. Thank you for your questions. So our presence in the Middle East varies by division. We have relative to the GDP size of the region, it's slightly higher in Express. It's lower in supply chain to name the two extremes. As strategic as these conflicts are and as regrettable, given what we do and the segments we are in, we typically benefit from this turmoil than we have exposure to the downside. I think this is just a learning from past situations. The main reason, and I think you already heard that in the answering of previous questions, is that those disruptions spill into the airfreight from ocean or land transport surface transport into Air and Express.

And people tend to rely on providers like us and with our significant footprint in the region, we are often the go-to party. That has been the case with the recent floodings in Morocco, which have driven volume massively. Now you're not going to see that in your numbers because Morocco overall is too small. But it's just to make the point around the -- in principle effect this has on supply chains and the need for our services. For ocean, especially the tying up of vessels is reducing supply.

There has been some concerns about supply-demand balance with the Red Sea, the Suez route reopen. I think that's off now or at least further shift it into the future that such vessel routings would be accessible for the great majority of ocean liners. So that it has an impact on Europe to China as it relates to lead times and the competitiveness of ocean freight lead terms or the airfreight lead times, but also on the supply-demand balance in the container, the cellular vessel space.

So far on the Middle East, any follow-up questions on this are welcome. On our Fit-For-Growth program. Indeed, we have been executing this very well across the year of 2025. Now the measurement of those things is not on a daily basis for all of those initiatives. So it is now with the year-end that we have taken stock and we see that we are significantly ahead of what we had originally planned, and we see this again very positively. It's speed, but it's also the impact that we have in some areas is ahead of what we originally thought. But that has been an outcome of the work throughout the year of 2025.

And we had already flagged in Q3 in November that we were ahead of schedule. But of course, also the importance, given the importance of Q4 and the peak season. We then really saw that those structural cost improvements also held during the peak season. And that, of course, then also drove up the overall performance towards the end of the year.

Okay, Marco?

And yes, just on the run rate of cost savings because I think there is a bit of confusion this morning out there whether the EUR 600 million is the run rate versus the EUR 1 billion or the EUR 600 million is the achieved cost savings and therefore, that's in the bridge to '26, we just need -- we need to plug EUR 400 million more. So if you could clarify whether EUR 600 million is the run rate in Q4 or the achieved number in so far.

Yes. So the EUR 600 million is what we achieved gross in 2025, excluding the cost of change. And so in a very simple calculation that should leave around 400 to come now for '26.

And obviously, if it's a little bit more, we won't stop the measures just because we said it's EUR 1 billion.

[Operator Instructions]

We'll take our next question from Cedar Ekblom with Morgan Stanley.

I've just got a question on if you could reflect on the volume performance in the Express business, particularly in the context of volume growth in broader airfreight cargo, I understand the points around sort of weight per shipment rather than just shipment count, but this sort of persistent trend of lower express trends or flat at best and air freight -- general air freight cargo growing continues to sort of play out quarter-over-quarter.

And I'd just like to sort of hear how you are perceiving the relative trends in those two categories and how we should think about that over '26 and possibly a bit further out. I think sort of the debate around is Express structurally impaired relative to history, remains quite alive in the market. And with the volume positions that we've had, I wonder if you've got a view on how to sort of debate that question or respond to that question. Thank you.

Yes. So Cedar, I think a fair question given the market developments that you characterized, I do not think that DHL Express has a share versus our traditional competitors in the Express space. If you look historically, these waves a little bit between Air Freight and Express have happened before. It's particularly now kind of post COVID, the e-commerce normalization that has impacted us, but also the broader industry, which is why the broader integrated industry, I think is the key driver of why we have lost a share or a point of market share also in the broader market.

And it is absolutely our objective to get back on to a track to outgrow the broader airfreight market as we have done as an industry for the last 40 years. We target that through specific verticals, but also a broader and engagement more on the B2B side, that has not shown effects yet in the fourth quarter. So that's something which we would only see now in 2026 as that program gets implemented. We had good discussions with the management team with the broader management team around that. I think DHL Express is very in its usual way, a very structured set up to address that, but it will only unfold as we go through the year.

In some of the verticals, and we said that also with Strategy 2030, and its execution, some of those verticals, particularly Life Science and Health Care and Cold Chain Express will take some more time until that infrastructure and equipment is ready. So that will not happen this year. This is more for the years to come.

And maybe just to add from my side, we have this on Page 5 in the deck, we have talked about it before, where I mean you can see that actually weight per day rest of world was already just flat in 2025. And obviously, our clear focus is to now get rate per day back into growth territory. And we think that weight per day will be the more relevant KPI to look at for Express. A, which also drives a lot of the economics of the division in terms of associated revenue per shipment in terms of weight load factor on the aviation side and so on. But it will then also give a good comparison to the relative performance vis-a-vis the air freight market, and that is what we will focus on in '26.

Thank you, Cedar, and we've got another caller waiting.

Our next question comes from Alex Irving with Bernstein.

Two for me, please. First of all, you've heard from some of your peers about how they're deploying AI in their business and why they in particular, stand to benefit. Own platforms, data, quality and so on. You spoke earlier on about some of your aims during the presentation, but what factors give you the right to win from AI? And what are the main actions you're currently taking here, what's the impact you expect those to have gross and net after any sharing gains with customers.

Second question, you're nearing into the simplification project and subject to AGM approval, the carve down of P&P. How committed are you to the ongoing ownership of all 5 divisions? What conditions must these divisions satisfy to remain owned by DHL. Thank you.

Yes. Thank you for these questions. Starting with AI, I think for us, what's important we are not in the -- don't have the approach to think that putting a AI sauce source over everything creates great benefit. This is a task that ultimately is technical. This is a major transformation as the induction of the PC into our business world and will have a similar size, if not larger, benefits.

Now why we think we have the right to win and we'll have a net benefit. This is a technology where scale will matter to a greater extent. And we have some applications I mentioned what we intend to do and are implementing on the hand scanners, where also across the divisions, we can deploy similar technology and reap those benefits. So we see AI as a driver of scale benefit, increasing scale benefits, but also it will benefit companies more that have a well set up, well structured IT landscape, and we very much believe we have that, especially in Express and Global Forwarding, and in P&P, but also in supply chain, where Oscar in his previous role, has driven a standardization of warehouse management systems and so forth for many years.

We have a great track record as it relates to use of data, become a much more data-driven company. So that is a foundation that we can now build on. Now we know that others also claim that. So here, I think as often, it's in the execution that will prove who can really make benefits from that. Again, I think we know very well what we are doing. And we are striving to use this technology at industrial scale for efficiency, but also effectiveness reasons. And that's what we're very much focused on. This will take time to implement for companies. This is always harder than for consumers to adapt to new technology.

But we are absolutely sure that we will stand to benefit. As it relates to the commitment to owning the different divisions, we, I think, have addressed this multiple times across the portfolio. We do think that the portfolio does make sense, but we also have a clear success criteria for the different divisions that we operate in. You asked specifically for P&P, where, again, we think we are the right owner for that business. We need to have the right regulatory conditions that enable us to self-fund the division to self-fund the transformation from a letter centric to a parcel-centric company where we have progressed much, much further than many others with our great offering on the parcel side and significant market share that we do have in Germany.

So that success factor for us is currently clearly fulfilled. And in the other divisions, we obviously are closely monitoring our performance versus peers. In some areas, we are top of the list. And in other areas, we have more work to do. But with a clear plan to close those -- that gap. So we are committed to the portfolio that we currently own.

Okay. Very good. Thank you, Alex. I think we've got a follow-up from Alexia.

Yes. Our next question comes from Alexia Dogani with JPMorgan.

Some follow-ups. I actually have again 3 -- 2 very quick ones. Just firstly on Express, can you let us know when you would consider putting emergency surcharge or a war disruption surcharge, if that will be part of the consideration. Then secondly, would you give us some kind of short comments about Q1 kind of notwithstanding the normal seasonality of the business, should we kind of be looking out for anything specific? And then kind of my real follow-up question is Melanie, you discussed a little bit about kind of historic performance, valuation. And obviously, growth is very important for kind of the sector that you are in, I guess, would you consider any other means to accelerate growth?

I mean we've discussed your M&A strategy in the past, which is much more kind of bolt-on. Would you consider something a little bit more transformation that you could basically put more capital at risk? Or do you see at the moment kind of the return of cash and kind of levering up the balance sheet slightly as the most prudent kind of capital allocation near term?

So I'll start with the first two, then Melanie being specifically addressable comment on the third question. So on the Express, we do implement emergency surcharges depending on the local situation, that is typically country specific, and that's what's also happening in this context. We particularly use that to pass on higher cost, either through insurance or other. So we will handle that also in this, and we're in the process of doing so in this situation that is unfolding in the Middle East. Overall, I think and I tried to express that I think we exited 2025 with really good achievements and at a good momentum.

I think also, personally, I feel about 2026 quite positive, knowing that the turmoil is often something that stands to benefit us. It's not always to describe why that is, but that has been historically the case. And that's why even though the macro situation, we are not so optimistic on that the per se, the macro environment is going to be very favorable. I'm quite optimistic about 2026 based on the achievements on the cost side, on the structural improvements, but also what the current environment means for our industry and specifically our portfolio of businesses, and that's how with the mindset that we enter and are engaged here in the year 2026.

And to your third question, yes, as I showed in the presentation, we have significantly improved profitability and cash generation and also the composition of where earnings are coming from, where we now want to double down on is how to accelerate also growth. And of course, profitable growth. The focus will remain on organic growth opportunities. We are convinced that there are ample opportunities out there also in the current environment. We are going to double down on those. And we will continue using M&A more as an add-on supplement. So no fundamental change in strategy.

Thanks, Alexia. And we have Andy Chu joining the call.

Just one question for me, please. I guess the market always worries for DHL particular around any sort of crisis, and we seem to be lurching from one crisis to another. But I guess, historically, you've shown some really great flexibility, resilience, probably most recently COVID being the best example. So could you just give us a favor maybe just using Express -- could you just give an example, maybe using Express as to how quickly you can make adjustments to your network, just examples of flexibility because it just strikes me that this business is -- has a proven track record of tremendous resilience.

Yes, Andy, thank you for that question. Which is more a comment that I would absolutely agree to and especially in the Middle East, I mean, we have a very strong presence there. We have colleagues there that were already in the region during the second Gulf war, where we also still already had a significant presence due to historical reasons. We even had a monopoly in Saudi for some time. Obviously, that's not the case anymore. But our presence there is very strong. Express with its setup also of different airlines has flexibility that others do not have. Now location by location that requires work, traffic rights, aircraft change in registry or this doesn't happen by itself. But over the decades, I think we have built that muscle that capability and I think are somewhat unique in our industry in that setup and capability set.

And that's why, indeed, I would echo the confidence that you also expressed in your comment, the confidence that as tragic as this military conflict is and the crisis that it triggers it's not bad historically for our setup and does not harm in any way, our confidence about 2026.

Maybe just two quick points to add from my side. I think one thing which is remarkable, our express aviation setup is that we have now shown over the last years, the capability that we can flex up quite rapidly if that is required globally on specific trade lanes that we can likewise also flex down key contributor, of course, also to the fact that we had 6 consecutive quarters of EBIT growth in Express despite the top line headwind.

And the complementary element is also going back to Alexia's question, we have also shown that on the pricing side, we are able to smartly price given the circumstances with elevated risk surcharges if and where needed.

Andy, thanks for your call. We just passed the 60-minute mark, but we still got time for a follow-up question by Marco.

Marco, please unmute your line.

Marco, we can't hear you.

Still working on it.

Marco, please go ahead.

I think you can hear me now. Just One more question, which is a bit more longer term. So if we look at your overall OpEx line of EUR 75 billion. I mean clearly, that's fairly big one. And my question to you is whether you see further opportunities in terms of cost savings on top of the EUR 1 billion program you are running at the moment. And in the context of that whether you think that there are cost synergies potential from maybe in the future, better integrating divisions and therefore, achieving extrapolating cost synergies across divisions as one of your big competitor is doing in the U.S.

Yes. So thank you for this question, which is obviously not easy to answer across all the spectrum of what we do. I would definitely say that our drive for efficiency will continue. That is basic frugality. We're a logistics company, we're not a bank, and we should look like a logistics company, we should not look like a bank. But more importantly, the obsession with efficiency in processes and having great processes with an adequate amount of technology that in supply chain, supply chain is going to be the first business that has a significant impact with robotics.

We are already leading in the deployment of robots. It will change the business. It will add a different revenue stream robotics as a service to what we do, similar to what we did with Real Estate Solutions, which is a great contributor of the successful path that we have taken with supply chain. So those elements are very important next to AI, not to forget that the physical part of AI being manifested in robotics is also very, very relevant for us.

In Express, I think we're on a great path to make the best service in the industry more affordable, and that will give us broader access to certain markets and companies and is underpinning our drive for industrial growth. Also, in Europe with the expansion of our road network and that related offering across the continent, that's a driver of growth as well. As it relates to divisional synergies, yes, we will have those on the technology side. We'll be very careful with operational integration that harms our value proposition.

Express has a different value proposition than the standard parcel business, and we will not ever damage that value proposition. The spreadsheet might tell you something different. But experience tells us that, that setup that we have, particularly with Express is working very well for us, is working very well for our customers. Collaboration is what's going to happen, but this very cost and efficiency minded synergy, we will remain very careful because we see with our own experience, but also what happens across the industry that the detrimental effects on value proposition are often outweighing the benefits.

So on the technology side, yes, on the collaboration side, absolutely, yes, you also see this in Europe between e-commerce, P&P, and also increasing the e-commerce and Express. We often talked about the great collaboration we have on the aviation side between Express and Global Forwarding, the joint plans we have there in terms of Life Science and Health Care. You might have seen the health logistics plan that Express operates, which is also used for DGF for Global Forwarding cargo. So we'll collaborate value proposition and efficiency, but we'll be very careful to integrate with the sole mind of cost synergies.

And what did you mean when you said making Express more affordable?

Well, I mean, we have undertaken significant steps to enhance productivity through technology, but also through streamlining processes, especially in Europe and the U.S., and we're also growing in the European road offering, DDI significantly. So that is what I mean. It doesn't harm our value proposition as it relates to the time defined offering, where we will always put quality first, but it gives us access to some segments that we haven't been serving to that extent in the past.

Great. Thanks, Marco, for that follow-up, and that concludes our Q&A round. We're looking forward to seeing you over the next couple of days and weeks on roadshows and conferences. And to close off the call, I hand over for closing remarks to Tobias.

Well, thank you all for your interest. Again 2025 was not an easy year as it relates to the macro. I think we've managed as well. And I feel this leaves us really in a position where we enter 2026, and we operate in 2026 despite, again, a very volatile environment with great confidence that we will offer great service to our customers during the year of 2026 with the initiatives that we've put forward, and we get back on the track of growth through the measures that we've described and talked about in this call, but also beyond the divisional strategies that we have presented. This is going to be the focus in 2026 to add the growth component through what I believe was a good bottom line management, that's what we are 100% focused to do and confident to achieve. Thank you.

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the DHL Group conference call. Please note that the call will be recorded. You can find the privacy notice on dhl.com. [Operator Instructions] I would now like to turn the conference over to Martin Ziegenbalg, Head of Investor Relations. Please go ahead.

Thank you, and a warm welcome from my side to the Q3 '25 results call. As it says on the title, I have here with me our Group CEO, Tobias; and the Group CFO, Melanie. We aim to cover all ground within the next hour or so.

So therefore, without losing any further time, over to you, Tobias.

Yes. Thank you, Martin. Thank you all for participating in this call and your interest in our company. On Page 2, the highlights for the quarter. Firstly, on the short term, dealing with the changes in the global landscape, particularly the outfall of the changes in U.S. trade policy.

Within the quarter, we had the abolishment of the de minimis also for the rest of the world. I think we have been able to deal with that very effectively by adjusting and shifting capacity, especially in our more asset-intensive global transportation networks that being Express, especially to do adequate yield management to overall mitigate the impact on the U.S. trade lanes and continue to take advantage where there is growth, and we'll talk about where there is growth in a minute.

What is also very important to us not to only be observed with the short term, but continue to spend time and execute measures to accelerate our growth through the focus on the industry verticals that we've laid out in our Strategy 2030, but also and very importantly, to invest in those geographies that are growing and will continue to grow. We have a list of countries, which we call GT20 Global Tailwinds 20 with related trade lane development measures. And I think we can say that we also made good progress on that in the third quarter. Cash flow generation was strong. Melanie is going to talk about that in a minute, and we continue to be committed and execute on our promise on attractive shareholder returns through dividends and share buybacks, which also continued in the quarter.

On Page 3, you see a statistic a graph that we published in conjunction with our global connectivenness tracker. Those of you who follow us more closely, we have been doing this for some years in collaboration with NYU Stern. And we found it worthwhile to highlight that the average distance of trade has continued to grow, actually reaching a record high. There is a strong narrative out there that talks about regionalization and french shoring and there might be reasons for such trends. But the fact of the matter is that long-distance trade continues to grow. We have massive shifts that we see in our company, but also beyond due to the changes in U.S. trade policy. But we also see that other trading partners continue to expand.

I think most notably that was visible in the September export figures of China, where trade to the U.S. was down 27%, but you had double-digit growth in the trade with Southeast Asia with the trade of Europe as well and particularly the trade to the Middle East and Africa was growing a lot, Latin America as well. These being long-haul trades and that compensating for some of the decoupling that we see as it relates to the U.S., which clearly has a lower share of participation in global trade as is increasingly replaced by China as the most important trading partner for many countries in the world.

That is also visible on Page 4 when it comes to our volumes here, a focus on the time-definite international piece. So that specific segment of DHL Express. You see, by and large, the trend from the second quarter continuing. So especially the decline on the U.S.-bound trade, the U.S. inbound that is, but we see also some other trades, also U.S. exports being somewhat under pressure as input factors for U.S. producers get more expensive if aluminum is double the price in the U.S. than it is in other parts of the world, it's obviously difficult to produce cost competitive products.

So that is something that will continue to influence global trade and thereby our customers and the business that we do with them. As spoken, the de minimis now being abolished also for Rest of World that had a notable impact on volumes, less so for us on profitability because we were able to counteract that. But also we see that some volumes are declining that have been not so profitable for us to start with. So that also impacts our overall results. But the cost action is very important.

And on Page 5, you see some details on that. Aviation costs down 8.5% in the quarter. That's hard work, and we are really pleased to see that the Express Aviation team has been able to deal with that very professionally. Service was very good in the quarter. And we are also really looking forward to the fourth quarter across all divisions. I think we're very well prepared with our setup to deliver excellent quality. But we do that in good balance with strengthening our cost competitiveness.

So we have adjustments that are more cyclical, ramping down capacity shifting capacity. But on top of that, structural measures, which we have under the program Fit for Growth that really makes us a better company in many ways. Cost competitiveness is an important part of our growth journey going forward as well. So we see ourselves in making good progress on that. We keep the discipline that you used from DHL Express, but also the other divisions when it comes to yield. That's clearly also supportive of the result in the quarter.

Some more examples on P&P on the following Page 6. Maybe before I go on to the profitability accelerators, it's important to note that the volume in the quarter for P&P had some shifts for some good carrying products between letter and parcel. There are details in the backup on that. So if you look on an organic basis, parcels were up around 2%. We had normal ups and downs in the volume of mail as well. The advertising mail had been quite weak in the third quarter of 2024. So year-on-year, it looks quite positive. But overall, when it comes to letter volume in Germany, there is no change to any trends. We still see that on the path that we talked about earlier.

Now coming to the concrete measures that helped us also improve profitability to the level that we're now seeing, which is in line with the guidance that we've provided. AB steering, this is something that we can now do to a greater extent because of the lead time extension we got for the standard letter so that those standard letters are only brought to every address every second day, staying within the allowed lead time, but allowing for some efficiencies in that last mile and skipping households where we would elsewise only had a single letter on Monday and Tuesday, for instance, and now we bundle that to 2 letters on Tuesdays. That's what's meant with that AB steering.

Joint delivery is something that we have been on for a long time. It's a really big program because it requires us to rebuild infrastructure to a great extent, but that is really very important in the long run to strengthen the efficiency of the system to ultimately become a parcel carrier that also carries some mail. We are now at 69% of parcels being jointly delivered with mail. So that's steadily progressing and supporting the efficiency, much needed efficiency within P&P. Out-of-home continues to be a focus.

We continue to invest in that. We are as close to consumers as we ever were in Germany, and that is strengthening our position in that market and also on the support functions, we are nimble and efficiency focused, which you also see in the numbers. Technology plays an important role. On Page 7, there are some examples how we also deploy Agentic AI. Outside Europe, we have support for frontline recruiting, for instance, the prequalification, the initial interview of somebody who wants to work for DHL, an applicant that's done with the support of AI, customer service, probably across industries, the most common use case that is also visible in our company.

More specifically on customs, it's very helpful not only from an efficiency point of view, but Agentic AI also does an excellent job in documenting the sources that were used for classification, so on the regulatory side, but also on the goods description side that does not only increase efficiency, but also service quality and compliance, very important in this area, especially when we talk about U.S. clearances is an important component of our success there. I think we have been leading in providing continued great service into the U.S. in recent months. So that's something where this also contributed.

And then on service logistics, dispatch calls, for instance, following up on the dispatch of trucks is one of those areas where AI also comes in handy. When we look at growth accelerators on the following Page 8, we continue to invest organically, roughly at the same level than we had in previous years. This goes into infrastructure that improves our quality like in Barcelona and Helsinki for Express, but also investments that unlock new revenue streams, particularly in geographies like Middle East and Africa, where we're really getting into new verticals as well for supply chain, especially and then the ongoing expansion we have in our last mile activity.

We continue to do targeted M&A, and we also had such in the third quarter as it relates to the merger of our e-commerce operations in U.K. with Evri. That is a consolidating move. We believe we need to be amongst the top 3 players in every e-commerce last mile market that we're in. If we're not able to reach this organically, we'll do so inorganically. We have announced a similar move for Iberia earlier in the year. We have now closed the transaction in the U.K., getting into such a market-leading position with that participation in the merged entity.

We did a smaller acquisition in the U.S. that gives us access to specific capability on health care-orientated last mile, hospital logistics. And with our investment in AGEX, we get access to last mile activities in the Gulf Corporation Council countries. So again, an expansion of our footprint, which is part of the strategy that we have communicated. Similarly, we support the strategy with a strengthened management focus. We have a dedicated team for supply chain Middle East and Africa that has been executed in the third quarter. We just announced that we'll also have a similar move with DHL Global Forwarding as it relates to Latin America.

So we want to have senior leadership in the region to drive the growth of those businesses. That's part of our strategy execution as well. That already brings me to my summary on Page 9. So we cover the short-term volatility that the business is exposed to. We're successful in protecting earnings and cash flow generation in that environment by doing the cyclical capacity flex, which I believe was highly effective also in this quarter, but also work on the structural measures that make us more competitive in the mid- to long term through the Fit for Growth initiatives, including increased deployment of technology such as AI-based tools. But also the long term, we saw progress in the quarter with those organic investments, the targeted M&A.

We see ourselves making good progress on those structural elements of our growth journey towards Strategy 2030, and that is important to accelerate our growth trajectory in '26 and '27. We are aware that additional momentum is needed. With that, I would hand it over to Melanie to give you some more details on the financial performance of the divisions in the third quarter.

Yes. Thank you very much, Tobias, and good morning, and welcome also from my side. Thank you for joining our Q3 earnings call. I will start on Page 10 with the main takeaways by division. For DHL Express, Tobias already explained the effectiveness of our cost and yield measures. Reported Express EBIT contains a net negative EUR 54 million from nonrecurring effects, mainly related to a legal provision as well as some smaller cost of change and M&A effects.

So it's worth pointing out that excluding these nonrecurring items, Express EBIT was actually up 9% year-over-year. In forwarding freight, we have seen similar market dynamics as our peers. In comparison, we have been performing relatively well in the quarter with underlying ocean freight volume growth of 5% and increases in GP and GP per tonne in air freight, both year-over-year and quarter-over-quarter, all leading to forwarding EBIT being up versus Q2.

That being said, we are clearly not where we want to be with DGFF and Oscar de Bok is implementing structural improvements. Supply Chain continues to perform very well. Yes, we see somewhat slower growth in current circumstances with both currency headwinds as well as impacts from the general environment. But the structural growth tailwinds are intact for that division as reflected in very good new business signings with EUR 1.4 billion new contract value in Q3.

One of the key drivers of these customer wins as well as a strong 6% plus margin is our leading digitalization, automation and standardization setup. In DHL e-commerce, EBIT includes a mix of nonrecurring effects, which I will address on the next page. Fundamentally, Q3 confirmed the intact structural e-commerce growth opportunity, which is not yet translating into accelerated profits as we keep investing into our network in this division. Last but not least, P&P is delivering very well on its strategic plan. Tobias has shown earlier the structural network changes which we are successfully implementing under Fit for Growth.

And the Q3 numbers show that our measures are working with a year-over-year EBIT increase, both on a reported and as an underlying basis, which brings me to our Q3 EBIT bridge on Page 11. So in Q3 '24, we had a EUR 70 million positive one-off effect in P&P. If you adjust for this as well as this year's nonrecurring effects, our reported 7.6% year-over-year EBIT increase was actually a 10% growth, excluding nonrecurring items.

On the main effects in this quarter, we are showing them very transparently on this page. There are, in total, EUR 37 million cost of change across Express, Global Forwarding Freight and DHL e-commerce. I already talked about the net minus EUR 54 million in Express being primarily driven by a legal provision. Now to the big number in DHL e-commerce. We handed over control for our U.K. e-commerce business to EY at the end of the quarter, which led to a positive deconsolidation gain. This positive effect is partially balanced by cost of change as well as a total of EUR 42 million in noncash write-downs for a full net positive effect of EUR 123 million in the quarter.

We are explaining the accounting effects of the U.K. transaction on the dedicated e-com page in the backup, so I won't go through the accounting details now, but be aware that going forward, we will no longer fully consolidate our U.K. e-commerce business, but recognize the pro rata net income of our 30% stake in the combined entity in EBIT in line with the equity accounting rules. So that was a bit on accounting now.

Sticking to the P&L, turning to Page 12, some more comments on the overall P&L. I think it's worth pointing out here that the 2.3% revenue decline is about equivalent to the minus 2.4% FX effect in the quarter. So while lower freight rates and U.S. tariffs were a headwind to growth, that also implies this revenue development overall also implies that on other trade lanes in regions and verticals, we saw continued growth, as Tobias already pointed out before.

On the cost side, you see the benefits of our capacity flex and structural cost measures taking effect in terms of significantly lower cost for external capacity as well as in the reduction in staff costs. And at the bottom of the P&L page, you see that our continuous and consistent share buyback activity is driving a significant step-up in earnings per share growth in Q3 to 16% year-over-year.

Coming now to the key points in our cash flow statement on Page 13. So EBIT growth is translating into higher growth of operating cash flow before changes in working capital. There are numerous movements across different lines in the cash flow statement. But ultimately, this growth in OCF before changes in working capital shows that -- while there are some moving parts in our EBIT bridge, the earnings quality of our EBIT growth is very healthy, and that is very important. Working capital changes contributed positively to cash flow in the quarter with the main contribution coming from DGFF. And this is, for me, another useful reminder that while we have work to do on DGFF, the business model of an asset-light forwarder is attractive through the cycle with working capital being one of the factors protecting the cash flow generation of the model.

Strong growth in operating cash flow, coupled with ongoing investment control led to a very good free cash flow in Q3. And I'm pleased that in '25, we have shown a smoother cash generation across the quarters and are well on track to our unchanged EUR 3 billion full year target for free cash flow, excluding M&A. And that takes us to the use of cash and the next page. We have been consistently delivering on our dividend continuity promise and to our clear commitment on our EUR 6 billion share buyback program.

With EUR 4.4 billion done by end of September, this leaves up to EUR 1.6 billion to go by end of '26. So no change here in our commitment to attractive shareholder returns. To round it up, let's turn to our unchanged guidance on Page 15. When we talked about our Q2 numbers in early August, the short notice cancellation of Rest of World de minimis to the U.S. had just been announced, and we prudently flagged a worst-case risk from this new development. By now, the abolishment of Rest of World de minimis has been implemented, and we have better visibility on the impact.

So this impact is now fully reflected in the assumptions for our otherwise unchanged guidance as we reconfirm explicitly in the first bullet below the full year '25 targets. And this brings me right away to my wrap-up and the 3 main messages we want you to take away from today. The first is that in the short term, our cost and yield measures have driven a strong Q3 performance. And on this basis, we fully confirmed guidance today. Secondly, beyond short-term volatility and capacity flex, our structural cost savings drive a sustainably lower cost base, not only for the current environment, but also for the growth path thereafter.

So they literally make us fit for growth. And thirdly, beyond P&L earnings, we also delivered a strong cash flow, which allows us to invest in a very targeted manner into the GDP plus verticals and regions we identified, while at the same time, offering attractive returns for our shareholders. And before we now turn to your questions, something special, a quick double advertisement in the name of our Investor Relations team. So first, for your questions, we now have a new AI tool on our IR website, which matches your questions with the information we have provided in our official publications.

Martin told me that this is pretty unique in the IR arena. I would ask all of you to check it out, give me feedback. I hope that this will be a good example on how we strive to apply AI wherever helpful across the organization. And secondly, we have John Pearson and Mike Parra, our divisional CEO and our CEO, Europe of DHL Express, hosting an investor visit at our U.K. hub upcoming Monday. Contact IR here for more details if interested. I think it's definitely worth seeing. And with that, operator, please launch the Q&A.

[Operator Instructions] Our first question comes from Alex Dogani at JPMorgan.

Just I'm going to limit it to 2. Just firstly, in freight forwarding, obviously, Oscar has now been in the seat for, I think, the past 90 days. Can you give us a little bit of an indication of what his plan is to improve the earnings kind of progression in that division? Because clearly, things have been approaching the 2019 levels faster than we would have thought a couple of years ago. So that's my first question.

And then secondly, can you give us an update on the progress on the legal structure tiding up and when we should expect to see the overheads within the divisional reporting that you signaled at the CMD? That's it.

Thank you, Alex, for these 2 questions. So as it relates to Global Forwarding, I mean, Oscar is making progress. You saw the move on Latin America, for instance, which is, again, a closer to market move that enables us to execute our strategy in that as well. Overall, I think we know that in Global Forwarding, we have a great dependency on industry trends as well.

You see that in the third quarter. That is hard for us to predict. We have seen clearly a normalization trend since COVID, but also within the year. I think there are some signs of that bottoming out, but there is a lot of uncertainty due to the changes in trade policy that we have talked about that obviously has implications on demand, quite notably so. On the other hand, we have compensating factors. I think we're all positively surprised by the trade figures that China published for September. That being one example of a counterbalancing effect.

Overall, we see ourselves in the quarter with a positive development, especially in ocean freight. I think relative to our competitors, we have been doing quite well. Air freight, there's still more work to be done. And we also have that topic in terms of the freight market in Europe, especially our LTL network in Germany. So these are topics that Oscar is working on. But again, within the quarter relative to our peers, we are quite pleased.

Alexia, I'll take your second question on legal structure and the allocation of the corporate center costs. So we are well on track on the legal cleanup. As you may recall, target is to take the topic to the AGM next spring, and we are on track to do that. We will then, once we have implemented the new legal structure in the course of '26, start with the new reporting with the full allocation of the corporate center costs in '27.

We will do some parallel shadow calculations for '26 so that when we start reporting in the new structure in '27, we can also restate the '26 numbers to that format. That's the time line here.

And can I just ask a follow-up on Tobias answer. Obviously, you talked about the external factors. productivity usually is an element that kind of helps improve the earnings kind of projections. We've seen other peers announce kind of relatively sizable cost savings programs.

The Fit for Growth doesn't really apply to freight forwarding. Is there something that you are specifically looking at there, perhaps using natural attrition as a tailwind, just to kind of understand how costs should evolve there as well.

I think when you look, for example, at the numbers we show in our stat book, you can see that in terms of employees, we are 3.9% down in Global Forwarding Freight. So Fit for Growth and cost measures are also happening in that division.

Yes. So that I think I would absolutely echo we see ourselves good underway. You also have to see that productivity in the cycle has a cyclical element to it as well. In the downturn, we often see the files getting lighter and having less TEUs per file on the ocean freight side. Overall, also, if we look forward, Alexia, I mean, this is an area where we want to grow and rebuild also market share.

So our obsession with cost is limited by that ambition to grow. We will look at productivity, continue to do so. But 2026 needs to be a year for growth for Global Forwarding. The environment is ripe for that. Some of the moves in the broader industry landscape might be helpful for us in that regard. So that's a strong focus that we have. We want to absolutely stay customer-focused in Global Forwarding and grow in those industry verticals that we have laid out. That's a clear focus for Oscar as well.

Thank you, Alexia. We come to the next caller, which is from Wolfe Research.

Yes, our next caller is Jacob Lacks with Wolfe Research.

So cost control was strong again with the ongoing volume pressure in Express. Can you help us think about how much of the cost outs are variable and how much are structural? And is in the EUR 1 billion Fit for Growth plan, is that on track? Or are you ahead of schedule here just given the global trade volatility?

Yes. Thank you for that question. So we are purpose really not breaking out how much of the cost is coming from the volume capacity flex and how much is structural because that is a little bit of an artificial calculation. So for example, -- we have done some rejigging to our aviation network by changing the partners we fly with. That has structurally improved our cost base under the Fit for Growth. But of course, that is now also impacted by how much volume we actually have in the network.

So we don't see the benefit of kind of like pseudomathematically breaking it into the one bucket or the other. I think the important element is what you see in the bottom line and that is this very good cost development. And with that, we are overall a bit ahead of what we had envisioned under Fit for Growth for the third quarter situation.

Great. And then just one more for me. When you look at the U.S. volume declines, do you have a sense for how much of these declines are driven by de minimis and how much are higher tariffs? And to the extent we see tariffs taken off by the courts next year, could this drive a B2C volume recovery?

So I think we would not expect that. The -- even if IEEPA tariffs go, we all know that there are other legal grounds that the President could use to impose tariffs. So we think that the step down that has happened is permanent. If that would change, that would obviously provide opportunity. We would love that, would allow us also to definitely bring some business back, but we currently don't plan for that. The exact split between de minimis effect and tariffs is hard to do because it's also overlapping.

So e-commerce has clearly taken a much more severe drop than B2B volumes. That's something that we very clearly see, and I think everybody would expect as well. Those B2B volumes are goods that are essential in many ways to the U.S. economy to U.S.-based customers. So the decline is significantly lower than the decline you see on the B2C on the e-commerce side.

And you also see in our overall numbers. So for B2C, we had minus 23% on the shipment side and for B2B, minus 2%, so holding quite stable.

And on to the next caller from BNP.

Our next question comes from James Hollins with BNP Paribas.

James Hollins from BNP Paribas. Two from me. Melanie, please, could you try and quantify the de minimis impact? Obviously, you talked about up to EUR 200 million this year. Maybe you could give us any detail you think it's going to be and better still what you think it might be in full year '26. I know you told us not to annualize it. And then what I'd describe as a stream of questions on Express, but I'll keep it to pretend to one. If we look at Express TDI volumes obviously down 10%, 11% Q2 and Q3. B2C volumes down 23%.

I was just wondering where that was versus the market, what you're seeing happening on market share and perhaps whether you could give us an early estimate where you think volumes might go in 2026. And then let's turn to the second part, TVI B2B volumes. I think previously, obviously, volume is pretty solid there. You talked about average weight per shipment. I was wondering if you could give us a bit of an update on that, if possible.

Yes. Thank you. So starting with the de minimis question. So I mean, again, when we talked about the EUR 200 million on August 5, that was days under days after the announcement that de minimis would go out end of August rest of world. So what we had done to come up with EUR 200 million was basically extrapolate the development we had seen for China, Hong Kong to the U.S. And I had already flagged then that this was really a worst-case scenario. We have now seen that there is an impact, but that we are able to manage that quite well as visible the Q3 numbers for Express.

With regard to the TDI volumes, I mean, first of all, we had already taken a yield and profitability focused approach to B2C volumes long before the whole de minimis thing started. We had talked about that now for, yes, 6 quarters that we had really taken pricing action and that this had impacted our volumes, particularly on the Transpacific. And in that respect, we had seen stronger volume declines than competition. But when you look at our profitability development, I think that shows very clearly that the development is -- our approach is the right one.

And to the weight question, yes, I think that's a very important point. When you look at volume and weight development, we see a less pronounced development on the weight side. So the focus also on heavier shipments for the Express network is actually paying off.

And I think if I may add to the market share, we are following that. You might have seen that some of our competitors have also published or said something to the in-quarter development. So that is something -- if you look at the entire quarter, it gives an impression that we might have lost. If you then look at how that development was within the quarter. We're not so sure about that anymore. So it's something that we watch. We obviously here are focused on TDI. We do not play in the intercontinental deferred market where there is clearly some growth that competitors have shown.

Melanie commented on the profitability. The focus for 2026 is more on the weight side, given the focus on growing in industrials and the focus verticals that we have laid out. So that's our focus there, clearly B2B and tilted towards somewhat heavier weight of high-value critical goods. That's very much the focus of Express as we go into 2026.

Next question comes from Marco Limite with Barclays.

Congrats for the Q2 results. So a question indeed on cost savings because I think the Q3 was a bit was mostly driven by cost savings. When we think about the 2026 outlook, I mean, I'm aware that probably is a bit too early to discuss about '26. But I mean, if -- specifically in the Express division, I mean, if we think about an environment where macro does not improve, you've got pricing that offset inflation.

So let's say, the year-over-year improvement will be driven by cost savings. And then in your Fit for Growth program, I think you have said you have only EUR 250 million cost savings in '25 and a lot more next year. So is my, let's say, statement of Express growth next year of EUR 300 million, EUR 400 million year-over-year, right, if we assume macro stable and all coming from cost savings or that you think is a bit too bullish and I'm missing something else? Yes, maybe this is the first question.

And my second question is on your full year '25 outlook. You have reported 3 quarters year-to-date up year-over-year and your current guidance at the low end implies Q4 down year-over-year. Yes, is that just, let's say, the low end is a bit more cautious? Or how do you explain that? I mean, do you just expect the e-commerce season being particularly bad? Or any color on that would be helpful.

So maybe I take the first question and then Melanie can comment on the 2025 outlook. Look, I think in the current environment to say what a stable macro means, we find this relatively difficult. If you look on the macro assumptions that we based Strategy 2030 on, and we rely on external sources that has been very disappointing, not only as it relates to trade and what has happened with tariffs in the U.S., but also the continued weakness in Europe, especially Germany, Germany having the third year without growth. So we will provide guidance in due course. We are in that process.

We'll obviously continue the focus on cost savings, the cyclical part, but more important, also the structural part. We see ourselves good underway, but I think we need to wait a bit more to see with what run rate we really now exit 2025. We have picked up momentum in some areas as it relates to contract closings, for instance, in supply chain, which is also needed to get back on a solid growth term. We need to see now what happens on the U.S. side with APA and how that turns out. So these are all factors that will play out in2026.

Okay. Sorry, just a follow-up on that. asking the same question in a different way. Like can you confirm that you still got additional EUR 750 million cost savings next year and only EUR 250 million cost savings in '25 from the EUR 1 billion Fit for Growth program?

So as I said, we are actually ahead on the Fit for Growth measures. So in that respect, we will already see more benefits in the current year. As Tobias said, we will give guidance for '26 in March. There will be a positive contribution year-over-year from Fit for Growth going into the next year. We also have some negatives, for example, in P&P, it will be the second year of the price regulation. And then we have the macro question mark. We will put all that together for our guidance in March. With regard to Q4, yes, I follow the mathematics and the year-over-year comparison.

I think one important element also linked to the first part of your question, we do plan further cost of change bookings for the fourth quarter. So in total, we will probably have cost of change up to million, half has already happened, but that means that we will also do some more cost change in Q4. And as we guide on reported EBIT, that is, of course, all included in our EBIT guidance.

Next question comes from Cedar Ekblom with Morgan Stanley.

I've got 2 questions. So firstly, on the AI rollout that you guys talk about. Have you thought what you could quantify those cost savings at considering we've got headcount down a couple of percent versus the end of 2024. I don't know if you could put some numbers around sort of lowering cost to serve. Maybe it's too early in the process, but that would be interesting to understand. And then the second question is just related to sort of the macro outlook that you talked about, Tobias, at the beginning on your global connectedness tracker. That obviously points to a world where global trade as a multiplier of GDP should continue to be pretty solid.

I'm not so sure that, that is consistent with the message you gave at the Capital Markets Day where we had that sort of long-term trend that saw that decelerating. But the broader question here is, you are not growing your volumes in the businesses that are sort of most geared into global trade, sort of freight forwarding and Express. And I wonder, is it a case where the global market might continue to grow overall, but the verticals that are actually profitable for your business become far more niche. So I suppose the overall market can grow, but can your business grow overall? Or is it a case that there's only certain segments that remain profitable? It's a bit of a macro question.

Yes. Thank you, Cedar. For both of those questions, I think for AI, we would not quantify this. I think this is also very difficult to do. This technology is ultimately becoming a part of many, many applications that we use. We have dedicated programs as for customs, where we also drive that with own capacity, and that's easier to measure. But even that will quickly infiltrate into normal productivity increasements and the like.

So singling out the AI effect as important as that emerging technology and very helpful technology is something that we see as difficult. Well, we'll continue to report and give updates on how we use it. and at least on a qualitative level, how it connects to our figures. As it relates to the macro outlook, I think we would stay with the view that we have shared that there is a deceleration also in the multiplier.

The multiplier was significantly above 1 since at least 1990, and that will -- is not what we expect going forward. But the narrative that is out there of the regionalization is a Western perspective, and it's not a global perspective. China continues to globalize. Now in terms of us benefiting from that, it's not falling into our lap. That's, I think, a fair observation. There are some also industry sectors that we have strong exposure to that are not going to deliver the growth in Express, -- it is a story of an industry that has taken share from the general airfreight market over the last 40 years by expanding its capability.

And that's what we need to do to be able to continue to grow that we have express cold chain capability, for instance, to have access to the sector that we're absolutely convinced will continue to globalize. The U.S. has a very unique point being the world's largest market and thereby being able to force companies to produce there. The rest of the world doesn't have that choice. Maybe China is the only second one to that. You will not produce modern pharmaceutical biogenetic pharmaceuticals in 20 places on this planet. This is just not what our customers tell us.

These modern technologies are going to be highly concentrated, which means that for the rest of the world to participate, in that technological progress, there will be trade. That's what we see happening with a different focus, and that's what we expect going forward. Again, something that we need to actively address geographically, but also as it relates to our capability portfolio, and that's what we are working on and need to deliver on to be able to show stronger growth. I think we have a good track record in supply chain with that gradual expansion of our capability portfolio, but it's clearly a strong focus point for Express and Global Forwarding as we go into the year 2026.

Our next question comes from Alex Irving with Bernstein.

Two for me, please. First of all, on Express into the air peak season, both on volume and on the success of the surcharge, how are you seeing that develop, please? Second, also on Express, you've taken out quite a lot of costs year-over-year, but how much of that we need to add back as and when volumes rebound? Maybe related to that, where is the weight load factor currently, both year-over-year and also relative to your view of a normalized baseline?

I think with regard to the Express peak season, maybe not just in Express, but also in the other businesses where we see a peak season, we do expect that there will be a B2C peak season. How dynamic that will be remains to be seen. But we clearly expect the seasonal increase in the B2C volumes, and we are prepared for that in Express, but of course, also in Post & Parcel Germany and the e-com divisions. And with regard to the yes, demand surcharge driven by this seasonal additional stress on the system. We are on track with the implementation.

So we do expect the positive cost offset from that seasonal surcharge also in the fourth quarter of '25. With regard to how much of the cost improvement is there to stay, as I said before, it is a mix, what we see at the moment between volume-induced capacity adjustments and structural growth levers. So of course, when volumes come back, we will eventually also flex back with capacity. But we also think that those structural fit for growth measures will give a lasting benefit, but we can't quantify that to a very precise number. With regard to weight load factor, well, given the current volume and weight situation, we are still not at an optimal point.

So the cost measures are helping. But of course, ultimately, that is still a fixed cost network where it is more enjoyable when there is more volume and weight. I mean, also with regard to margin, we have seen a good development, but this is not our ultimate margin goal. So I think very well managed given the circumstances, but we look forward to the moment when volumes come back.

Our next question comes from Michael Aspinall with Jefferies.

Michael here from Jefferies. A couple on Express. On the Express Rest of World kind of impact, it was mostly lower volumes. Maybe you can just talk to us as to why that is? And just thinking about the characteristics of those products. Are they kind of highly desirable B2C products or B2B that still need to move? Just thinking kind of what's happening underneath the numbers.

I think what we already assumed in August or what was kind of like our hope to keep us away from the worst-case scenario was that particularly the higher valued shipments, which had entered into the U.S. under the de minimis rule that they would be more resilient. So I mean, you had lots of machinery spare parts valued below $800 going into the U.S. under the de minimis. And our base case hypothesis was that these volumes would keep moving, but of course, then with clearance, and that is what we have now seen happening.

So particularly the very low-value B2C stuff has seen the impact. partially also because customers are then changing to different forms of transporting B2C into the U.S. but we have seen more resilience on the B2B side, and that explains the difference between the minus 23% B2C volume decline and the minus 2.2% B2B.

Great. And 2 other just small ones. In Express on TDI volumes, Europe improved sequentially a little bit from minus 3% to minus 1% in 3Q. Is there anything underneath that to read into in terms of Europe getting better or not really yet?

I think it's a glass half full, glass half empty question. So yes, from minus 3% to minus 1% is moving in the right direction. Can we be satisfied with minus 1% -- clearly not. So yes, I think at the moment, we still see a more stagnant European development than we all would have hoped for.

Okay. Great. And last one, sorry to slip in 3. I think you don't really get into fuel hedging in Express. Maybe you can just remind us on that. And similarly, if there's no hedging, but you expect lower fuel surcharges, would that normally help on the volume front?

So on the fuel side, and there's a well-established mechanism in DHL Express, but also in the industry where you have a fuel surcharge. So there is a bit of a time lag about 6 weeks. But fundamentally, you then adjust and pass fluctuations in underlying fuel price on to the customer.

And the volume elasticity is relatively low to that.

Our next question comes from Cristian Nedelcu with UBS.

Can I ask the first one in Express, your competitors are talking about adding air capacity on intra-Asia and Asia Europe. And I believe -- and correct me if I'm wrong, but I believe those are usually trade lanes where your Express margins are higher than the divisional average. So how do you see the risk of potential market share losses or margin compression there in 2026?

The second one, maybe a small one on the Q3 Express. For what concerns the U.S., we've heard about the postal operators temporarily stopping deliveries to the U.S. in September. There's been maybe also some de minimis front-loading in August. did those bring any benefits to the profitability in Express in Q3 that may not repeat going forward? And the last one on Express, very useful the chart you offer with the weights into different regions. And looking at Q2 and Q3 and just focusing on Europe, weight down 3%, weight down 1%. If I compare it with the CTS ocean volumes into Europe, those have been growing around 10% year-over-year.

Air freight capacity into Europe overall is also up high to low -- high single digit, low double digit. So I guess my question is a bit what do you think is driving the underperformance of Express versus ocean and air cargo only when we focus on Europe? Do you think it could be market share loss? Do you think it could be down trading or other factors that could explain that?

Okay. So maybe starting with the third one. So the missing element in the comparison is the intra-European business, where obviously air and ocean freight statistics don't show what is happening intra-Europe, but that's a big part of our Express business, and that has clearly not been the most dynamic. So that explains the difference there. Staying with the trade lane questions.

So yes, I mean, the fact that intra-Asia and Asia to Europe is developing more favorably, which is why others are apparently thinking about moving capacity there is ultimately a good thing because those trade lanes are strong trade lanes for us market position in terms of profitability. So I see it more positive if intra-Asia and Asia to Europe is developing favorably. And yes, I think overall, we haven't seen any crazy capacity movements leading to difficult pricing situations beyond the normal competitive dynamics.

I would echo that. So this is good. We see ourselves in a very competitive situation, both intra-Asia. We sometimes say that Asia is DHL's second home and also Asia to Europe. So the trends that you're seeing that competitors are more interested in is something that we recognize and overall see as a positive message of this being a trade lanes where we can also can expect some growth in 2026.

To your second question on the postal operators and the de minimis front loading, I think there might be small effects of that, but really not much. The de minimis front-loading, we -- others might have seen to a greater extent than we have. The postal operators, there might have been some shift for some time, but I think most of that volume just didn't show up. And we, as you are aware, have already now for several weeks, re established the postal channel to the United States Postal Service, which is particularly strong on the C2C side. So not much effect on Express in the third quarter as it relates to that.

Our next question comes from Muneeba Kayani with Bank of America.

I just wanted to understand your guidance that you've maintained and unpack some of the moving parts there because it's, of course, on the reported number and with all the one-offs. So you've got the EUR 178 million benefit on the accounting on e-commerce. That's certainly new for us. Was that something that you were expecting kind of already when you were giving your guidance maybe earlier in August?

Similarly, on the cost of change, this was something you'd kind of highlighted and kind of we've taken into account into our numbers, but has that kind of impact of cost of change been different because of the phasing than what you had initially expected?

And then lastly, on the de minimis kind of -- what have you accounted for into the year-end on that impact compared to that worst case of EUR 200 million. So if you could unpack those moving parts, that would be super helpful.

I think in the de minimis for us, this is now part of the run rate. So the effect is there. We don't expect much further to move than what we now have.

As Melanie laid out, the impact was smaller than the worst case, significantly smaller than the worst case, and it's now part of everyday life. As it relates to the guidance, overall, this will net out for the year. So we roughly stay to where we originally seen that. Obviously, there's now the impact quarter-by-quarter, and Melanie can further elaborate on that.

Yes. I think if you put all the one-offs together, what we disclosed in Q2, what we disclosed in Q3, we currently have a net positive effect of a bit over EUR 40 million. We expect that to turn to a negative number because, as I said, we will have more cost of change now in the fourth quarter, and we don't anticipate a positive one-off in the fourth quarter. So if you say we have close to EUR 100 million in cost of change year-to-date. If you want to take that up to EUR 200 million, that gives you a feeling for the order of magnitude in the fourth quarter. So we should end the year with a negative contribution from one-offs for the full year.

And just kind of on your 3Q Express volumes and the B2C minus 23%. Can you give us a sense of how that was in the month and like what happened in September post the de minimis?

So the swing that others might have seen was not as big for us. So I think you see over the quarters a pretty consistent trend, and we would not see much deviation from that trend.

Our final question comes from Marc Zeck with Kepler Cheuvreux.

One question left for me, maybe a bit on the P&P performance, I guess, that was good, certainly much higher than expected by the market. Is like EUR 200-plus million EBIT in the -- every quarter that is not Q4 kind of the run rate that you would expect now for the next year as well? I guess, we've seen the wage increases already for this quarter. So it seems like a pretty decent run rate. And with Q4 coming in, would it be fair that maybe you will end up in EBIT maybe more at the EUR 1.1 billion rather than the EUR 1.0 billion in P&P?

So I think -- the recovery that we see this year is also because the last year was relatively weak. I think that's important to keep in mind. Overall, we see ourselves very well underway to deliver the guidance. For next year, Melanie already highlighted, this will be a year without regulatory price increases in Mail. So that provides some pricing headwind for 2026. We obviously have some freedom in parcel that will also adequately utilize.

So similar to other elements that we talked about, we don't see a change of trends for P&P. We have some seasonality in that business as it relates to volume and also earnings, and we expect that to be a normal peak season. That's where everything is currently pointing at. We also have higher cost to deal with that. So a normal seasonal development is what we expect to close out Q4. And then again, obviously, some of the structural cost measures will carry forward, but the headwind on input factor cost and pricing will be a factor in 2026.

This concludes the Q&A session. I now hand it back to management for closing remarks.

All right. We're not too far away from the 60 minutes that we were looking for. Good news for the guys in Copenhagen, who are next. Tobias, your closing remarks, please.

Well, it was an interesting quarter, and it, from our perspective, turned out quite well. We do not expect that volatility will go down. We will stay close to our customers. So first and foremost, impacted. It's easier to shift airplanes around than factories. We do see our narrative confirmed in terms of globalization not being derailed. There's clearly a deceleration relative to decades earlier, but especially in those areas that we focus on technology and the concentration of manufacturing due to economies of scale and economies of scale that continues to drive globalization and the growth of trade.

And we are very focused on, a, staying close to our customers, adjusting capacity and remain fit in the institutional capability to do so. But secondly, to have enough time and management capacity to do what we clearly need to do to accelerate growth to execute on Strategy 2030, where we have more headwinds than we had originally anticipated from a macro environment. We talked intensively about that in this call as well.

So there's clearly work to be done, but we remain optimistic about that and to a great extent, also excited about the opportunity that the world still offers to our company. With that, I thank you for your interest and the great questions that you post. Have a great day.

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

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the DHL Group Conference Call. Please note, this call will be recorded. You can find the privacy notice on dhl.com. [Operator Instructions]

I would now like to turn the call over to Martin Ziegenbalg, Head of Investor Relations. Please go ahead.

Thank you, and a warm welcome from my side to our Q2 call to everyone out there. I take it, you have the material that we released this morning in front of you. We see that we can make this a straightforward exercise today with the presentation by Melanie Kreis, our CFO, and afterwards, the Q&A.

And with that, over to you, Melanie.

Yes. Thank you very much, Martin, and good morning. A very warm welcome to all of you out there also from my side. Thank you for joining our Q2 2025 investor call. I will, as usual, provide a short review of the key numbers and observations for the quarter, and I look forward to addressing your questions afterwards.

So starting with Page 2. Page 2 summarizes our key observations for the second quarter of 2025. We indeed saw an impact of lower volumes in global trade. However, we have managed this volatility effectively, driving a strong performance in our Logistics portfolio with an increase in Q2 EBIT and sustained strong cash generation.

This outcome shows the effectiveness of our cost actions, both in terms of adjusting capacities to cyclical fluctuations and in implementing structural cost measures under our Fit for Growth program. And this allows us to continue investing into attractive structural growth opportunities aligned with the priorities outlined in our Strategy 2030. More details on both inorganic and organic investments will follow at the end of my presentation.

Let me start on Page 3 with some observations on global trade, as I know that this is on everybody's mind these days. The graph on the left illustrates the diversification of global trade. By destination, the U.S. remains the largest destination market. And as expected, this is an area where we have seen the most significant impact on trade flows in Q2. Nevertheless, it is the essence of global trade that it finds its way to keep flowing, as we will also see in the Express regional development later on.

Our ambition as the most diversified global logistics company is to support our customers in keeping their businesses going and in enabling them to continue leveraging the opportunities from the diversification of global trade, also under the current circumstances.

So flows have been extremely volatile throughout the second quarter from week to week and across trade lanes. Page 4 summarizes what this means for our Q2 volumes. When we filter out the weekly noise, B2B volumes were eventually slightly lower across modes. However, there was no massive decline nor did we see a fundamental mode shift. E-commerce was a structural trend and continues to drive better momentum in B2C generally, with China, U.S. de minimis being the only market segment where we see a significant impact on trading volumes.

Page 5 highlights how we translated these external conditions into a 6% year-over-year increase in Q2 EBIT for our group portfolio. Express has really excelled in cost flexibility and yield management, delivering the fourth consecutive quarter of EBIT increase, despite an underlying volume decline, and I will come back to the drivers of this performance in more detail in a minute.

As shown at the -- in the line at the bottom of the page, we have also started to book first one-off costs related to our Fit for Growth program in the second quarter, impacting Express, DGFF and eCommerce. And this is one reason why DGFF has seen lower EBIT conversion in the quarter, with the extreme volatility and overall weaker demand also dampening GP generation and productivity in the sector.

Supply Chain continues to demonstrate a resilient performance with EBIT margin at 7%, and that is after adjusting for the positive net M&A one-off we had in the quarter. eCommerce booked EUR 8 million cost of change, so was slightly down year-over-year also excluding these costs, but in line with expectations, reflecting, as you know, continued investments into the structural eCommerce trend.

And last but certainly not least, in P&P, we are very pleased to see our targeted cost actions based on structural network changes, providing the necessary benefits to manage the ongoing structural volume shift from mail to parcel, which we saw as expected to continue in the second quarter.

The mentioned cost of change and supply chain one-off benefit are summarized in the EBIT bridge on Page 6, with positive and negative nonrecurring effects roughly balancing out for a positive EUR 4 million net effect in the quarter. The positive one-offs relate to M&A with a small disposal in corporate functions and the larger EUR 54 million net positive M&A effect in supply chain. There's a positive contribution comes from the first-time full consolidation of our ASMO joint venture in Saudi Arabia. We also had a positive free cash flow effect of roughly EUR 100 million in net cash from M&A from ASMO in this quarter.

Now it gets technical. This will reverse out, becoming cash flow neutral eventually with no impact on our overall free cash flow generation. However, the current accounting assumption is that the outflow will go through different lines in the cash flow statement, and that technically will lead to a net negative impact of EUR 100 million on the free cash flow, excluding M&A view. We will flag that transparently as it unfolds in the remainder of the year.

The cost of change of EUR 58 million relate to structural cost measures in the 3 divisions mentioned. But what is important to understand is that not all Fit for Growth measures do require cost of change. To the contrary, we initiated the first Fit for Growth measures last year without any cost of change, and we are seeing Fit for Growth benefits clearly supporting our EBIT performance, I would say, even better than initially expected, particularly in Express and P&P.

On Page 7, we present some examples of relevant cost KPIs, which we are actively steering and tracking for Express. And you can see here that across the network, we see really positive, i.e., declines in all categories, which is a combination of efficient capacity management and structural changes on our Fit for Growth program. Next to the strong yield management, these cost measures are the primary driver of the increase in Express Q2 EBIT, despite the year-over-year volume decline.

As we mentioned on Page 8, we have significantly reduced our air capacity and related costs. Beyond the overall 7% reduction, which you can see highlighted on this page, again, we have furthermore flexed capacity across the network to adapt to the volatile regional trade flows. As such, you see on the left side of the page the expected strongest decline in shipments into the U.S., to which we have responded with a significant reduction in airlift and in local pickup and delivery capacity.

At the same time, the positive year-over-year developments in APAC and Middle East, Africa are noteworthy. Though not sufficient to drive year-over-year growth for total global volume, they demonstrate the high diversification of global trade as discussed earlier. Or simply put, there are still growth opportunities and growing trade lanes also in the current environment.

Looking ahead, we expect this volatility to continue, and we also expect a usual seasonal uplift for the peak season. And for that reason, we are currently preparing the demand surcharge 2025 with similar mechanics as last year, and we will announce the details in due course.

I have now talked about what we see in terms of the global trade environment, what it means for our volumes and how we cope with it. There is clearly still a lot of uncertainty and volatility, but based on what we know and see at the moment, we are reiterating our guidance today. We maintain a qualification around changes in tariffs on Page 9, where we continue to monitor an escalation in tariffs and trade conflict not covered in our current assumptions. And one of the topics which we are watching here is the de minimis exemption for shipments from rest of world into the U.S.

There have been several iterations on that topic in recent months. For example, the discontinuation of the de minimis exemption earlier in the year for 4 days after which it was reinstated. Then as you all know, we had, at beginning of May, the abolishment of de minimis from China, Hong Kong into the U.S. And now there was a new executive order issued on July 30, which brings the time line for the rest of world phaseout forward to August 29 compared to a phaseout in '27, which was foreseen in the tax bill passed just 1 month ago, so obviously also quite a dynamic environment with regard to de minimis.

We will have to see whether the latest executive order from last Wednesday will be implemented as announced and, if yes, what substitution effects will occur. In a worst-case scenario, we would see a maximum risk of up to EUR 200 million on our full year '25 EBIT. We decided not to include this risk into the guidance as we don't consider this worst-case scenario the likely path forward. But I want you to be aware of that topic as it is one of the many moving parts.

Turning back to a more straightforward topic. I'm particularly pleased to conclude my review with the cash flow perspective on Page 10. We see continued strong cash generation, allowing us to invest in a balanced manner across all priorities of our finance strategy. While we remain in strong CapEx control mode given current volume developments, we also continue to invest in targeted opportunities that will drive our midterm growth path, focusing on the growth topics identified by Strategy 2030.

We have spent EUR 3 billion on shareholder returns in the first half of the year through our dividend payment and ongoing share buyback program. And additionally, we have seized some good opportunities for targeted inorganic growth, leading to a temporary acceleration in M&A announcements and spending fully aligned with our strategic ambitions.

You find the full list of announced acquisitions on Page 11, and you see the clear focus on the strategic topics of life science and health care, geographic tailwinds and e-commerce as well as the confirmation on the right that we pursue M&A, not for sheer size or volume, but as a complementary option to enhance our capabilities and market fleet. But to be clear, organic investment remains the primary driver of our midterm growth plans.

On Page 12, we showcase some examples of our ongoing targeted investments into organic growth opportunities, driven by the midterm structural growth topics laid out in our Strategy 2030.

To wrap it up, on Page 13, the key takeaways from our Q2 performance and current management priorities are, not surprisingly, we are effectively managing short-term volatility through cost and yield actions. And at the same time, we continue to invest into fundamentally attractive structural growth opportunities. Given the environment, we are addressing our cost base, both from a shorter-term cyclical capacity angle and through structural cost reduction under our Fit for Growth program, and that is what you can quite clearly see in our Q2 numbers.

So I rushed through the presentation to have enough time for your questions, and I now look forward to hearing your questions. Over to you.

[Operator Instructions] Our first question comes from Andy Chu with Deutsche Bank.

Melanie, Martin, a couple of questions for me, please. In terms of the Fit for Growth benefits, could you just give us an idea of -- and try and quantify those for us. You obviously gave us the cost of change. And then maybe if we could just have a sort of word on sort of current trading.

Are you kind of seeing more of the same kind of run rate of growth in the business, sort of 6% at the group level? Is that kind of the run rate that you're seeing year-on-year or maybe a view kind of sequentially versus Q2 as we have started Q3?

Yes. Andy, thank you for the question. So on the Fit for Growth benefits, I mean, obviously, we are tracking that quite closely with internal monitoring. But I think when you then look at the ultimate effects, for me, it's not meaningful to break out a specific number because that is also coming together with the general cost management, which we are doing.

But what I can say is that it's clearly a net positive effect in the quarter. So we are seeing bigger benefits than what we had in terms of cost of change in the quarter already. And overall, I'm very pleased with the development. We are really ahead of schedule, and you'd see that particularly in Express and P&P, where, yes, the team is totally focused on implementing the Fit for Growth measures.

On the current trading, what did we see into July, August, beginning of the third quarter? I think you used the term more of the same, and I think that is probably the best description. We haven't seen a significant acceleration in the growth dynamics, and it remains very volatile. So I think more of the same is a very good summary.

Thanks, Andy. And the next caller should be Alexia.

Our next question comes from Alexia Dogani with JPMorgan.

Just, Melanie, to go back to the Fit for Growth comments you just made, that the net positive effect is ahead of the cost of change impact, should we expect, in the coming quarters, these numbers to kind of accelerate? And -- or should we kind of expect a similar pace of the cost of change and, therefore, kind of the commensurate net positive impact?

And if I can just ask related to that, are there any notable areas of the network that you're currently using money that you can quantify and that you're addressing, that would be helpful.

And then the second question, because I didn't quite -- I missed it. When you talked about this kind of negative scenario you wanted the market to be aware of, is that really on the de minimis change or just more broadly on the tariffs? And how should we think about it? Is it just for the 2025 EBIT? And does it relate with the capture of the demand surcharge in Express? Just kind of to understand what to look out for to know whether that EUR 200 million negative happens or not.

Yes. Thank you, Alexia. So on the Fit for Growth, yes, so we obviously expect the program to accelerate, and we do expect that we will see, again, cost of change bookings in the second quarter. For the full year, we're still in line with the overall cost of change numbers, so that shouldn't go any higher. But do expect more cost of change to come in the third quarter, and we will flag that transparently as well.

In terms of losing money, I think that is a very difficult question in a network, and that is not -- I assume you're talking about Express, and that is not how we think about it. I would say that we have really managed to make the necessary capacity adjustments on the aviation side. But you also see some numbers, what we have done on the PUD side, where we're also pointing out the significant reduction we made in the U.S. to adjust for the lower volume inflow into the U.S. So I think that is really across the network, extremely well managed.

Yes, to the de minimis topic, as mentioned, this is obviously one of the most volatile topics of the last months where we have seen quite a bit of back and forth. Early July, there's a new tax bill. It was said that rest of world de minimis would stay in place until summer of '27. Just 4 weeks later, we get an executive order, which foresees the complete abolishment of de minimis rest of world by August 29.

There are still many moving parts, for example, the whole question of the postal implementation of the de minimis abolishment, and that is why we now have to really watch and see, will it be implemented the way it was announced, what will be the details, what will that mean for trade flow substitution effects, opportunities, which could also arise from the whole thing.

But being a conservative finance person, I, of course, pushed my team for tell me what would be the worst case scenario if this all implemented August 29 and only the negative stuff come through. In this worst case, what number would we talk about, and that would be for '25 up to EUR 200 million.

I decided to share that number with you openly because I guess you will try to do the same type of worst-case calculations. So it's, again, not the likely scenario. That is why we have not included it into the guidance, but we just wanted to be as transparent as we can possibly be with all the uncertainty.

Melanie, I appreciate that. And can I just check, because what is the number you expect for cost of change for the full year? Is that something you've discussed in the past?

Yes. So we said that it would be kind of like up to EUR 200 million. And I think looking at what we have now booked in Q2, I think we will definitely stay within that number.

Our next question will come from Marco Limite with Barclays.

Okay. And again, maybe we give Marco a minute and continue with Muneeba.

Our next question comes from the line of Muneeba Kayani with Bank of America.

Martin and Melanie, first one, I just wanted to ask around the demand surcharge, which you said is in planning. So if I remember correctly from last year, at this time, you'd already, I think, announced it. So kind of what are you waiting for on the demand surcharge at this point? What are discussions with your customers like? And how should we think about it across trade lanes, given the big shift in demand compared to last year that you've just talked about? Because I think last year, it was more kind of on the Asia-U.S. trade lane. So any thoughts on that would be super helpful.

And then just related to Fit for Growth targets, I think those -- you've talked about the cost savings of over EUR 1 billion run rate by the end of 2026. So you've talked about kind of the impact this year. How do we think about it next year, both on kind of the cost of change as well as the benefits side?

Yes. Thank you, Muneeba. So on the demand surcharge, you're right. Last year, we announced at the beginning of August, and we then already informed our customers about the details. It went into effect September 15. So I think we announced it so early last year, a, because it was the first time we ever did it. So now it's more of, a, "Hey, this is what we have to do in the peak season." That's one of the reasons why we haven't communicated the details with the customers yet.

The second thing is, of course, that it is a very volatile environment out there. And the intention of the demand surcharge is to optimally balance the cost of production on the supply side with anticipated demand. And here, we really take some time to work through the details, so that we really get it right, including the right demand surcharge per trade lane, where, again, as you said, obviously, the situation is quite different on the transpacific compared to what it was last year.

With regard to Fit for Growth, yes, indeed, the intention is to get to a contribution of EUR 1 billion by the end of '26. That remains unchanged, and we do expect that the cost of change part is going to fall more into the current year than into next year. That is why we said at the beginning that all the impact is probably just going to be a small net positive for '25.

Looking at the progress we see, including also progress from measures which do not require cost of change, there will be a positive contribution falling into then the overall cost reduction progress, which you can see in our numbers. And that is, of course, in the current environment also needed to deliver on our overall targets for the year.

Muneeba, good for you? Maybe Marco wants to give it another try.

Our next question comes from Marco Limite with Barclays.

Can you hear me now?

Yes, we can.

Amazing. I apologize for that. I've got a couple of questions. So the first question is on your Express volumes where we've seen B2C volumes down 20%. Now I mean, if we aggregate the volume decline since 2022, eCommerce volumes in Express are down 40%. Yes, just wondering if you will give a bit more color of what's happening there. 20% this quarter is a very big number, more than Q1 and the previous quarters.

And then the second question is if you call out any comment about the changing leadership in the freight and forwarding business. Clearly, Oscar has had -- has done an amazing job in Supply Chain, but why do you think that the know-how and the skill set from Supply Chain is a good fit also into the freight and forwarding division?

Yes. Thank you, Marco. So on the Express volumes, yes, indeed, the minus 20% in B2C, leading then to overall TDI volume decline of 10% in Q2 is a higher number than what we had in previous quarters. And here we do see the impact of the de minimis abolishment for China, Hong Kong to the U.S. That is also what our competitors have talked about that, clearly, after May 2, there has been a significant decline on the transpacific.

I think for us, the impact of that has been a bit different to competition because we had already beforehand started managing down those volumes because, for us, they weren't the most profitable volumes. So for us, we see a combination of kind of like the de minimis impact and regular yield management.

With regard to the change in DGF leadership, yes, so indeed, Tim, who is turning 60 this month, has decided to go into retirement, and Oscar is taking over Global Forwarding and Freight. So first on the Supply Chain side, we have Hendrik Venter succeeding Oscar, who has done an amazing job in the Supply Chain division for 15 years. It was very good results and progress in the EMEA region over the last years. So we really have a strong bench, and we're able to easily refill that position.

Oscar taking over Global Forwarding, I mean, first of all, when you look at Oscar's CV, he actually started with Nedlloyd. So there is a bit of forwarding history in Oscar's yellow blood. But Oscar is also simply a fantastic manager and leader. And together with a strong team in DGFF, we felt that he's the right one to now take DGFF to the next level.

Our next question will come from Alexander Irving with Bernstein.

Two for me, please. First of all, in freight and forwarding, so you reported your lowest conversion margin since before the transition to CargoWise. How do you plan to get this from where it currently is up towards a 35% target? Is that yield? Is that missing volumes? Is that further cost reduction?

Second, maybe a question on Supply Chain, please? So the top line, broadly flat at constant FX. Should this not be a segment with at least mid-single-digit top line growth? And when are we going to get back to those sorts of levels?

Yes. Thank you for the 2 questions. So on the DGFF conversion, yes, clearly, that is not at the level where we want it to be, and Q2 was overall, in terms of financial performance, not the strongest quarter. I think we also see that January. The market is difficult. But obviously, we also have some internal homework to do. We made progress on the freight side, so that looks already better than in Q1, but we booked a cost of change in freight. We also booked some cost of change in DGFF. Those are also impacting the conversion rate.

What do we have to do to move that into the right direction? Again, I think it's a combination of the 2 factors you already pointed out. It is yield working on the GP side, where we also see, yes, some of the targeted growth initiatives gaining traction and, of course, continued focus on cost and efficiencies with the Fit for Growth component also playing a role in DGFF.

On the Supply Chain growth, yes, so that's a very interesting question because Supply Chain is, in terms of speed of adjusting to a slowdown or an acceleration in the global economy, the slowest of our divisions. So you may recall a while ago, we had this slide, which division is the most macro dependent, which division reacts the fastest. That's Global Forwarding. Which one is more on the slow side? That's Supply Chain.

So what we are now seeing in Supply Chain is also, yes, that things are not super dynamic in the global economy. You can see that in the throughput volume, in our warehouses, in some of our customers. And that is temporarily slowing down the top line growth in Supply Chain. Over the medium to long term, we still see a fantastic growth opportunities for that division. So I would say that we are now going through the Supply Chain cyclical adjustment to what is happening in the world around us.

Our next question comes from Patrick Creuset with Goldman Sachs.

To clarify -- yes?

Yes. Now we can hear you.

Now we can hear you. Start again, please?

Just 2 clarifications, please, on Express. So one, just on the EUR 200 million worst-case scenario de minimis, can you just share whether you think that's -- if it happens, that's -- that would be down to a direct loss of volume and revenue for you or whether it takes into account largely the indirect -- potentially indirect effects on softer air freight market, therefore, lower ACS revenues and that kind of thing?

And then secondly, on the surcharges, you're preparing for September. I mean, can you roughly give us a sense of the level related to last year? Should we think about it as last year's level being a best case? And then if the peak season surcharge was down year-on-year, is your current expectation that the lower cost base offsets that in the fourth quarter basically?

Yes. Thank you. So let me start with the second question because I think you basically answered it yourself. So yes, we are. Given that this is offset for the cost development in the current environment, we probably assume that we will have a lower cost base and, hence, need a lower cost offset. So that would, per se, leads to a lower income from the demand surcharge, but you would see the compensation on the cost side. And that is all factored into our guidance.

And again, the reason why we are not announcing the details yet is that it is obviously a quite dynamic environment out there in terms of changes, not in terms of volume dynamic. And so we really want to get it right and take the time to really per trade lane find the right balance.

On the de minimis worst case, so, I mean, again, we run a holistic model for these different scenarios, and you can spend all day at the moment doing scenarios. But -- so in this worst, worst-case scenario, the biggest impact actually comes from the assumed reduction in volume.

Our next question comes from James Hollins with BNP Paribas.

A couple for me, please. Just wondering on the -- I mean, previously, you said de minimis from China to U.S. is pretty small for you guys. I don't know the exact quote, but that was roughly in line. I was wondering if you could maybe help us with the math on the B2C shipments down 20% year-on-year, what that might have been ex de minimis on that channel lane.

And then, Melanie, thanks very much for the EUR 200 million guide on your very diligent view on the worst-case scenario on de minimis. I was wondering if you could take us behind the scenes and maybe quantify your worst-case scenario on some of the tariff news we've been having recently from Donald Trump.

Okay. I think the second question is a bit impossible to answer because there is so much news flow, right? So I mean, when you just look at the EU, U.S. trade deal, where, I think as we all know, the details are still to be worked out. So I think on the positive side, you can say that there is some types of time -- type of clarity coming up. Talking to customers, that is also something they do appreciate very much. But obviously, it will lead to a significantly higher tariff than what was there before, and that should have some impact on transatlantic volumes from Europe into the U.S.

There could be some upside, specifically on certain sectors from the U.S. into Europe. So I think we have -- would like, with so many topics, now really have to work through the details and really see also how this is then implemented in detail because, for us, being the ones who are doing the customs clearance, the devil is really in the detail. And there are still a lot of question marks around the recent announcements.

With regard to de minimis B2C minus 20%, so the minus 20% in B2C volume in Express in the second quarter is impacted by the de minimis abolishment China, Hong Kong to the U.S. So we clearly have seen in May, June an acceleration -- a significant acceleration in the decline in volumes on that trade lane. What I had alluded to beforehand was that we had already done quite a lot of action on the pricing side before that. So we had already seen declining volumes before. But obviously, there has been a significant impact, and that is also visible in the minus 20% B2C volume decline in Q2 overall.

Thanks, James.

Our next question comes from Parash Jain with HSBC.

I have 2, and if Melanie can talk about any qualitative color on how has been the start of third quarter, especially amidst tariff on, tariff off scenario.

And secondly, if you can talk about some of the tools that Express business have to deal with the extreme volatility in freight volume. I mean, how easy or difficult it will be to take the cost out? And will it come in the form of return of aircraft? Or will it come from -- get rid of some of your older fleet? Any color on that will be helpful.

Yes. Thank you for the 2 questions. Maybe on the first one, start of Q3, I really think I said before, the best description for me is it's more of the same. So we don't see a significant change in volume dynamic. And we see a continuation of this very pronounced volatility, which, of course, makes planning and network businesses like ours quite demanding.

And against that background, I'm even more pleased with the ultimate result for Q2. So also now in the third quarter, we stay extremely focused on constantly adjusting the network to the new volume development and driving forward our cost measures.

With regard to what tools do we have on Express, to flex on the aviation side, yes, I think what we are now seeing, for example, in the 7% capacity reduction in Q2 is the benefit of our aviation setup where we have this very good combination of own aircraft to long-term leases, medium-term leases, short-term leases, which allows us to really flex the capacity.

And that, in combination with a lot of regional rejigging, so moving aircraft from the less busy routes to the busier routes, that is what we have successfully used in Q2, taking us to the 7% capacity adjustment, and that is also the opportunity we have going forward. And I think also very importantly, when volumes come back, that will allow us also to flex back up.

Lovely. And maybe one quick question, if I can add up. Now that the DB Schenker acquisition has been completed, are there any early signs of movement among the key customers? Are you seeing any pockets where DHL's Freight and Forwarding business can grab some market share?

So we think that the opportunity is out there, but I think in the current environment, we do see in our customer portfolio, but also in the customer portfolio of competitors, a higher reluctance to change. So many tenders are being pushed out, which would be natural opportunities to switch because customers are delaying decisions. So we do think that there are opportunities coming from the merger, but we see an impact on the speed from the current environment.

Our next question comes from Cedar Ekblom with Morgan Stanley.

Melanie, I just had a follow-up question on these points around de minimis. So my understanding was that de minimis was all quite a small part of what the Express business was doing. And I understand the EUR 200 million that you've given is for the group overall in terms of risks in the second half. But I would expect that a lot of that would be in that Express division, particularly because you talk about B2C volumes being down 20%, and that being a lot linked to sort of China de minimis.

So if I look at that EUR 200 million, and I say that, that's only for 4 months of the year, it actually works out to be quite a large percentage of your Express profitability. So I'd just like to understand your comments around de minimis not being so big for your group, but then those numbers actually implying that it's quite large.

And then just on margins in B2C and B2B. My understanding as well has been in the past that you haven't necessarily seen a meaningful difference in profitability between those 2 product groups. But B2C volumes were down a lot more than B2B, and I know that you've put cost initiatives in place, et cetera, but the margin was actually really strong.

So can you just talk about sort of B2B and B2C and if we really do need to think about different levels of profitability for those 2 product categories? Because that's got implications for how we think about the potential margin recovery when B2B volumes come back.

Yes. Thank you, Cedar. So on the first question, I mean, there is obviously quite a lot of dynamic now on the whole de minimis. And as I said before, with the new tax law, which was just passed in the early days of July, everybody assumed that it would now be in place until July 27. On July 30, there is an announcement that it will now be gone completely by August 29.

And of course, all these changes take some time to really settle in, and that is why you also see a bigger impact at the beginning than in a steady state. So I mean, customers are, of course, working on solutions. And yes, that is why I don't think you can extrapolate from a worst case '25 number for what that means going forward.

In terms of -- and just to be correct, so the number which we have given is kind of like a worst case number for the group overall. But obviously, the biggest impact would be in Express.

With regards to the margin question, B2B, B2C and what can you kind of like derive from the Q2 numbers, I think the important element in here is that the transpacific trade lane in terms of profitability is very different, different for us and also different between us and competition.

For competition, that has obviously been one of the most important and most profitable trade lanes. For us, due to our distant third position in the U.S., the economics have been very different, and that is also why for more than a year, we have now talked about pricing out B2C volume on the transpacific because we didn't see the best margin contribution from that business, and that is the reason why this B2C volume decline in Q2 looks as if we are losing B2C volume with a poor profitability.

Overall, for the network, and that is something we have been obsessed about ever since the beginning of B2C. We do make sure that there is also a good profitability and margin contribution from B2C to the Express network.

Okay. And can I just have one follow-up, please, just on this de minimis topic? So if it's a worst-case scenario of a EUR 200 million cost from the end of August this year, how do we think about what the cost -- the incremental cost would be for '26 in a worst-case scenario?

Do we just double that EUR 200 million? Or do we need to think about the seasonal cost being very much weighted into the last quarter of the year? And so actually, the incremental cost into '26 would be much less, maybe another EUR 100 million incremental or something like that.

So I mean, there are so many moving parts at the moment. We have now tried to kind of like give you a feeling for the overall impact, not on cost, but kind of like the overall EBIT impact in an absolute worst case for '25. Of course, if that scenario, which, again, we do not think is a likely scenario, should materialize, we would take further cost actions.

We would take -- we wouldn't make further adjustments, so that extrapolation to '26 on that basis is really not possible. We will then have to reassess how we set up the whole operations for '26. That was just to give you a bit of a sensitivity for a worst case in relation to our '25 guidance.

Our next question comes from Cristian Nedelcu with UBS.

Cristian? We can't hear you.

Our next question comes from Marc Zeck with Kepler Cheuvreux.

Can you hear me?

Yes, we can.

That's great. Just a small clarification regarding de minimis and, in relation to that, the demand surcharge. With that worst case EUR 200 million already assumed that in that case you wouldn't kind of -- you wouldn't do a demand surcharge for the fourth quarter. Or is that kind of a worst-case scenario possible, like the minus EUR 200 million from the de minimis impact and that then due to lower volume as such, you wouldn't do a demand surcharge and that's extra?

So we -- I mean, in this world of scenario modeling, we do try to come to holistic scenarios. That is why we are trying to then factor in all elements. So that is really the all-inclusive worst case number we would see.

Our next question comes from the line of Cristian Nedelcu with UBS.

Can you hear me?

Yes, we can.

Apologies earlier. Just maybe a couple left. Just a conceptual one. I think your revenues in the quarter, excluding FX, were down 1% or something like that year-over-year. You're seeing more of the same going forward. The structural cost cutting from Fit for Growth is not really meaningful -- meaningfully offsetting that revenue drop. Or it does seem to me that it is your cyclical cost cutting that is actually helping you have a resilient EBIT for the next couple of quarters, at least.

So my question is when volumes start to recover, is it fair to assume that the operating leverage benefit to the EBIT will be less pronounced than historically because you'll have a lot of the cyclical cost that you have to reactivate? So that's maybe just a conceptual directional question about the midterm.

The second one on Express. Historically, the Q3 EBIT is weaker due to seasonality versus Q2. And I think last year was the exception because you started doing, in a more meaningful way, capacity reductions. And you've been addressing the cost. I was just wondering how -- if you can help us a bit how should we think at the seasonal development this year in Express in Q3. I'll probably leave it there.

Yes. Thank you. So I think, first of all, on the operating leverage, I mean, what we are seeing at the moment on the cost side is a combination of the cyclical capacity adjustments to the volume and the increasing benefits of Fit for Growth.

And yes, when volumes come back, we will also increase over time capacity again. What we have traditionally seen is that this is quite a sweet spot period where volumes then tend to come back quicker than we add capacity, giving us good operating leverage. And that is also what I would assume for whenever volume comes back going forward.

And on the seasonality, yes, Q3, as you rightly point out, is not the strongest quarter for Express, and that is also what we expect now for the second half of '25.

Our last question will come from Arthur Truslove with Citi.

Can you hear me okay?

Yes, we can.

There was a couple for me. So just looking at the cash flow statement, you had what looks like a profit on disposal of noncurrent assets of around EUR 17 million. Just wanted to confirm if that was stripped out from normalized profits or not. And then also within there, I can see that the provision movement is negative from a cash flow perspective. But I just wondered if there was anything in the P&L for that.

And then moving sort of to the fundamentals of the business. Obviously, the volume trends in Express have been soggy for some time. What things are you sort of tracking to give yourselves an idea of when that volume rebound might finally take place?

Yes. So on the cash flow statement, I have to see whether I got your questions correctly. So we had, I think, EUR 95 million in changes in provisions. And yes, so I mean, for example, some of the cost of change, which we booked as provisions was coming up very quickly, yes. So we had some provisions, which we will be looking for the cost of change. And -- so I would say this is more of the usual stuff.

I mean, last Q2 -- sorry, I'm still looking at Q1. Sorry, apologies. Yes. So changes in provision was minus EUR 50 million in Q2, minus EUR 95 million in Q1. So I mean, we have a lot of usual stuff going through there, personnel, provisions, and I don't have anything I would point out here as extraordinary. I think, overall, really, the cash flow in Q2, apart from the M&A line, the EUR 253 million in net cash from acquisitions, divestments is really very unspectacular, uneventful. Nothing to be seen there.

And the second question on...

Arthur, remind us of the second question that you had.

Yes. So it was -- what are you sort of watching for, for the volume -- yes, what things are you looking for to give you the idea of when things are going to come back?

Yes. So I mean, we have our daily volume trackers. And as I said before, it has been super volatile also from week to week, which is something which I haven't seen in that magnitude before. So it's, yes, very hard to see any types of patterns at this point in time.

But of course, we are looking at, yes, daily volumes in Express, daily volumes in the parcel networks, turnover we see in the supply chain, warehouses. And as I said before, when we now look at what we see in the beginning of the third quarter, it's more of the same and not a fundamental change in patterns.

This concludes the Q&A session. I will now hand back to management for closing remarks.

Thanks, Abigail. Thanks to everyone out there for a very focused Q&A session. So thanks for that. The IR team is looking forward to discussing any other topics further with you over the next couple of weeks, unless you prefer to go on your annual vacation.

And let me turn it back to Melanie for your closing remarks.

Yes. Thank you very much also from my side for your interest, for the good questions and the discussion. Yes, if I wrap it up, obviously, we saw some impact of the volatilities in the world around us on our Q2 numbers. But for me, the important message is that we are focusing on the cost side, doing both the regular cyclical capacity adjustments and pushing forward with our Fit for Growth agenda.

But at the same time, we keep investing into growth opportunities, and they are still out there. You really have to hunt for them. But we are confident that with this combination of a strict cost focus and looking for growth opportunities in the current environment, we will deliver growth also going forward.

Thank you very much. And with that, also from my side, have a good summer. And to those of you who are still going on vacation, have a nice summer holiday.

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