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On time, I welcome you here in the room in London and out there on the live webcast. Good afternoon, good morning, wherever you are, and happy that we have you here for today's DHL Capital Market briefing. That's how we call the concept. It's a 90-minute or so session. So the aim is to be done by the full hour at 4:00.

And therefore, we are looking forward to here from our host, John Pearson, CEO of DHL Express. You heard him speak often last time around on our Capital Markets Day last year. Some may have seen on one of the tours. And we also have with us today our Head of Network Operations and Global Aviation, Travis Cobb. Thanks for making it.

And you will notice that we do not have a single CFO here in the room from our side at least. So this is very clearly targeted to be an educator session for you to get a better understanding of what we're doing in our Express network on the strategy and on the network side of the game. This is not about putting out any new targets or numbers, but your understanding of the business should be growing.

On the web, like for our usual formats with the quarterly reporting, any questions that you have, punch it in, I will get it up here, and we will make sure that the topic is going to be covered.

And as it is part of our safety culture in DHL Group, we're not going to start this session without me giving you a very clear briefing. There is no planned fire alarm this afternoon. And in the case of an emergency, the nearest fire exit is right out of the store and then straight ahead.

Okay. I should not forget to thank our friends at BNP for organizing and providing this venue. And with that, John, may I hand over to you.

Martin, and thank you for doing that safety briefing. That's something that every single meeting in Express and pretty much the group starts off with. So thank you for your interest in our company and being here again with Express. The slides aren't too heavy, but I walk through them slowly because I think there's some points that Travis and I really want to get across here at this particular time of year where we've reported the numbers we've reported, and we're now well into the third quarter.

From a sort of state of the nation point of view, you know our formula, people, quality and cost excellence are the drivers for -- all the drivers for our growth going forward. You see the formula in the minute. There's little point in expanding upon that more.

Smart industrial growth, really why we're here today, if you will, in Heavyweight Express combines the targeted Express levers with the group growth initiatives. It's a big focus for our division, Heavyweight Express. It's a big personal focus for me. I spend a lot of time on it and how we can make it more sophisticated.

Global Connectedness, proxy for global trade is at an all-time high. I heard the phrase the other day, global trade is stronger than ever. It's just the destination address that has changed. So I like to use the phrase water finds a way. It's just finding a way to different places. And that's absolutely the case. Trade grew faster in the first half of this year than any other first half since 2011. So we -- a lot of the things we're talking about are riding on the back of that. And for those of you that are interested in Warsaw, in a couple of weeks' time, we'll be sharing update of our Global Connectedness tracker, which is very interesting and more hotly anticipated than ever before.

That links to our [ 22 ] high potential markets, GT20, Geo Tailwinds 20. We've added two to the family. And that program I personally sponsor from a Board management point of view, and that is all very much on track. The formula, much more than just words on a wall. I think I'd like to make that point. I was in South Korea in Seoul last week, and I had it pointed out to me of how much depth there is below each of these letters.

And I've been in the business 40 years. I'm quite long in the tooth. I know when people are telling me the truth and what I saw in Seoul was just outstanding in terms of how that business has taken this formula, which is pretty much the same since 2010. little bit of cosmetic change, but pretty much the same for the last 16 years and are building it into the business.

That's also a country that their weight per day growth is in the 20s last 3 months and their heavyweight Express growth, which is over 50 are in the 30s. So everyone is a real lifetime example of just one country, meaningful to a point.

And we continue to build and manage and measure our countries on the things that we know are under these letters, safety, as Martin just pointed out, is one of the big ones under people. You can't be a great place to work unless you're a safe place to work. We've been #1, #2 or 3 great place to work in the world for the last 5 years. You can't do that unless your safety KPIs are getting better.

But what we're here to talk about is the C and the G. You can see the things that it says under those letters. And I think the point I'd really like to make here quite convincingly, if I can, is that the combination -- the strength of the discussion is in the combination of the two.

So I, for my part, talking about smart industrial growth, selling heavyweight business and controlling and managing RPK and then Travis saying, right, that incremental volume is going on a fitter and leaner network than we've ever had before.

So the two sides of the story, more volume, good quality volume, good yield volume lands on a network that Travis manages and is far fitter and far leaner than ever before. So I think that's the key thing there. The other way I'd say that is the network is there. The network is the jewel in our crown. It's the most important thing we have, been there since 1969. The network is there, utilization, let's monetize it. Utilization of that network will monetize. Operational leverage, call it what you will, but that's the moment we've been in for a while, and that's the moment that's bearing fruit now.

So let's start with smart industrial growth and kind of say what is it? It's definitionally a simple term, but definitionally something that inquires you to say, what do you mean by that? And I guess it's got two dimensions.

On a customer level -- on an Express level, it's great profile [ TDI ] business fitting into a network that's got capacity at service center, gateway, hub and in aviation. Great profile business that's palletized, stackable and full of aeronautical aviation, robotic parts, not welding rods, not potatoes, high-value parts that are going in those packages.

And you may remember, we had a program in 2018 where we pulled out some heavy weights from our network, uglies, rugglies and all sorts of things, oil drums, too many Samsung badly packaged, maybe plasma screens and other things, fully assembled trampolines, not quite that far, but there were things in our network that weren't accretive to producing more EBIT.

We cleaned all that out. That's what [ P300 ] was about. Now we relaunched in earnest the whole organization into finding these type of things.

From a customer point of view, it's quite different. We're doing this at a time where supply chain resilience and reliability and speed and economic value are more important than ever.

Customers' growth plans are getting hit every single day by global trade interruptions. The fragmentation of global trade is impacting customers' growth plans every single day. So the combination of the two is sort of going to a customer with something that is creating a situation where growth comes and business outcomes come from speed and the outcomes of speed and reliability enable is a very powerful proposition to our customers.

This is not just saying, do you sell heavy weight. This is have you switched your trade lane focus from somewhere, U.S. to somewhere else because of what's happening in the world of trade. Has that brought you any supply chain difficulties? Has supply chain disruptions, which there have been many every single month for the last 5 years really, meant that you're slower to market and your customers' customer ensuring high customer satisfaction. That's not our customer satisfaction, that's their customer satisfaction.

So the aggregation of a rather difficult trading world and a rather nicely controlled asset base that Travis has and a very accessible heavyweight Express product that we're offering in this -- on this foundation of smart industrial growth is what precipitates the sort of the line there at the bottom, the business outcomes that speed and reliability enable that their forwarder for certain goods that they have, they can't get that from their forwarder. And some of this will become even clearer as we walk through how things change from COVID.

So smart industrial growth is a sort of banner of this phrase. It actually started with smart growth because it was smart lane growth. It was smart product growth. Travis himself wrapped that up under the umbrella of smart industrial growth. There's two sort of prongs that we're talking about today, Heavyweight Express, which I've already sort of started on and geographic tailwinds.

Allied to those two diamonds are the other growth diamonds of the group growth initiatives, new energy, life science and health care, digital selling, e-commerce. The new growth diamond is data center logistics right on time. I think before quarter 4 2025, the number of people that knew what a hyperscaler was, was not very many. Now it's on every e-mail, it's in every day. So running fast on that. So it's the sixth growth diamond.

The little 4 that are sort of opaque out -- also important to comment on as intra-AP, a highly profitable intra-Asian lane, a big part of our business. Intra-Europe, a staggeringly large part of our business that is coming back with TDI. And with TDI, one of the little diamonds there is blue lanes, so growing volumes with more attractive pricing on systemically unbalanced, underutilized aircraft sectors. So the U.S. to the world is one of them, and MENA, back to Asia, et cetera. So there are a number of blue lanes and one -- the other one might be sustainable selling GoGreen and our sustainable aviation product.

So you see the sort of the growth architecture of our business. The focus is on communicating what this is and really drilling down into -- from my organization and even my own time, heavyweight Express and GT20.

I think it's worth just having a look at this slide, which really illustrates the evolution of DHL Express. And I'd like to go through it in decades of 10 years.

The first bucket, and there should be the right amount of people there, but the '70s was all about documents. If there were any parcels in our business, they were lightweight parcels going to aircraft on ground in Riyadh, in Yanbu, Saudi Arabia, vehicle off-road in probably Saudi Arabia as well, Bentley that was owned by Sheikh and the little 2-kilo part was shot over there, no expense bed, and that was the type of parcels. And think about this in the context of this type of parcels are moving.

The '80s was all about more small packages sitting on top of that document network. The documents didn't go away. So I'm layering on here different things as our business evolved over 60 years. The '80s, the '90s was all about Import Express, a product that kind of saved DHL. It was billing at destination rather than billing at origin. The customer paid when he received it rather than origin. 80% of freight anecdotally is consigner routed.

I'll take it from there, the factory, bring it to me, please, our offering, [ 219, 220 ] at the time because Afghanistan was included to your desk, pay everything here on one account number. It kept DHL in the black at that time for quite a long time. 1993 and was still a big product. It's probably 40% of our revenue. We're not quite an inbound company yet because outbound is slightly more, but it's a significant part of our evolution.

The year 2000s, I'd like to say when I was in Asia, I launched Fast Forward. Fast forward was kind of the forerunner to Heavyweight Express. It was launching a 0 to 250 kilo, we are faster and cheaper than a forwarder product. You should never use the word cheaper in marketing, but I use that advisedly in the sense that we were cheaper. There's less money. I think you need to say it in that way, and customers didn't realize that.

So the year 2000 is when we launched Fast Forward, which really made me reconsider bringing it back into the business now, which I've done. 2010s were all about e-commerce, the 21st Century Spice Trade, the work we did with McKinsey, I realized that when I went to the U.K., 7 of the top 10 customers were brands I've never heard of, and they were brands that hadn't been in our top 10, not even the year before. So absolute zero to hero, Farfetch, MatchesFashion, JD.com, big, big customers. We need to know how to manage those well. So the 10 to 20 was really -- and through to COVID is really about e-commerce.

And then '20 onwards was really the machine you're looking at on the right. It started because apples fell on to our cart. Big weights fell into our bucket during COVID. Everyone said they all disappear. All of them will disappear. We went from a weight per shipment of something much lower to much higher. I'll show you that later. And we talked to our customers and said, how much will you leave with us?

This is another important point because of speed, shipment visibility, reliability and customers' customer, they said, we'll probably leave 60% with you. Some of them said more because actually, I found out that you're cheaper because I've never used you before. and I had to use you, I found out that you're cheaper than enough order. In the end, we kept about 88%.

So post-COVID normalization, something I said on the night our dear Queen passed away at the Capital Markets Day on September 8, 2022, wasn't really a big deal because we kept the business. So as we get into this period now, we've got a lot of learnings from COVID and a lot of those customer satisfaction stories.

So let's just have a look at this and relax for 2.5 minutes to portray what we're saying to our customers and what we're doing in the market and how we're educating a little bit our sales force.

[Presentation]

So if you aspiration absolutely is to get our shipments through to destination at the same time as our documents arrive and that absolutely is what Travis is working on.

So what is it really? Well, it's the big boxes and pallets and crates that you saw in that video. It's not this. This is a thing called the jumbo box. I launched in Australia in 1997, 25 kilos. And our average weight per shipment for B2B is kind of here at 12. You know that from the stat box. But COVID, it was kind of -- so we're putting on weight as a business. We're putting on weight kilo by kilo by kilo over the last 4 years, nearly a kilo a year or 0.5 kilo a year. So we're sort of up here now.

But we're a long, long way from what's already in our warehouses, what's already moving with us and what Siemens and Robert Bosch and Kuwait -- oil company in Kuwait are moving with us. So whilst that is kind of the business that we grew up on and whilst it took us 56 years to get here and sort of only 2 or 3 years to get here, the business has so much more potential with the speed, the quality, the use cases, the urgency drivers and the fact that we are more economically viable up to a weight that most customers don't realize.

Most customers think it's over 50 kilos, give it to a forwarder and then they find that up to 125 kilos or cheaper or 130 kilos. So that's kind of what it is that the competitive pricing that goes without saying, the right sales approach is not can I move your heavy weights. The right sales approach is do you have shipments that will increase in value if you move them via a network with more speed and reliability or ultimate customer satisfaction. So if we look at some of those, they are the obvious ones, and I let you read them for yourself. Those are the urgency drivers that we're communicating to our customers in our sales conversations with logistics managers of all sorts of different skill set and experience. And these resonate well in the customer calls that we have.

But there's 1,000 more. there's literally no end to the number of things. It's my shake is arriving back and we need this there. It's not there. That one is not there, but it's #7. And #8 is I used you for one of those, but then I learned that you're actually cheaper until 129 kilos. So I'll use you a bit more.

And that's why we kept the ATK 80% plus. And if you said, well, what sectors are they? They're all the normal sectors. They are our group growth initiatives. They are significantly these ones. The componentry and what's in the box is exactly, as you might imagine, robotic parts and life science and health care equipment and server racks.

And just talking about DCL for a second, no one was talking about hyperscalers 2 years ago, no one. No salespeople have never heard the word. Now it's in every single deck and every single document kind of thing. And our salespeople, we've got dedicated win rooms and war rooms and we collaborate with DGF and the whole collaboration story is so much stronger. But we are in the upstream world of the ecosystem of the upstream world, spare parts for something that's already been set up and established with things that Oscar in DGF moved 6 months ago. So this whole ecosystem world is enormous, and that's why we've added it as our sixth growth diamond. But that doesn't detract from life science and health care or anything else in there that is -- we're also focusing on.

And then the result of that is, as you see here, nothing that I didn't expect. We maybe had some tailwind from the Iran-U.S. situation and capacity constraints and supply chain pressures. And -- but when I was in London in April at the Capital Markets Day, I made this point that interruptions play into our system. We control the aircraft Travis will talk to you about. We have our own facilities. We can find more aircraft quickly. We can put aircraft on the ground. We can move aircraft tails around.

The types of things that are going on in this fragmented world of global trade and very quickly changing global trade when de minimis suddenly shuts you out of one market, play into those assets. So it's no surprise to me that we're at the 9.4 weight per day. You see the transition between quarter 1 and quarter 2 play back against the comp of 2019. You can read for yourself on the right-hand side why that matters. We're 2/3 of the way -- a little bit more than 2/3 of the way through quarter 3.

I would expect the number, I'm sometimes a bit more open than Martin, but high level, I would expect the number to be quite similar. That's how it's playing out. And I say that in the sense that this is -- going back to that point about, this is a decade of commercial strategy. We didn't do this for 3 months of better volumes. We did it for the next decade like we did the documents and the [ IMP ]. [ IMP ] is still an enormously valuable product today because it's got a higher revenue per kilo and a higher weight per shipment than outbound business. So it's propped up the whole commercial KPIs of our business.

So that's how it's performing. And we deal with more in Q&A. So where does that take us to? It takes us to GT20. I think the query code works by all means.

There are publications just about every year from us. There's the global connectedness report, it was called the index, and there's a global trade Atlas. The world that you live in and the world definitely that we live in, these are more hotly anticipated and read and understood 3.5 million data points, and they tell you a lot about what is going on.

One of the things they tell you is that globalization is not giving way to regionalization. Global trade still moves 5,322 kilometers on average, through the Malacca straits, I used to be on a boat, survive over from the East to the West. And if a lot of onshoring and nearshoring and friend-shoring and reshoring was happening, then mathematically, that number would come down.

Trade, as I said, grew faster in the first half than any year since 2011. Trade is -- there are trade policymakers and business people and CEOs out in markets looking for new customers, looking for new trading routes, almost with "I Love Global Trade" T-shirts.

And that's kind of how it is. They lost a major destination market, but most people pivoted very quickly in their marketing efforts, which is why we send the message we can pivot equally quickly in our operational efforts to help customers get their products or samples to new markets, then ultimately get their finished goods.

And if any of these things that people, these naysayers would tell you about global trade and globalization, nothing is true. After the Iceland eruption in 2011, I said global trade will never be the same again. What changed? Nothing. Nothing. A thin veneer of goods and parts that were highly sensitive and value might have been moved closer to end consumption.

But by and large, the economics and trade is built on economics and efficiency. The denim jean industry is not going to move from Bangladesh to Stuttgart. And denim jeans are still made in Bangladesh, which is one of our new GT20 countries. So a few things changed, but I'm pretty sure that as global trade emerges and the map of global trade evolves, it will fit our network uncannily well. And that's what's proving to be the case with these countries that we put into it.

And let me go on to that. I don't really get into any detail. I've already sort of shared that Bangladesh and Morocco are going to be 21 and 22. But I want to say from this, they're evenly distributed around the world. This isn't just something in Asia. So they're evenly distributed. These countries grow fastest on an axis of speed and scale between now and 2030, as defined by NYU Stern, who is our partner, BCG, McKinsey and some other people that helped us. They are the right countries. You won't find Papua New Guinea in there because whilst it's going to grow fast with vanilla and all the other products it has, it's not of any scale.

The reasons why these countries were the ones selected is any of the right-hand drivers or all three. A good example of inward FDI investment, the country that gets more FDI investment than anywhere other than the U.S.A. is India. So India is in for that reason. The countries that are in for the reasons of supply chain diversification beyond China is mainly the Asian countries. And the only country that's in for nearshoring is Mexico, where Chinese companies are setting up on the border and shipping into the U.S.

And some are in for all three. But the fact of the matter is we identified 20, one or two could be the wrong ones. We identified 20 2 years ago, and we started doing things. What did we start doing? We started driving commercial excellence means the quality of our people, the quality of our programs, the quality of our pricing, specifically hard in all those 20 markets, but more so pushing our sister companies to get to the same level, some of which would agree, they perhaps weren't at the same level as DHL Express. We then made sure that we were collaborating better than we've collaborated before.

So in Malaysia, which is one of them, that would be no surprise to you, we collaborate regularly with our sales teams and our general managers and the CEOs of the region to drive through a list of established programs.

And lastly, and ultimately, actually, putting a pot of money aside Tobias was very keen that this happened to drive investment. If we identify a white spot in one of those country sessions and reviews, we need to deliver EUR 50 million or EUR 100 million back to that country and fix their problem. We can't quickly respond to their reasons why they may not be growing at full tilt, the program is really fractured in my view.

And then lastly, like anything in business, P is the first letter of our formula. It relates back to leadership capability of the General Manager of the commercial team of the entire SMT. And in countries that are maybe towards the bottom of the sort of rankings, there will be some cases where it's a leadership topic that needs to be addressed. So that's the foundation of it. We've evolved things as we've gone through the 2 years, different things have been in place at different times. And one of the aspects that came out of it is our Chinese overseas sales network.

There's a little bit of deja vu, I joined in Bahrain in 1986, there was a Japanese overseas salesperson and a Korean overseas salesperson. The program fizzled out after 5 years. And here we are 35 years later, populating the GT and other locations with Chinese salespeople, largely from DHL China. Now what I've learned about doing business with Chinese companies outside of China is it's best to do it with a Chinese person. And metaphorically, figuratively speaking, the concept is to meet them off the plane, to be in their diary, be in their office, be around the dinner table with them and be their lead logistics partner. They build cultural bridges. And these people are all doing that in these different places. So that gives us real traction on those Chinese companies that have established.

A great example of Haywood heating in that set up a plant in Egypt and Thailand. Sure enough, when I wrote to the country manager, they've identified them. They've got capital set up, and they were building their plant to sell heating equipment, little small heaters to Egypt to North Africa in one case or to Southeast Asia. And we were first in best rest. So the program is going well, and we'll continue to drive that. The final tapestry, if you will, the bed spread of performance on this program is pretty impressive. So we look at it in different ways. We look at it by division. We look at it by GT19, excludes China. You can imagine that had a bit of a headwind for a while, GT20.

But the roll-up of the entire thing for the DHL Group is the 13 of the 17 are more than 20% growth. And you can see that 3 of them are more than 40% growth. We'll add Bangladesh and Morocco to the program. I visit them within the next 3 months, and we will kick off the same processes and make sure that we're getting more than our fair market share of the automotive business in Northern Morocco and the other aspects of the opportunity in Bangladesh.

Lastly, one more slide only, and I run over time a bit, but these are all important things to say and share. If anyone was in Leipzig, maybe not in 2012, I shared the pricing Blackboard for the first time. We've had two pricing leaders in 30 years -- 25 years, and they both built the pricing competence and capability in Express at a very high level. So called the steps to pricing excellence. We were at 2%. We're probably near a 4% now.

This is a demonstration of how we've improved our NPC over the years in a rather tough competitive environment, NPC, you take all the shipments that were build in November, you run them through the new set of rates you've given to your customer in January, just run the same shipments through the machine, and it comes out 2.8% higher. So we get that stick rate. We get that as a base on our 24 billion, if you will. There's some attrition of that as the year goes by and so on and so forth.

And then the rest of the pricing environment is managed with the red cards, where if we bring on in error a heavyweight customer that really shouldn't have been with us, probably should have been with forwarding. We'll share the lead back with them when we move them out. They'll be red carded and we'll put them up to the price they should be if that's not right for them. And we'll move that to a monthly program, not a yearly program. So we are very specific on protecting our RPK. I can get young kids to go and be a freight forwarder salesman and sell heavyweights at lower RPKs. We have to maintain our RPK.

So that's the signal there. You see the NPC that relates to this. Willingness to pay in deal review is very sophisticated AI-driven pricing programs. The willingness to pay is about SMEs and making sure we don't give discounts too readily to people in the pharmaceutical business that would typically pay a higher rate to us. For example, deal review is establishing in a very sophisticated way the business that comes to us from a certain customer and how accretive it is to our EBIT through the type of network that -- and lanes and packages that they give to us. So you can imagine some people that only ship on a very transactional lane, Asia to U.S. and only give us this type of thing, and it goes to middle of Central America might be quite low on that.

But you can imagine someone that ships daily around Asia, high-value aeronautical parts of 8 kilos, very dense are a different type of network value customer. Quite sophisticated, all AI on a strong AI platform got it in 20 countries. We should have it in 50 by the end of next year. But it just talks to the strength of the pricing unit that has the responsibility for maintaining RPK on heavy weights, keeping this whole SIG and heavyweight strategy in track, but also do everything else on the day-to-day pricing.

So it's smart industrial growth, that's heavyweight Express, that's yield control, that's driving incremental volumes that are coming to us anyway because trade is so disrupted the customers' customer is wanting better, quicker service in these type of times and then putting it on a network that's leaner and fitter and for a long period of time and getting the operational leverage from that. So if I can, I thank you for listening, and I'll pass over to Travis, and then we'll have maybe questions at the end. So Travis, thank you very much.

Thank you, John. Good afternoon, everyone, and good morning to our colleagues that are dialing in virtually. My name is Travis Cobb. I'm the COO of DHL Express, and it's a pleasure to be here with you today. And it's good to see some of you again that I met 4 years ago when we had our Capital Markets Day in the tower and then toured our Cologne facility.

So as John said, I'm here to talk about the cost excellence portion of our strategy. You will have heard a lot from Tobias and from Melanie and from John over the last couple of years about fit for growth and making sure that we're getting our platforms really optimized and ready to capitalize on the smart industrial growth that John just took us through. So when we talk about Cost excellence, I'm going to talk about a couple of key elements. I'm going to talk about our aviation network, and then I'm going to talk about our ground network, which includes all of our hubs and all of our country operations for our pickup and delivery and for our customs operations.

I'm also going to give you a preview of some of the things that we're looking at from a digitalization and from an AI standpoint that we see as the next cost optimization levers in our business going forward.

So let's get started talking about the aviation network. And internally, we often refer to this as aviation, the perfect network. And there's a lot of characteristics that describe why we believe our aviation network is the perfect network. Some of these are extremely important to us, safety and security, obviously, high quality, obviously. But what's going to be more interesting, I think, for all of you today are the second, the third and the fourth points that you see listed there, the flexibility that we have in this network, how it's designed from a resiliency standpoint, certainly, how sustainable our aviation network is. And then lastly, how we've been able to, over the last couple of years and going forward, really cost optimize that aviation network. And let's start there if we can.

So here on the left-hand side of the slide, you see a 10-quarter history. So quarter-over-quarter, year-over-year going back through 2024, where we've been able to demonstrate that flexibility that makes up our perfect aviation network. We flexed down our capacity. We've been able to flex down our cost base overall for those 10 consecutive quarters, in line with what we were seeing with our [ TDI ] weight development and overall result.

I think on the right-hand side, you also see an important element here that is good to understand going forward is not only we've been able to flex down that cost base, but we've been able to actually structurally change it, and we're delivering a unit cost, which we measure as our aviation cost per kilo at a material lower level than where we were just 2 years ago.

So if you take smart industrial growth and you take that net price change that John just showed you on his last slide and you bring that volume on to a more efficient cost aviation network that's producing a fantastic flow-through into our results that you saw in the second quarter. So you can see that's really fit for purpose and set up going forward.

Now what's the size and scale of our aviation network? You see it here. We published this once a year. So this was at the end of 2025. We have over 275 aircraft operating over 2,400 flights a day. But I think the most important part on that slide is we're not one single airline. We don't have one DHL airline hotel and operate that airline around the world like our competition does. Instead, we are 19 airlines that we own and partner with around the world. And that configuration, we call and bring it together to call one big virtual DHL airline.

And that virtual airline has some really interesting characteristics to it. One, it gives us a fantastic geographical coverage that we need to operate in 220 countries and territories around the world. But importantly, it gives us operational flexibility.

So again, as we need to increase capacity in the short term or decrease capacity in the short term, with one phone call, we can flex up or flex down with our partnerships that we have around the world.

This is one of the key principles that we build into that fantastic aviation network. We are not overly fixed in leverage. We keep a very targeted amount of flexible capacity in our design of our network. And you can see at the end of last year, that flexible amount was 20% of our total capacity. We could flex it down with in less than 1-year short-term contracts.

But also importantly, in periods of higher demand, like we've recently seen in the second quarter, we can also make one phone call to our partners around the world and add capacity on in a very variable and quick basis to support our customers' shipping requirements.

Yes, those 19 owned and partner airlines that you see listed there. Geographically, these are the countries that those airlines are domiciled in. So you see it's a very healthy spread from the Americas into Europe, across the Middle East and over to Asia Pacific. And that geographical spread is critically important, particularly in the geopolitical times that we operate in today. And I'm going to give you an example of how we've leveraged that over the last 6 months to our benefit.

So obviously, the Middle East conflict has been disruptive in the industry. But again, because of our geographical spread of our partnerships that we have, airlines, when they assess security threats and airspace closures in different parts of the world, there's not one universal jurisdiction that says, this is how we're going to operate. Every airline follows their country and their national regulations and assessments in that particular geopolitical situation. And in the Middle East, in particular, we were able to leverage 5 of those partnerships and our own airlines that we have, and we never missed a beat in terms of being able to provide fantastic service into our Middle East part of the world.

And we already have a healthy business in the Middle East, but to be able to quickly and nimbly set up short-term contingency hubs in Muscat and in Riyadh and then leverage those fantastic aviation partnerships to fly in there, connecting into our ground network has provided us benefit and a tailwind into our second quarter result that you saw noted in our second quarter results.

I'll move on to another element of our perfect aviation network, and that is the fact that it's very sustainable. You look over the last 7 years on the investment that we've made into our intercontinental fleet, we have the youngest and we have the most fuel-efficient intercontinental network of anyone in the industry, largely made up of 777-200 freighters. We completed our Boeing order last year with 28 of those new production freighters. And that gives us a fantastic capability to deal with these additional volumes and leverage that volume that's coming into our network with a high level of utilization of those assets.

I think on the right-hand side, I want to make a critical point here. When we look at the aviation network in that fixed flex ratio of 80%, 20% flex, we look at that on a multiyear forward horizon. We don't have a CapEx backlog. This recent volume growth that we've seen, all we're doing is leveraging those investments that we made and the decisions that we made back in 2018, 2019 and bringing that modernization of the fleet on. And that's a critical important point to understand.

So that's the first element of sustainability. I do want to talk about sustainability because it is an important part of the perfect aviation network. I want to read this slide kind of your right to left here, those 777s that we talked about, why did we make that decision 6, 7 years ago? Well, a 777 operates with 18% less fuel burn than a 747 operates with.

And if you look at the annual utilization of a 777 and what that equates out to, that's over 4 million gallons less of fuel that gets burned on a like-for-like basis, a 777 versus a 747. You then multiply that times the 34 additional 777s that we brought into the network over the last 7, 8 years, and you can do the math on what that means in terms of the efficiency that's delivered into our business. But importantly, it's also helped us to decarbonize our aviation network, and it's one of our key pillars and key strategic aspects of the sustainability piece.

We combine that with our fuel optimization program. Most all of you will drive a car. Well, the way that you drive a car, you do have a direct impact on the efficiency, the kilometers per gallon that you're able to deliver and drive in that vehicle. It's no different in the aviation network. How we load that aircraft, how we trim the aircraft from a weight and balance perspective, the procedures that our crew and our pilots fly those aircraft with all make a material difference on the efficiency. So we have a fantastic optimization program to fly those aircraft very efficiently.

And then in John's opening, he talked about our GoGreen Plus product that we launched a couple of years ago. That's been a fantastic offering for our customers with significant uptake and their usage of our product offering. And we take all of that revenue that comes in on our GoGreen Plus product offering, and we just reinvest that back into sustainable aviation fuel.

And I'm incredibly proud that as we stand here today and what we released at the end of 2025, we are the largest user of sustainable aviation fuel in the industry with greater than 10% published in 2025. And I can confidently say when we publish our results for the full year in 2026, we will have grown higher than that this year.

So that's sustainability. The last comment I'll make about our perfect Aviation network is with a filler product that we have, which is called ACS or air capacity sales. There's a couple of key points that I want to make with this specific product. This is a great product for us to deal with the ebbs and flows of the TDI volume on a day-to-day basis.

We have allocations on the aircraft. We use predictability to indicate what those allocations are going to be needed for, for our TDI Express product. And any remaining space that we have available on the aircraft, we monetize by taking that space out and selling it in the open air freight market. And that ACS product helps us to drive a great utilization on that aviation network.

In the middle slide, I think this is also a really important point to understand. Any time that there's periods of these geopolitical disruptions and the airfreight supply-demand disruption takes place, you see a constraint driving higher charges into the RPKs of the airfreight industry. This particular product for us does not drive the Express result.

If you look over the last 7 years, it ranges between 5% to 7% of our total revenues. So certainly, there is some tailwind in there, but the size and the scale of it is pretty small in comparison to our overall revenue stream.

And then the last point I'll make here is the same pricing discipline that John articulated on net price change on our TDI Express product. We apply those same principles into our ACS product, and we're seeing healthy improvements from a revenue per kilo as a result. And that ACS revenue helps offset the cost of that aviation network.

That's the aviation story. I think next, I'll move into the ground structural reset that we're calling it. Again, this is all of our hubs and gateways. This is our country operations with our pickup and delivery and our customs aspects. And then I want to give you an example of one of the overall European resets that many of you who would have joined us in November in East Midlands last year would have heard Mike Para, our CEO of Europe, articulate on the journey that we were doing to structurally reset our cost base in Europe.

So we have seen success there. So I note John's comment about our aspiration is to deliver a fitter and leaner network. Here's a great example of how we've been able to achieve that over the last couple of years. Again, 10 quarters here that are reflected 2024 quarter-over-quarter. We've been able to demonstrate a reduced FTE result in our hubs and in our gateways around the world.

So as those TDI volumes were slightly coming down over the last couple of years, again, this is a great reflection of our ability to flex down our cost base to make sure that we deliver a healthy EBIT margin into the business and for the group.

I think the other point that I'll make here is look at quarter 4, 2025, quarter 1, 2026 and quarter 2, 2026. As we've seen weight growth come in, we've been able to take that leaner platform that we have in our hubs and gateways and deliver some pretty healthy improvements in productivity with that rate growth coming online. And again, that helps us with our operating leverage to really bring value into the financial result of the business. So that's the hub in the gateway story. I did change slide here, although it looks very, very similar, and this is a reflection of our country view.

Again, this is for country operations, this is largely our pickup and delivery or our couriers that are making the first mile and last mile deliveries. This is largely our customs clearance FTEs that are clearing the shipments in our business when they import into a country. And again, you see the same quarter-over-quarter, year-over-year improvements as we've executed on cost excellence, as we've executed on all these fit for Growth initiatives across all the countries in the world. This is how the results of that have been achieved.

Same point that I made in the hubs on productivity and efficiency. As we see weight growth now coming into the network for the last 3 quarters, look at the productivity that we've been able to leverage with that weight growth coming in. And again, that's helping to flow through into the bottom line of the business.

Again, on the European reset. So for those of you that know us, you know that we have the world -- under John's leadership divided up into 6 different regions: Americas, Europe, Asia Pacific, excluding China. We have China separate as a region. Middle East and then Sub-Sahara Africa. This is a fantastic example of our European Fit for Growth and cost excellence initiatives. You see a variety of work streams that are listed there from aviation to ground line haul, hub and pickup and delivery operations on the ground, our customs work streams and just our efficiency and productivity work streams.

And what I'm pleased to say is what Mike articulated that we were going to do in that East Midlands meeting in 2025, we did achieve that last year. So this Europe reset has been largely successful, delivered over EUR 200 million of benefit into our result last year. And again, those other 5 regions of the world that I mentioned, all have very similar well-orchestrated cost excellence, Fit for Growth programs that they are executing on.

So we are, I would say, well through those last couple of years of exercises. We're not completely done. You'll still see benefit flow through in the second half of 2026 and into 2027 from those initiatives. But we also do believe that with the additional technology and advancements that are taking place in AI, we're going to see some acceleration in some key areas of cost excellence in that next midterm horizon. So midterm horizon, 1 to 3 years out. Some of these are already in place, and some of those are going to continue to accelerate over that time frame.

I'm really proud of our colleagues in customer service. You can see they, from a function perspective are probably a little further out in front than the other functions in terms of leveraging technology to drive efficiency and quality into their function. Again, similar results from an FTE optimization taking place quarter-over-quarter, year-over-year. And with the significant advancements on conversational AI and agentic AI, we do see this accelerating and continuing going forward regardless of the volume growth that's taking place because it's just modernizing and coming along so, so quickly. You can't tell the difference whether you're talking to a human being when you call into one of our customer service agents or where you're talking to a conversational AI agent at this point. So that's fantastic and a great illustration of using technology to deliver optimization.

I think there's a couple of other areas that I want to highlight here today. I was with our aviation leadership team yesterday in Belgium, and we spent a part of that day talking about some new IT systems and new digitalization programs that we're rolling out right now. And this AI and as we apply it into aviation management is going to deliver much quicker decision-making and much more accurate decision-making, which ultimately leads to higher quality and a lower cost position.

I'll just give you a couple of examples of that, that first column, aviation forecasting. We forecast every one of those 2,400 flights that we do a day, and we provide a forecast on how much of that flight is going to be utilized with our TDI Express product and how much allocation on that flight we have available to take out, to sell with our ACS product to drive that high level of utilization.

And we would have a team of analysts and managers that would look at the data, they would look at the historical volumes, and they would manually forecast out and statistically model out what those allocations would be. And that would take them weeks and sometimes even months to do to really get to a level of accuracy.

And now with AI, you can press a button with the models that we're doing and that computing power that used to take weeks can now be done in minutes and hours. And that information from a management decision standpoint really allows us to drive accuracy on what we provide to our ACS colleagues to sell, which they can drive up the RPK on, which delivers a higher level of optimization into the network. So it's just a quick example there.

I think the same thing is happening and going to continue to happen in the space of customs. So obviously, the regulatory environment in the industry has been extremely dynamic over the last 6 years. Go back in -- particularly in this part of the world, Brexit in 2019, VAT22 in Europe, Liberation Day in the U.S. last year and then even up through the removal of de minimis in July in Europe this year. So the customs environment from a regulatory standpoint is extremely complex. And if you go back 6 years, the only way that we had to respond to that was to add people to it. And we did that back in 2019, 2020. You can see over 3,000 employees were having to be added to deal with that complexity. We recognize that back then. We've been investing in automation, investing in our IT systems. We've been working with our customers to collect data and to improve the accuracy of that data.

And now with the advancements made in AI, we can automate and apply that technology into really streamlining that customs clearance declaration process. And we're already seeing significant efficiencies take place, but we see another step change that will take place over the next 3- to 5-year horizon.

So that's the cost excellence portion of the presentation today. I want to summarize it by saying we do have a fantastic aviation network. It is structurally different than some of our competitors. The way that it's set up, we can respond in a very nimble way in a very flexible way to periods of high volume demand or periods of contraction and that flexibility and that resiliency with the Middle East example that I gave you perfectly positions us to deal with the next horizon. I think you combine that with the cost excellence and fit for Growth initiatives that we've taken in the hubs and in the ground country operations, and it just puts us in a fantastic leveraged position going forward.

And again, we're not going to stop there. We're going to take the advancements in AI and the advancements in technology over the next 1 to 3 years and come up with a whole another series of optimization programs to execute over the next 1- to 3-year horizon.

So you get to the end there and you think about what John said on smart industrial growth and what we saw in the second quarter continuing now into the third quarter and into the next decade with that Heavyweight Express program. You leverage that on to a fitter and leaner network that I just talked to you about that we've been able to achieve and we're going to continue to achieve going forward. And that leads to what we see as a continuation of the great 2Q results that you will have seen.

So thank you very much for your attention, and I'll invite Martin and John back up on stage for the Q&A session. Thank you.

Great. Thanks, Travis. Thanks, John. Now come to third of this session for the Q&A. We got a couple of questions that we got in from the web. But obviously start here in the room. Jamie, Alexia [indiscernible], if that's the order, please?

Arthur from Citi. Two, if I may. So question one was what do you think a sort of peak cycle margin looks like in Express Down? I mean clearly, you're talking more about higher weight, better network utilization. So if everything is sort of fully stacked up and utilized fully, what could the margins go to? Obviously, that's not a through cycle margin, that's a peak cycle margin. Second question, more short term, what are you seeing in terms of peak season? I'll stop there...

Okay. So I'll take the margin. Travis might want to comment on peak season. I don't know whether the peak season was linked to margin or just peak season. But anyway, yes, I think we always talk in Express about absolute EBIT generation year-on-year. We talk about incremental margin improvement that generally comes with that. Sometimes foreign FX and fuel can blow us off course or help us a little bit there.

If you remember in April in the Capital Markets Day, I said we'd do on the first page to all these things to drive us back to a 15% mid-teens or 15%, I think the slide said. We're obviously tracking at that -- in that area already.

And with the things, Martin can overlay on what I'm saying, but where I sit as a senior line officer in Express and thinking about our business and with a little bit of hope of global trade and everything else, we can continue to build on that.

In the peak of COVID, we got up to our 18s. And yes, I think we all say that was sort of over-earning and it wasn't going to be there. But over-earning or not, it did demonstrate what this network can produce if you're pulling the cost and the revenue levers in the right way. Those were excessive because revenue was really excessive and cost was really excessive the other way. So we got up to 18 or something. So I think we carry on building on where we are now in a rather incremental fashion. There might be some quarters where we sit back a peg. And as to peak season.

Yes. I mean optimistic and bullish on a normal peak this year. I mean we're planning for a historical peak. For us, with the focus on smart industrial growth, it is going to be more of a B2B focused peak than it's been in the past, and we're sizing and scaling the capacity to support exactly that.

And you would have seen us release our peak surcharge table about 2 weeks ago, 3 weeks ago or so because we are having to go out and bring in additional higher cost third-party capacity, and that's how we help maintain that margin that John was just talking about as a cost offset is passing that along.

And capacity is pretty tight for other.

Capacity is tight in the industry. I think we're in an excellent position going into fourth quarter to be able to capitalize on the growth that we're going to see.

Just two thoughts to add to your comparison to what happened under COVID. I think two elements are different. I mean we have seen volume in the network under COVID that really doesn't belong there. On the other hand, that was produced on a network, which was still a long way away from where we are in terms of cost efficiency and effectiveness. So let's see how these two play out.

Alexia? Alexia, that's very kind of you. She's a lovely girl. James Hollins from BNP just sneaking in with two.

My first question is, is there any particular reason based on your network and what you've sort of evolved the network, you're talking about it being clearly an evolution over a very long period and your historical global focus where maybe you think you could outperform or underperform others in any of those sort of key growth engine subsectors like hyperscalers, life sciences? And maybe if that is the case on any underperformance where you need to invest in this business, in particular, geographically or network-wise.

And while I'm here, the second one would be, I mean, clearly, you've talked a lot about, I guess, taking some of the lunch from the forwarders. If we had like a panel of pure-play forwarders, what might they say in response to that and your ability to take some of that business? And I guess a sub-question would be, given you have a forwarder within DHL Group, how is the competitive tension with that division?

Maybe I'll take the first question, and you can take the competitiveness with DGF question, John. Well, yes, I think the illustration of what I showed in terms of the geographical diversification of our airlines and our owned airlines around the world put us in a very nimble position.

So as growth takes place, whether that's in Southeast Asia, whether that's in the Middle East, whether that's out of the U.S. or into the U.S., we have that capability to scale each of those partnerships up or down as we need to. And we've been able to demonstrate that over the last couple of years.

And yes, actually, with Cargo fax a couple of days ago, I was quoted there by saying we're adding a couple of 777s into a Chinese partnership that we have exactly around that point. So we can size and quickly move where we need to from a capacity standpoint to support growth.

You play back the freight one to me?

Well, in a way, I mean, you remember as well when the whole idea came up, the initial reflex was what are the forwarding colleagues going to say about it? Now I know what they're saying today. But you mentioned the collaboration overall within the groups being...

So what was a collaboration within the group? Good question. Yes. So I think -- yes, and I think that's good that you asked that because when I launched Fast forward in 2002 in Asia Pacific, and maybe it was in the naming, fast forward, but it is how I see it at the time anyway. And there was a fair bit of acrimony, but the group was in a totally different position. We've had leadership changes that have gone through the business.

Tobias has brought a level of intensity and collaboration to the organization. If you said, what two things as Tobias Meyer brought in, I would say, intensity, bite and collaboration and getting the best result. And then we started this heavyweight Express initiative and change of leadership also in -- at the sales commercial level in DGF. And the collaboration has been daily and very positive. And in both ways, I would add.

So I've always known that in our business in Australia in 1993, I had a friend and foe campaign with forwarders, where we identified them as a friend, they would give us their smalls. Where we identify them as a foe, we would sell against them and take business from customers that they were giving to a forwarder a little bit on this fast forward model. There were many forwarders that gave us the less than 50s, they're less than 100s.

So I've had this mindset, this sort of two hearts in my chest for forwarders. I know there's a forwarder in our group, and we collaborate very well. And on the rest of the story, just imagine sometimes a box far bigger than the one on the floor there, but 200 kilos, call out Kuehne+Nagel and you're not a very -- you're not really a repeat shipper you're a bit of an ad hoc shipper. You call out Kuehne+Nagel, they turn up and they're semitrailer, the his of air brakes and they jump out the cab and say, is that it? Well, a lot of these shipments should be on our heavyweight -- dedicated heavyweight routes that are coming to pick up something that is 8x that size, but maybe a forwarder is not really what they want.

So there's quite a lot in this. And when you link it to the urgency drivers and the use cases, I'm just very comfortable with how we're selling against the forwarder, how we collaborate with our forwarder and where we partner with forwarders for just moving their smalls.

And I'll add one thing. You think about the market share that DGF has in airfreight, the two of us are working together to go grab market share from our competition, DGF on the airfreight side. But where we're going after Heavyweight Express as well is not taking volume from our sister division, DGF. It is going out into the airfreight industry and taking it from there.

Also, when speaking to Oscar, who has his strategic 5-point plan in execution and a very clear focus on growth. I think in terms of timing, it was good to see that coming together with your sales campaign on finding growth in the heavyweight and joint approach of the identified accounts and were you are not successful, well, he will be. So I think that's a lengthy answer. So I'm a bit confused now on this side. Alexia, is it you?

Yes. I'll ask three, but I'll ask them one by one to make it easier. So firstly, on the net price change, thank you for sharing that information. We now can see kind of more clearly the stick rate that you've historically had. Why would you say the stick rate post-COVID has been double what it was pre-COVID? So the...

Which stick rate?

The pricing, net price the 2.8%.

So why did it double in COVID or...

No. Why has it doubled today versus pre-COVID? I think you showed...

Yes, I think, you're right. There was some 2.8. There was a 4 and there were some 2.8 on that chart. I mean it's very easy. It was only -- I might be a year out here, 7 or 8 or 9 years ago that we could properly measure NPC. We manage sort of in a fairly crude fashion, GPI stick rate. The ability to manage it and have a phrase and it be on the pricing backboard means that we've got great commercial reporting every single month right down to what our NPC is for local decision, what our NPC is for the big global CSI customers.

So a country like Netherlands would say, well, my NPC is five on local decision, my customers, but there's these big CSI customers where it's lower. So there are all these different cuts of it. all the leader boards that come with that. And I'll just say it's leadership focus on -- from the pricing team, the ability to measure it right down to sales territory level, the ancillary programs that relate to NPC.

I'll give you a very good example, Alexia. One of the things we measure is when we give a -- at our TRB, which meets in every region once a week for the last 15 years to talk about large customer pricing requests. Sometimes a salesperson comes in and says a need to give a 10% discount. We say, what more volume will you get?

One of the aggregated or by customer or by region, by country, by whatever, KPIs that fall out of this NPC reporting is we gave -- and we've done 62 GPI calls over the last 2 days. Every single one of them has presented their net price change down the 10% that they gave back to the customers, and then we expect a 4:1 ratio. So we expect 40% growth for a 10% type reduction. We had more than that, and we had a few that were less than that. So that type of sophistication, what I call one of these ancillary measures to NPC, and we put that all in the pot of every salesperson knowing it's the most important thing we've got.

I had this whole campaign 2 years ago that 4 is the floor, and we ended, I think, at 3.8 that year. So it's one of the things to round out the question for everyone's interest that Express does very well.

We're in 219 countries. We can talk to those 219 countries either overnight directly or through 6 regional sales leaders and say, "this is the big deal", maybe at Express or NPC. This is what we want in a month. This is when we're going to do a webinar with all your customers. This is when we're talking to you and we're coming down to your region and we're going to review these things. We can talk to the network in that way. And NPC is a great example of that, even though it's become a little bit harder to hold it as those years have gone by.

I had two more, Mark. Can I ask them quickly. Yes, weight load factor, can you give us a sense of where we are on the range? Because when you talked about the box, 25 kilos, you're now 12, it kind of assumes you can double your weight without adding extra cost. How should we think about utilization? And I'll leave it there.

Yes. So maybe I'll take the weight load factor. So we have been able to achieve a plus 1% weight load factor year-over-year in our aviation network and 1% aviation weight load factor improvement equates out to about EUR 80 million to EUR 100 million bottom line flow-through in our business.

And so I think where the smart industrial growth that John spoke about, where we grow also makes a material difference. And so the blue lanes that he referenced, growing faster out of the Americas, growing faster out of the Middle East back to Asia were the two examples that he gave, that has a significant flow-through and improvement into our weight load factor.

Okay. Muneeba from Bank of America. So following on from the question Alexia just had on weight load factors, and you seem quite comfortable on the capacity side of it. Like when will you need to add capacity? How much can you keep growing? -- help us understand, like if I put in 9% growth in weight for the next couple of years, when do you hit that capacity ceiling is my first question on capacity.

And then on data centers and hyperscalers, what we've heard from the forwarders and maybe, John, you can talk about that is that they want to take more kind of long-term capacity. They want to have visibility on the capacity they're taking and want to know that they can actually get their shipments. Is that something you're seeing in Express as well? And kind of what's the behavior of this customer base? And is that any different from the rest of the shipments you see?

The behavior of the forwarders or...

The hyperscalers, the hyperscalers...

You want to go first?

Do you want first?

Right. So the question was with growing at 9%, when would we need to add capacity? And that's a very simple question, and there's not a very simple answer to that because it really does depend on which lanes and where we're growing.

So where we are underutilized in the network, you've got three heavy driving lanes globally in the world, Asia to the U.S., Asia to Europe, Europe to the U.S. And so every airline -- cargo airline in the world has a very high level of utilization on those sectors, and they have a lower level of utilization on the return sectors. And that's what we're calling blue lane.

So when that growth is happening on a blue lane, we don't need to add capacity. We're able to have a high absorption level and a nice improvement in our overall utilization.

When we grow on those driving lanes, what's critically important, and we've been able to do this is with that smart industrial weight growth on those lanes, we've got to be very disciplined in our pricing to make sure that when we do add that capacity, we add it with the margin that we're targeting in our business. And right now, we've been able to demonstrate both of those an absorption on the Blue lanes and adding the capacity when we need to price the right way.

Just on the Blue lanes before I come to the other question there. The thing when you look at these growth diamonds within DHL, they represent different percentages of overall revenue. And e-commerce is very big for us. Heavy weight is big for us. Intra-Europe is big. Intra-Asia is big. Blue lanes now is getting to the point where it's 16%, 17% of divisional revenue.

So if we really -- and it's growing at 12% or 14% over the last 2 months, so this is a program that's only been in place a year. So we're really quite conscious of driving growth on these growth -- from the growth diamonds where we're going to get the most traction. It doesn't mean we don't pay attention to new energy, small. It doesn't mean we don't pay attention to life science and health care. In fact, in that one, we're developing new products.

It just where our focus is at the minute is where we're getting the biggest return. Now on hyperscalers, if I heard the question right, it might be a bit more of a question for forwarding, but the hyperscalers are scouring around looking for capacity and finding it with DGF or finding it with Crane Worldwide or finding with DHL sky or finding it with DHL AG. We are ready more to handle the ecosystem of upstream hyperscale -- upstream providers to the big data centers, spare parts, et cetera, et cetera. So it sort of comes a bit later, if you will. And Yes. So we don't -- I think it's a bit more of a forwarder question as I heard it.

Yes. And let me chip in a couple of questions on this hyperscaler and how is data center logistics affecting the group overall, I think so far to a smaller extent as a percentage of your network. I think right here right now, it's indeed an interesting field, a new field for the forwarding guys, but still low single-digit percentage of the overall volume that they're doing.

And the same goes for supply chain where the warehousing capabilities are obviously in high demand. But -- and that's typical for the group. You've got a very broad diversified customer base with so many different verticals coming into play. There's always a number of strong drivers where in periods of less strong growth in other verticals, you do a good job to find the right balance.

Good. Talking about easy questions. European de minimis, any comment you can give on how that plays out so far since 1st of July?

Carlos, do you want to jump in with the program because I think that's worth 2 minutes, and then I'll jump in with the impact.

Yes. Well, thanks, John. I think we did an excellent job preparing with our systems and with the industry in terms of executing the removal of de minimis in July 1. In terms of -- I just give a lot of credit to our European colleagues, our IT colleagues for that 6 months of preparation leading up to that. And it was really a nonissue for us operationally.

We had one little change, France, the country of France at the last minute. We're going to put in a charge and they pulled that back 24 hours before it went live. So we had to go in and reconfigure stuff. But operationally, it was a nonissue for us and executed extremely well.

On the commercial side, it was a bit of a nonissue. There were some volumes that went away that probably shouldn't have been on our network, weren't necessarily at the price we would be happy, a little bit similar to some of the big Chinese merchants, mega merchants into the U.S. We were already refining and profiling our profile with those customers before de minimis happened.

And then when de minimis happened, it kind of answered it for itself. A little bit the same. I couldn't necessarily find the space on the line where it happened and we saw a drop. So nonissue operationally, but fantastic operational planning and nonissue commercially.

Okay. Before we come to Daniel, that's right in front of you, Sebastian.

In value terms, how important is heavyweight now -- and where would you like it to be in, say, 5 years' time?

Those easy but hard ones. Shipments over 50 kilos are a significant part of our business. If I just use the -- not stalling for time, but if I just go back to the e-commerce thing for a second, e-commerce, when I was talking to many people from your industry, they got up to 1 shipment in 2. It's now closer to sort of 1 shipment in 3 or 1 shipment in 2.5. So the industry has evolved and so on and so forth.

I see heavyweight Express is quite different because pointing to that box there and looking at the boxes on the video, the runway is significantly longer. It's already shipments -- when I say Heavyweight Express, means very much defined so we can measure it and all our commercial wizardry with it is shipments over 50 kilos is a significant part of our business. And it will only become more. There will be a limit to -- there will be a limit to how far that can go, obviously, because we don't want to get into that stage where we're impacting our revenue per kilo on the negative.

But we're a document business that moved to packages. We're a package business that started moving more packages than documents. We became an IMP business. We started moving heavier weights. It's a significant part of our business. It will become more -- I think there is an end to the journey, but I see this as a decade program. Travis we will think differently. Travis can comment. articulate it differently.

Okay. So I think when you look at greater than 50 kilo shipments in our network for 2025, it was around 2% of our shipments, but it was a significantly higher percentage of our total kilos that we carried in the network.

And so if you think about the growth that we're already seeing in the second quarter this year, heavyweight Express is growing faster than that published Q2 9.4%, right?

So I definitely feel we've got the capacity, both in the air and on the ground to double that business. And I think we'll do that over the next 5 years in the business. And to John's point, this is going to be a reflection point over the next decade in terms of...

I think -- thank you, Travis. That's right. Looking at sort of whether it's 20% a year, then you've doubled it over 5 years at that sort of CAGR.

But I think the thing that's really important to restate here is that global shipping has changed and global trade has changed and global trade continues to evolve and change. The analogy I use, the water will keep flowing, has keep flowing. It just goes in different riblets and it ends up at a different place. And customers are dealing with every single day that, that market shut down, how can we find a new one. They send their commercial people to Malaysia, try and find new customers. DHL, can you go to Malaysia? Can we pivot those volumes from that distribution center to Malaysia very quickly.

So this is the type of point I've tried to make in the bottom half of my heavyweight of my smart industrial growth side is customers are demanding different things from us, and they're getting satisfied by different criteria looking for and getting satisfied by different criteria than they did before, which is economic value, reliability, speed, customers' customer satisfaction.

And if that happens to cost more than a forwarder, fine, if it may be the case that it's actually less than their forwarder pricing. So there's no doubt, as I said, that customers' growth plans are being impacted by these types of things that are happening in the world. And as I read the newspaper, there's no end to how these things will evolve. So that talks to the runway on this product.

All right. We're coming to Daniel [indiscernible].

I just have a general question around -- you talked in the past about being quite import-centric, but not yet majority import. And I suppose if the -- to retain share of global trade or your exposure to it and given that global trade is increasingly -- it's potentially Asian export driven, how do you make yourself fit for the future? So having a high share with European exporters is one thing, but having a high share with Asian exporters is another. How do you move your customer base across?

Well, I don't know whether I got that one. Import Express is being an import business is just a billing option. So it's just those customers that want to pay a destination and want to take control of the goods from the factory and for finished goods and spare parts, that's how most freight moves. And that's why the product was so successful when we launched it, so we could take it into a customer ship from the world to your desk, to your warehouse on your normal account, and it was very effective in terms of being able to penetrate a world of freight routing that was typically destination build and then typically going by a forwarder as opposed to an express operator. I think your question was a bit how do you -- how do we grow out of Asia...

Yes. I'm just trying to say if the exporters from China are taking market share, is your customer footprint to Western? And how do you become more penetrated into the Chinese exporter market?

Well, should talk about our market share in Asia, John, on that. Yes. How do we maintain it? I mean we are market share leaders in Asia on the export business already. So as that -- I understand your question correctly, that is a complement to our business with Asia and China being...

To BYD or something taking share in the Western markets?

Yes. But then...

I get it...

Yes. So BYD, and I visited them the other day, -- and no surprise that they're taking share because they can do 100% charge in 9 minutes. And when it's minus 30%, they can -- in another 3 minutes, they can do 100% charge. So there's no doubt that they will be taking share.

But we are an established logistics partner with them, all elements of the group. We've got Chinese overseas salespeople on that map that are visiting BYD in their different factories. They're propositioning us with trying to get some of their vehicles into our fleet in Europe.

So I think the commercial setup that we have, the sort of an approach called China market growth, where we're working with these Chinese customers in China, and then we've got an overseas network. So if the drift of market share on automotive drifts from Tesla to BYD, we're very well positioned to benefit from that and any other industry in Asia where it's drifting back.

I mean that is exactly our CMG, China market growth, working with these big Chinese companies that are either setting up in the rest of the world in Egypt, they meet their Chinese overseas salesperson and do their stuff or how we represent ourselves to CATL, Envision, BYD, NVIDIA, which is the largest producer of white goods in the world now with 30 factories all over the world, how we sell to these people. So I think we're in a good position there. Thank you for the question.

I just had a really quick question on what the -- if we had to repeat the COVID sort of experience with the massive peak in the B2C volumes that we saw and then the big decline we saw after that, would you do anything differently? Are there any lessons learned from that sort of why did the business -- we were just following demand, I assume, but we pivoted quite a lot to B2C and now we're talking a lot more about B2B. And I just wanted to understand whether there was sort of a change in the business' thinking over the last 5 years.

Because of B2C?

You referenced the pandemic period as well. I mean I think the pandemic period did teach us a lot where all that belly capacity went on the ground, and we did get flooded with that B2C business during that time frame.

And as we looked a year later and 2 years later, what we certainly recognized is that the margin on that business was not great. And we started to optimize the customers' volume that was on our network really as a result of that. And so the lesson we've learned, we would take into the future in the event of something like that happening again, and we would be very guarded on what we led into our network.

Yes. I think we've got to be quite specific. the e-commerce business was highly accretive to our EBIT. The last mile got better and better because leave on doorstep or leave in safe place. So delivery was even more efficient than B2B kind of thing. Origin picking up 5,000 pieces. The whiz around our sort. They fit in the corner of a van. They're very light, everything good.

What particularly happened in e-commerce, why it's lower than it was, was two things. Some of them went to a TDI mode or realized that the margins in their particular product weren't able to sustain Express transportation. We've got many of the ones we found in 2015 still trading with us as TDI. Some of them migrated to TDI.

And then I think the point that's worth clarifying is the mega merchants in China weren't in a position to sustain those volumes. We're talking about 400 tonnes a night in quarter 4 2024, I think it was. And that I would say this in front of Shadd, I'm not talking -- that caused us to reestablish a different footing with some of these customers of what we would do and what we wouldn't do, what lanes we're interested in.

And Shadd is going to the world, Malta, Israel as well as U.S.A. in a big way. So U.S.A., we put a weight limit on it, meaning higher than 10. And everything in Europe, we took it as it was, and we just found a better place with them. So I think we did learn lessons with it. Lessons with B2B, we're much more familiar with because we've had this sort of -- it sounds a bit vulgar, but this red and yellow card program in place for 20 years. where we find a business that's come on to the network errantly really, and it doesn't deserve to be on our network. And I think the customer, in many cases, should be using e-commerce, Pablo's division or a slower and less expensive service because the value of their T-shirts or whatever they're sending shouldn't -- they wouldn't even expect an express delivery.

Okay. Well, at the very beginning, I told you this is going to be a 90-minute format. And so it is.

Yes. So thanking you, John Travis, for giving that insight and tons of food for further thought, I'm pretty sure with our audience here.

Thank you for you guys out there following the questions we got from Patrick, [indiscernible] and Jay. I think we sort of had that all covered in the context of the other questions.

And with that, I wish you a good rest of the day, good afternoon. Thank you, and talk to you soon.

Thank you very much.

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.

All right. Thank you, and I welcome you all on the Q2 '26 conference call of DHL Group. You've seen our full set of reporting out today. We've got with us here, Group CEO, Tobias Meyer, Group CFO, Melanie Kreis. It's going to be the usual procedure. After your presentations, Tobias and Melanie, we go straight into Q&A. And then with that, over to you, Tobias.

Yes. Good morning. Thank you, Martin. We had indeed a good second quarter as DHL Group with group revenue accelerating to 13% year-on-year, as you see on Page 2 of the presentation and Group EBIT increasing by 30%. We had a good flow-through of the increased business through the bottom line due to the effects that we also spoke about in recent quarters, our Fit for Growth program, which we executed, but also continued good management of both yields as well as capacity and thereby our cost base, especially in Express.

The free cash flow reflects that we are in a growth situation with some buildup of working capital, as you would expect, but also one extraordinary item driven by the refunds of the IEEPA tariff, which are currently reversed, as you will be aware of. So we had some temporary increases in cash flow given that we received payments in the last days of June, which are currently in the process of being repaid to customers.

We are very satisfied with the acceleration of our growth path throughout the first half of this year with significant increases in the volume that we transported in our Express network, but also what we consider a good performance in Global Forwarding relative to our peers and continued very satisfying path for our Supply Chain business, which continues to develop very favorably. And this also gives us despite the continued uncertainty and volatility around us, the confidence to increase our guidance as we have communicated on July 7 and also to increase our share buyback program, which will extend until the end of next year and increase to a value of up to EUR 6.5 billion as the cumulative amount.

Going into some details on Page 3, you see the development of Group revenue growth. We also showed here the organic development, excluding FX, which is by far the bigger effect and M&A. So we had talked about some headwinds going away already with the reporting on the first quarter. Those headwinds particularly relate to FX with the strong appreciation of the euro against other currencies, including the U.S. dollars in February and March of 2025.

That has now cycled out, and we basically have no major effects as it relates to FX on revenue and earnings in the second quarter, but also the volume development with the initial waves of tariffs coming into effect end of the first quarter of 2025. The second quarter has a lower baseline as it relates to volume. So those were headwinds that we anticipated going away.

But as you see on the right side here highlighted on Page 3 for the Express network, the weight that we carried in that network, we had a quarter-on-quarter increase of about 6 percentage points of volume. That figure is relatively stable if you compare to 2019 or whether you compare it to 2024. So that gives you a sense how the underlying business has developed and the really positive momentum that has unfolded in the second quarter on a very broad base across the business that we have increasing CASA demand and also growth in the sectors that we targeted.

As shown on Page 4, our Strategy 2030 is now in full execution with our focus on top line growth, but also profitability accelerators. So this is just a reminder on what we are working on. How that unfolds and what we're exactly targeting for Express is highlighted on Page 5. This is a longer-term graph, the share of the integrator industry, the Express players relative to the total airfreight market.

We started collectively in the late '60s, early '70s. If you look at UPS, FedEx and us, in particular, at that time, the business was very much focused on documents, so not much tonnage, not much kilos transported. That has changed over the years with the integrator industry taking a growing share of the general airfreight market, and we expect that to continue.

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

Page 6 provides some examples on how we sell and what we sell based on. So it is the reliability, the speed and the predictability of the integrator model which is superior on those dimensions to the general airfreight product. And that is attractive not only for small spare parts, but also for bigger parts like turbines, be that for the use in aviation or for power generation for the supply chain of complex, high-value products. What you see, especially in IT and data center logistics, especially, we've played a significant role in the semiconductor industry now for about 20 years. It's a vertical that was added to the integrator focus area about 20 years ago.

Now it is also a much broader representation in that value chain and also in traditional areas like automotive, in this case, motorcycles, there is a space for us with the cost position that we've reached, with the scale that we have reached. If you look at our intercontinental fleet, it is the most efficient air cargo fleet around. And that is different than what we had in terms of scale and relative cost position 20 years ago. So there is a natural and attractive play for us in those verticals.

Beyond that, we continue to broaden our capability set to be an attractive provider to more industries. In the space of new energy shown on Page 7, that is particularly the handling of DG or dangerous goods of different categories, but especially also batteries where there's a strong need to build up not only the supply chain for new goods, be that inbound to manufacturing or the distribution of such, but also increasingly spare parts, spare parts as it relates to full-scale batteries for EVs, but also spare parts in areas like wind energy, where remote places have to be reached at an increasing amount to keep those machines running and provide the needed parts for such installations.

Data center logistics is something that is in full swing with significant building taking place, especially in the United States, where we also increased our business there. That is in 2 areas, mainly in the international transportation along that value chain, so inbound to the data center construction site, but also and increasingly so upstream and then the staging of material and the sequencing at or near the construction sites of those facilities.

There's obviously high urgency to bring such sites into operation and that urgency then translates into goods that need interim storage and sequencing to alleviate bottleneck capacities at the construction and us also taking over even certain installation services on site. So that's the 2 areas. We also expect significant spare parts business to follow as those installations mature. That is an area where we are traditionally very strong with our service logistics business.

The journey on Life Sciences & Healthcare also continues. This is a longer-term play for us where we systematically build out capacity, but also capabilities, especially on the Express side to offer an end-to-end cold chain service in the Express network. So this is something that did not have a significant impact on top line or bottom line in the quarter, but remains important for the mid- to long-term growth of the Group overall and Supply Chain, Global Forwarding and Express in particular.

As it relates to the profit accelerators on Page 8, we continue to do professional yield management. In this case, we highlight the example of parcel in Germany, where you see the development of volume and revenue, and thereby, I can conclude on the yield measures that we have taken. This remains obviously very important that we pass on inflationary effects, be that from labor or be that from fuel and other input components for fuel, we want a recovery mechanism, and that is also for the Group overall, how it played out for the second quarter that we recovered the additional cost that we had through the elevated prices of fuel.

Fit for Growth, we have successfully and ahead of time, executed and achieved our objectives as it relates to the savings. We'll obviously continue to be very mindful about productivity and efficiency in the different parts of the business. We'll continue to deploy technology to leverage efficiency potentials and realize such. So it's not that we, in any way, lose focus on such opportunities, but as a structured program that was also meant to react to the changes we saw in the market post COVID.

We have achieved our objectives, and we will now have a more embedded approach again, which again does not mean that we lose focus on the absolute necessity to remain cost competitive. The same is true as it relates to our investments. We continue to spend diligently and enable new growth. So we are very mindful not to increase the capital intensity in our existing business, but we want to fuel growth where CapEx is required to realize such growth.

That is the case in Express, but also in Supply Chain, where we have significant demand and a very good success track record to enable new real estate and new buildings for our customers and also increasingly automate and deploy robotics in those solutions, which means that the new businesses that we onboard there has a certain requirement to spend CapEx, which we happily do since such business is accretive not only to the top line, but also to the bottom line of our business.

On Page 9 is the outlook, which is unchanged since the publishing of the preliminary results on July 7. So we now expect to exceed EUR 6.5 billion EBIT for the full year of 2026 with the split that you see below the increase coming from the DHL divisions whilst P&P and Group Functions stay unchanged. Also free cash flow and gross CapEx guidance remains unchanged as the midterm outlook, which is also unchanged.

With that, I'll hand over to Melanie for some more details on the divisional developments.

Thank you very much, Tobias, and good morning, and welcome also from my side. I will start as usual with the key takeaways of the quarter for the divisions, which you can see on Page 10. For DHL Express, I'm happy to simply underscore the key observations shared by Tobias just now and already disclosed in our pre-release on July 7.

The strong EBIT performance mainly reflects the operating leverage from weight per day being back into growth mode in combination with our effective cost and yield actions. Yes, we had some benefits from the tighter air freight market conditions as reported in our prerelease and fuel price volatility is inflating both revenue and costs. But the key driver of the strong Express Q2 financials is simply the core operating performance where the Express team is finding the right growth at the right price and serving it with the best cost-efficient and flexible network. I'll come back to that in a minute.

DHL Global Forwarding also delivered a good second quarter. While we still have more structural work to do, our Q2 performance shows above-market growth of 7% for both ocean and airfreight volumes with ocean freight GP holding up well and airfreight yield and GP increasing strongly. Volatile markets are part of the new normal as it seems, so we should definitely not call this a one-off, but we still thought it's worth sharing that we think we had some more temporary benefit from the air market disruptions in Q2, as also mentioned in our pre-release already.

With the phasing out of FX effects year-over-year, the full DHL Supply Chain growth momentum is now again visible also in the top line development with a 13% reported and 10% organic growth. And considering last year's positive one-off, EBIT is also further up year-over-year with a good margin of 6.5%. It's worth mentioning that this is actually the first quarter where DHL Supply Chain delivered more than EUR 300 million in EBIT, excluding special effects like in Q2 of last year.

DHL eCommerce numbers continue to reflect deconsolidation of the business in the U.K. and Iberia now in the second quarter as a new effect, while the organic growth of 9.5% shows the continued strong underlying eCommerce growth momentum, which is the reason we keep investing into the expansion of our network, as you see reflected, for example, in higher depreciation, holding back EBIT growth.

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

Let me briefly step back from Q2 and take a broader look at the Express performance drivers on Page 11, as we frequently get questions on what is explaining the strong Express development and what KPI can be best used to forecast or track that development. So looking at what John and his team successfully do and at our internal discussions on financial performance and the daily decisions that lead to that financial performance, I think the key observation from my side is that there is not the one single KPI that ultimately determines our Express performance.

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

So beyond the improvement in a lot of single KPIs, which we currently see, the Express team has improved tools and enhanced visibility to execute this delicate steering better than ever before. And that gives me a lot of confidence also for our future development. In that context, please take note of the invite we sent out earlier this week for a capital market briefing to be hosted by John Pearson, our DHL Express CEO. It will take place in London on September 17, and John will provide some more details on how we manage profitable growth in the DHL Express division.

So after that short advertisement, let me get back into the depths of our Q2 numbers with a few observations on our Q2 P&L on Page 12 and the cash flow statement on Page 13. On the P&L, the 13% top line growth includes a roughly 5% point contribution from the pass-through of higher fuel prices, but no relevant FX effects different to the previous quarters. So organic revenue growth, excluding the fuel contribution accelerated to 8%, reflecting the improvement in business momentum as well as our continued yield management.

The higher activity levels and fuel pricing are equally visible in the higher purchased goods and services line. Bottom line, we see a 30% increase in EBIT, reflecting accelerating volume/weight growth, active yield management and continued cost focus. And the ongoing share buyback program is, of course, supporting earnings per share growth even further.

The same drivers are essentially visible in the cash flow statement with business growth as well as higher freight rates and fuel costs driving to be expected expansion of related working capital in Q2. Included in the working capital number is also a temporary positive effect from the IEEPA tariff reimbursement procedure, where we receive reimbursements and then pass them on as quickly as possible back to our customers. So at the end, this will have no impact on our free cash flow generation.

But in the second quarter cash flow, there was a positive effect of EUR 416 million of reimbursements received and not yet paid out to customers. We really saw a significant inflow, particularly in the last days of the quarter. And we are now, of course, working on reimbursing the received funds as quickly as possible. So much for the technical aspects.

What fundamentally counts for me when I look at this cash flow statement is that you see EBIT growth very nicely flowing through to OCF before changes in working capital, and that confirms for me the very strong and healthy operating profit growth and that we invest into our organic growth ambitions with continued high discipline. This all is the basis for the very good free cash flow development in the first half of the year, which you can see on Page 14.

The H1 performance puts us well on track to deliver on our full year free cash flow target. And I think it also confirms once more our structurally improved free cash flow generation, which allows us to balance the 4 quadrants of our finance strategy, continued targeted investments in organic growth, attractive dividend, complementary inorganic growth in accordance with our Strategy 2030 growth priorities and share buybacks as an additional shareholder return instrument.

We are therefore also in a position to extend our current share buyback program and increase the overall size once again, as shown on Page 15. This gives us up to EUR 1.5 billion of remaining share buyback firepower until the end of 2027. As a conclusion, I think the numbers pretty much say it all. We are accelerating growth driven by improving business activity as well as our strategic actions. And we are certainly watchful to ensure that this accelerated growth is sustainable for our shareholders in terms of value accretion through high return on invested capital as well as continued free cash flow generation.

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

Yes, Luke. This will be a good time to start the Q&A process.

[Operator Instructions] Our first question comes from Alexia Dogani with JPMorgan.

I have 3, if possible, please. Just firstly, on the weight per day growth you showed in Q2. Can you talk a little bit more in detail about the regional trends you're seeing? Obviously, Americas and the Middle East showed a very strong acceleration. Maybe kind of base effects explain that. But kind of fundamentally, what are you seeing by region would be quite helpful.

Then secondly, you've again helpfully singled out the benefit in the quarter from the Middle East disruption. When you look at the outlook over the coming quarters, do you think some of that is sustained? Or do you think kind of markets have already corrected? And how should we think about the bridge into '27? Because I guess we've just gone through a recovery post-COVID. Obviously, these one-off events help near term, but become a drag kind of in the future. Is that how we should see the Middle East benefit? Or do you think other factors will help you keep kind of driving growth?

And then finally, the market is focusing a lot on AI CapEx. I think it's been only a couple of quarters where we've been hearing from you and peers that you see the benefits of this data center rollout. Where would you say we are on the journey for that growth? Are we still at the beginning? Are we in the middle? Does it follow closely the AI CapEx numbers we hear from kind of the big hyperscalers? Just give us a sense of, yes, how quickly you benefit from those trends?

Thank you, Alexia, for your questions. As it relates to the first, that being weight per day growth, that's really pretty broad-based. Some of that, obviously, especially as it relates to the Americas, the United States, also has to be seen in the year-on-year comparison that the second quarter last year was a bit weaker. But also if we look out Asia Pacific, which is obviously from an export perspective, very important, we see good growth there.

You already highlighted the Middle East and Africa. Again, for us, relatively strong in the quarter despite the disruptions. I think we strengthened our market position there due to the excellent performance that the colleagues really delivered under difficult circumstances. Europe, weaker, as you would expect, given the macroeconomic situation. So overall, weight per day growth, pretty broad-based.

The benefits or the situation around the Middle East, I think, is not so easy to isolate. It's not the primary effect of the disruption in the Middle East that is positive. Within the Middle East, as we talked also in the context of the Q1 reporting, we also had significant extra costs, those being operational, those being insurance related. It is more the overshadowing on the overall demand-supply situation on Asia-Europe, which is also why we called that out with EUR 150 million effect.

Now whether that is going to settle down entirely and will back -- fully back to normal in 2027 for us is hard to say. We specified the amount relative to the situation prior to that disruption, that major surge of, or escalation as it relates to Iran. So that is what it constitutes, whether we are fully back to normal in 2027 and would not have any other disruptions that influences the demand-supply balance on the overall Express and airfreight market or Asia, Europe for us is hard to judge. So you need to read the EUR 150 million to the situation prior and the primary effect being the changed demand-supply situation for Asia, Europe as the much broader and more significant market.

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

Absolutely. And I think that's also visible in the absolute number. If you look at the EUR 1.9 billion earnings in the quarter relative to the EUR 150 million, the great majority of the increase is driven by what Melanie rightly characterizes as what we see as clearly sustainable long-term orientated growth. AI and the CapEx spend,that impacts us in 2 ways. What has been particularly notable in the quarter is the warehousing and staging part, which we also highlighted where we had significant increase in activity. We also had increase in activity in the international transport of parts and components for data centers.

We expect that to continue well beyond 2026. It will also transition then into more spare parts logistics where we see an opportunity. So while for us, it's hard to say whether the level of CapEx flow will continue, we'll definitely see that this is a lasting component of our business to then also supply spare parts components for the ongoing operation of those sites as we have done for many years in other parts of that tech industry, if you think about telecommunication networks, if you think about the data networks, the routing facilities, but also general data centers where we have a pretty strong position in supplying those, not only at the phase of the initial build, but also at continued operations.

Excellent. Luke, the next caller please.

Our next question comes from Jacob Lacks with Wolfe Research.

So the weight per day improvement you're seeing, is that at all tied to the airfreight capacity constraints you discussed? Or is that more so related to pricing? And then do you have any early expectations for how peak season is shaping up this year in Express? And given the improvement in weight per day, are you expecting a year of larger surcharges?

So on the weight per day development, as I tried to highlight, this is mainly driven by the strategy that we have in Express to refocus on industrial growth, smart industrial growth to highlight the specific value proposition of the integrator model of our DHL Express capability to industrial customers, and that is what we see working out very well. You see that we are very disciplined with pricing. So it's not that we have been in any way attracting higher volumes to lower prices. That's not the case.

We specified the spillover on the Asia-Europe lane as it relates to the changed balance of demand and supply. But the great majority of the growth that we see in Express in terms of weight per day is the execution of the smart industrial growth strategy. As it relates to peak, different than our -- some of our competitors, we currently do not have a peak surcharge as we speak in the non-peak period.

But if the season would unfold as per usual, and we would then expect also an increase in the buying rates for airfreight, we would use a peak surcharge as per usual. That's not decided yet how that exactly would play out, but it's a regular instrument that is a cost recovery mechanism for higher airfreight cost and as such, is a normal instrument in the integrator industry, which we'll also continue to use under normal circumstances.

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

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

So first question around Express and the EUR 150 million benefit that you've had because of the tight airfreight market. Just to clarify, has that gone through kind of 9% weight per day growth? Or is that coming through the ACS part of Express? And if it's gone through -- if it's in that 9%, can you help us understand how much of that 9% was this kind of spillover from the tight airfreight market? That's my first question.

Secondly, on Forwarding, your yields were super strong. Is there a mix shift happening in there? Can you help us understand kind of the moving parts in there?

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

Thank you, Muneeba. Let me start with the first question. So I mean, first of all, this is not a mathematical formula where you really kind of like get the 1 single answer. I think the EUR 150 million was our best attempt to quantify those more temporary impacts due to the tightness in the airfreight market. And there, we have indeed seen that also volume which normally would have gone with forwarders ended up in our core TDI product. So it had an impact on the weight per day growth in the 9%, but it is by far not the dominant driver. So I think the real driver is that we really see the smart industrial growth taking place, but there is a component now in Q2, which leads to the EUR 150 million impact from the more temporary nature.

So on DGF, this is a variety of factors that ultimately stem from the disciplined execution of the plan that Oscar has laid out. Mix shift is maybe a little part of that, but it's not particularly pronounced. We had a focus and applied usual measures to larger, not so profitable customers. But here, it's really also fairly broad-based that we have seen improvements in the business both on the margin side as well as on the volume side.

So both for air and ocean, I can say I'm very satisfied with the trajectory that we are on. And there are no extraordinary effects or particular things that we would highlight. This is an organic development that we, again, are very pleased with, but also not surprised by. You already saw this in the first quarter. So we are accelerating on a good path, and I would not expect this to change in the quarters to come.

I think for those of you who listened to Oscar's Capital Markets briefing in London a couple of weeks ago, I think you could really see how the product and the country and regional organizations are working together much more -- much better to fund profitable growth. And I think this is what we now really see in the numbers. So clearly, something which is not one-off driven or one special effect, but more yes, sustainable, different way of working under Oscar.

Yes. And we continue to have a strong focus on great service quality, invest in capabilities. So whilst we are also cost conscious, we are not single-minded about cost. You heard me talking about that before. But I think it is important. We are a service organization and particularly in Global Forwarding, it's extremely important to have great people and have great capabilities. So we see that, we see ourselves confirmed in having that balanced view and not being single-mindedly obsessed about cost.

To your third question, Muneeba, on supply chain and data center logistics. So what we have there, particularly in the U.S., but not only in the U.S., are typically multiyear contracts. This comes from a relatively small base as it relates to this particular activity, which is the staging of parts and components for the construction of data centers. We have been very well represented in other parts of the value chain.

I talked about service logistics, supply chains before. Obviously, in the semiconductor industry, we are an integral part of that Supply Chain, and we continue to be that and also profit from the overall uplift, and we continue, and we expect that to continue. The specific staging of components and having larger warehouses for this activity comes from a relatively small base.

Thank you, Muneeba. Luke, we are ready for the next caller.

Our next question comes from Alex Irving with Bernstein.

Two from me, please. First one is on Express. Now I note that the Gulf carriers have been progressively restoring their networks. And of course, with that comes the bellyhold capacity between Asia and Europe. How does that shape your expectations for weight per day growth and revenue per kilogram growth into Q3? And can you maybe share how July was on those metrics, please?

Secondly, on DGF, great to see conversion improve to above 19%. But can you help us understand a little bit more what is temporary versus permanent? I know you talked about the low to mid-double-digit millions EBIT temporary effect. If I were to very crudely sort of roll forward the Q1 unit gross profit in airfreight to mitigate the impact of disruption, that will be sort of a EUR 55 million hit rather low to mid-double-digit millions. That would give me a 16% to 17% conversion ratio. What am I missing? How can you help us to separate the temporary versus permanent impacts on DGFF profit in the quarter, please?

All right. I would start with Express and Melanie would comment on the second question. So we do not see that the activity level of the Gulf carriers would change our outlook on weight per day for Express in any meaningful way. We see a broad-based growth out of multiple origins, implementing our smart industrial growth strategy, and we would expect that to continue.

How the yield effects play out also on the ACS product, which was mentioned, which for us is a cost offset is hard to forecast as freight rates are generally hard to forecast. But again, we would not see significant effects coming from that also due to the sheer size of it. But on weight per day, I'm very confident that we'll continue a positive trajectory independent of the situation of the Middle East carriers.

Yes. And on your DGF question, so probably 3 components to the answer from my side. I think the first one is like with Express, we try to quantify to the best way possible the more temporary impact from the airfreight market distortion. This is, yes, relatively wide range because, again, it's not a mathematical formula. So there was a positive impact from the current market situation, but it is not the main driver for the progress we see.

So we would have had year-over-year improvement also excluding that. Having said that, we are clearly not where we want to be on Global Forwarding. I already said that in my comments earlier that we have further work to do. The encouraging thing is that we see the trend going in the right direction. But obviously, as you pointed out, the 19% conversion rate is not where we want to be. So there's more work to be done.

Next caller please.

Our next question comes from Marco Limite with Barclays.

I hope you can hear me, if you can confirm?

Yes, we can. Thank you. Go ahead.

The first question is on the share buyback. So you have extended the share buyback until year-end '27 and EUR 500 million plus. But if we do the math, EUR 500 million executed year-to-date plus EUR 1.5 billion until year-end '27 is EUR 2 billion, which is EUR 1 billion per annum. And let's say, we were modeling EUR 1.5 billion for '26, so the run rate on a per year basis for now has come down. Can you just explain to us why, let's say, you have extended by 1 year, but only increased by EUR 500 million despite, let's say, the trading environment being quite strong would be my first question.

The second question is a bit more details on Express revenues, where I've got actually 2 questions there. So the first one is as you focus more on heavyweight cargo, shall we expect a negative price mix going forward as, let's say, the average price per kilo goes down as you focus on larger, more heavyweight sort of cargo? On my math, it looks like, yes, Q2 pricing was a bit below expectations. And then also within Express revenues, I've noticed that if I compare volume growth versus revenue growth, for example, America revenue growth is quite below volume growth. So also wondering what is driving, let's say, pricing dilution in Americas?

And then the third question is a follow-up to something that has been already asked, but trying to be a bit more explicit. So as we think about the EUR 150 million and the mid, low to mid double-digit benefits in Q2, to what extent should we expect the numbers, let's say, to repeat in Q3? Any indication would be good.

Okay. Marco, let me start with the first question on the share buyback. Yes. So indeed, year-to-date, we have executed EUR 500 million. And with the upping to EUR 6.5 billion until the end of '27, we now have EUR 1.5 billion left for 1.5 years roughly. And I think that is also the run rate which we had at the beginning of the program for many years. We then upped it in between, but I think it is a healthy run rate, and it clearly gives us quite a good firing power now for the next months to come.

On Express revenue, I would say that the growth we are currently seeing is accretive. And it's -- you see this also obviously in the margin is very beneficial. There will always be mix effects, but there are also a difference in the cost structure. If you deliver a 200-gram flyer, obviously, the variable airfreight cost is much, much lower than the cost of the stop on the route. So heavier shipments have a different cost structure and thereby might have slightly lower revenue per kilo than what you see in a mix of lightweights that have a lot of flyers as well, documents, that means.

So that's normal. What we manage is that it's accretive growth, and I think we're very successful with that. Also on backhaul lanes, which is the case, for instance, for the Americas. There are backhaul lanes out of the Americas where the headline revenue might be lower, but the cost structure is also much lower. We fill backhaul space that would elsewise be empty.

So also that growth, while it might look on the headline as being dilutive, can be very accretive. And that's exactly what we have seen in the second quarter. So we're not at all worried about yield dilution. We think the growth that we currently see in Express is very healthy, and there has been a specific focus to also grow on backhaul lanes, which again might mean lower headhaul or lower yields, but still very accretive growth as the cost structure for that volume is also much lower.

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

And we have the question on EUR 150 million...

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

All right, Marco. I think that was helpul. Thank you. Next caller please.

Our next question comes from Cristian Nedelcu with UBS.

My first one on Express. Can you give us a bit more color on the heavyweight campaign? And just for us to visualize, if we look in the first half, I think your weight per shipment is up high single digit year-over-year, double digit in Q2. How much of that is in your hands? How much of that is the heavyweight campaign versus the broader B2B market recovering and therefore, the positive mix to weight per shipment? So if you can help us visualize a bit that.

The second question, there's some press articles suggesting that Express may lower the fuel surcharges from August for the same jet fuel price or for fixed jet fuel price. I haven't seen this officially on your website, but I was just curious if that indeed will be implemented? And if yes, why?

And the last one, if I may. Gave us some helpful data points earlier on the call. I'm just thinking directionally at the Express EBIT in Q3. So you suggest that some of the EUR 150 million benefits may still be there. You seem very confident on the volume growth year-over-year. I account also for a bit of negative seasonality from Q2 to Q3 EBIT, but I'm still getting EBIT in Express at EUR 1.1 billion or something like that. Am I missing any other headwinds or any other tailwinds I should consider in this analysis? Directionally, can you provide us any color?

Right. Thank you, Cristian, for these 3 questions. I will take the first 2, and then Melanie will add and take the third. So on the heavy weight, I mean, all of what we do depends on the demand of customers. And that demand obviously needs to, is attracted by a certain value proposition, which we, I think, successfully developed and enhanced over time as it relates to what Express can do for some industrial customers. But it's a match of a customer that is looking for a transport solution and us offering a great value proposition.

So it's not that we have taken on volume that we wouldn't have targeted. Quite the opposite. We continue to hone our pricing also as it relates to B2C, and we attract what we think is the right value proposition that is good for our customers and is accretive in the network. So that is something that you have seen very consistently and continuously unfolding over the last quarters, and I would not expect that to change. That's the strategy we are on. And we, with the results that we also discussed today, see ourselves confirmed that, that works well for our customers and for us.

I gave a couple of examples, concrete examples of what type of products these are that we now attract. And obviously, we have some still less lower-yielding B2C, and that is what overall leads to those changes that you see broad-based across the globe and reflected in the Q2 numbers. As it relates to the surcharge mechanisms, the surcharges for us as it relates to fuel, but also emergency surcharges are a cost recovery mechanism. And that cost recovery mechanism has undergone some stress because the volatility has been quite profound.

We've also seen significant imbalances regionally in the prices of jet fuel, especially, which we're not used to. And this led to some normal adjustments through the established mechanism, but also other adjustments and the fuel surcharge has been reduced by 2 percentage points, again, reflecting our cost base and our promise to customers that this is a cost recovery mechanism. So we do not expect that to have significant impact on margins.

Again, we aim to recover the cost that we have through emergencies such as higher insurance costs for flights, aircraft and the volatility in jet fuel, which in Q2 has had some anomalies and thereby a broader range of the usage of tools that are available to us.

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

Cristian, thank you for your questions. And we continue with the next caller please.

Our next question comes from Marc Zeck with Kepler Cheuvreux.

I hope you can hear me. I also got 3 questions. First, on the fuel surcharge again. I guess, I understand that over time, it kind of washes out. But I guess you had a headwind of EUR 100 million or so in Express in Q1. Would it be fair to assume that this turned into a tailwind of similar magnitude in Q2 already? Or will this only happen in Q3?

Then another question on Express. Could you quantify growth or negative growth for B2B versus B2C in Express, whether weight or shipment or weight per shipment. So any of these metrics would help.

And then for everything, let's say, that's not Express, we obviously had an end of de minimis in Europe or change in regulation for de minimis Europe for July. And could you quantify if there's, if you see any impact from that for, let's say, European parcels or German parcels that come from Asia? Has there been, let's say, volume reduction? Has there been some changes in the way the Asian marketplaces distribute their volume within Europe, have they set up own logistics centers? So any change really from the changes in de minimis regulation in Europe that affected parcels in Europe or Germany would be helpful. That's my 3 questions.

Thank you very much. Let me start with the fuel surcharge question. So indeed, there is always a certain timing element. And when we look at the development in the first half of the year, it was actually negative at the end of Q1, March and then continued negative at the onset of the second quarter. And then in the course of the quarter, it turned. Of course, the third quarter already started totally different again.

So I think for us, it is what it is. I think we have shown that we can manage it. We don't complain in the challenging quarters, and it's also not the big driver in the supportive quarters. So I think really coming back to what we said earlier repeatedly, the good Express performance in the second quarter is really predominantly driven by weight per day growth returning into a cost-optimized network with good yield action, and that really gives us nice operating leverage.

I think on the B2B and B2C development, so as Tobias has already explained, we are now really focusing on what has always been the core of the Express business on B2B growth. We still think that there will be after the normalization post-COVID growth also from e-com in Express, but it's not going to be this turbocharger growth driver, which it was for a couple of years. And that is why we are focusing on B2B. I think the important difference between B2B and B2C in Express is the average weight. The B2C shipments are significantly lighter. But coming also back to the earlier discussions, both for B2B and for B2C shipments in Express, there is a very strict pricing discipline. So neither do we transport heavy stuff nor do we transport e-com stuff at the wrong prices and hence, the pricing discipline is the same.

Then on the third question, the end of the de minimis in Europe, which also was paired with some changes in terms of data requirements, which particularly for our more consumer-facing business in the postal area, had a significant impact, but that's small overall. I can say that the impact overall was not as pronounced as we might have expected. So there was not much uptrend end of June as one might have expected that there's a kind of rush to the gate nor was there a significant dropoff in the initial days and weeks of July.

However, as expected, there is some softening due to the increase of prices for consumers and the additional hurdles, especially for SMEs and private individuals to ship into the European Union, but that is well in line with what we expected, maybe a little bit softer. As Melanie explained, we now have to see how this pans out in August. We currently experience a normal seasonality, and that entails that the initial days of August are quite soft as many people are on vacation.

So a relatively normal seasonal pattern. I do think there is some observable shift to fulfillment in the EU, especially in Eastern Europe, but there's also continued inflow via of fulfilled shipment, China fulfilled shipments into the EU, given that the cost competitiveness of those China marketplaces is still significant. And existing also with the regime that we have now entered as it relates to EU customs.

Thank you, Marc. We still have a couple of callers left. Luke?

Our next question comes from Hugo Watkins with BNP Paribas.

Could you just talk through the moving parts on free cash flow a little more and why the EUR 3 billion guide wasn't moved along with the full year EBIT guidance, just particularly where you are after the first half of the year and the potential for positive movements in working capital in the second half?

Okay. Yes. So thank you for that question. So I think what we have seen now in Q1 and Q2 is this very nice flow-through of operating cash flow before changes in working capital. So we have kind of the operating performance really arrive in the cash flow statement, which is good. And now depending on how the second half of the year develops, that should, of course, also be an important factor. We then have to see how working capital develops.

We now have to see how is the revenue development in Q3. How do we work through the whole IEEPA effect in the course of the second half of the year. And then, of course, we will also have to see how strong will be the revenue growth in the fourth quarter towards the year-end and how much working capital cash out will we see there. I think what is very important, we have not been maybe a bit conservative on the free cash flow number because we foresee another launch of CapEx coming, right?

So yes, we still have some CapEx projects in the pipeline, as you would expect for a growing business. But we are not in a backlog position where we now have to kind of do a crazy catch-up on the CapEx side. So it's really a bit natural CapEx development in the second half of the year. It's what will happen on the working capital depending on the phasing of revenue growth in the second half of the year with a component of the IEEPA stuff in there. And then it is the OCF before changes in working capital.

Great. Thanks, Hugo. And we continue, I think, with Hari from Deutsche.

Our next question comes from Harishankar Ramamoorthy with Deutsche Bank.

Maybe a quick couple of them. I believe some of your peers have been highlighting that the de minimis exemption impact on the Asia U.S. claims is now back to normal and back to where it was before the exemption was removed. So it would be interesting to have your take on the same. And secondly, on the working capital front, I was just wondering because the outflows in Q2 seem to be on the back of elevated rates and elevated activities. Is it fair to assume that if rates remain elevated, you'll still see a normalization into Q3?

Well, thank you for these questions. I'll take the first, Melanie, the second. So obviously, on the U.S., we have now the change cycling out on a year-on-year basis, we saw a significant drop in the China-U.S. trade, definitely also for B2C, but way beyond that. That has now cycled out. And in that sense, we are back to normal, but not on the same level. The growth has gone to other lanes. There have been substituting effects given that such goods are often not manufactured in the United States.

So you will have seen growth on other trade lanes that have substituted that. But we are in a, what I would call, steady-state situation as it relates to the U.S. And it's also important to see that the de minimis in the United States was a true de minimis where you have a significant step-up in cost on the European side. We always had an import VAT. We now have the minimum amount of EUR 3 customs duties, which elevates the cost for very low-value items, but is less relevant for mid-priced or more expensive items.

So this is also why the impact is not expected to be as significant, at least not at this stage than with the change that we have seen in the United States. Again, for us, the B2C play, especially for Express not the strongest factor. What we currently see also as it relates to the United States is, by and large, B2B driven.

Yes. So with regard to working capital, I mean, what we have seen in Q2 is almost textbook what you would expect. And I mean, particularly in Express and Forwarding on the airfreight side, we have payment terms with the airlines for fuel, which are relatively short. And then we have, yes, the standard payment terms with the customers. So in a growing business, that structurally leads to a cash out in working capital. If revenue would now stabilize quarter-over-quarter, we shouldn't see a continuation of this buildup because it begins to sink again more.

Then we have to see what happens in Q4 when we probably get again also into the seasonal growth mode. What we are watching very closely is, is there anything which goes beyond the normal business growth working capital drain. So do we see strange things on the DSO on the DPO side, and that is not the case, but that is obviously clearly something we are watching very closely division by division. And I think ultimately, if you grow and you have a working capital out due to the growth, you should also see the benefits in the OCF before changes in working capital so that it's overall a healthy development, and that is what we are focused on.

So good numbers attracting great questions, but we've come to only 2 callers remaining, Luke?

Our next question comes from Chloe at Citi.

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

So on Express utilization, this is a tricky question because we would aim going forward to achieve a higher healthy top utilization than in the past through also growth on backhaul lanes. And with that, there is some operational leverage left. We also have still capacity as it relates to most facilities in Europe, for instance, where we obviously have a very strong footprint. We've also recently just taken into operation a larger facility in Shenzhen.

So the ground infrastructure, I think, generally is in good shape. There might be certain locations and certain weight bands where some expansion is needed, but there is some operational leverage left as it relates both the air network as well as the ground. But again, especially as it relates to the air network, we would also aim higher to manage growth in a more balanced way and therefore, exceed what we, in the past considered a healthy level of utilization beyond which if we go too high, we have a service and cost impact, which we obviously would want to avoid.

Yes. With regard to the Express margins, I mean, first of all, let me say that we are quite pleased with the 16.8% Express margin we had in the second quarter, also in comparison to the rest of the market. So yes, I think we have obviously shown the strength of the operating leverage flowing through. Having said that, as we said repeatedly before, I think the most important number for us on Express is the absolute number.

And I think it's fantastic to see that very strong EBIT growth in absolute terms. So the EUR 1.2 billion in the quarter is probably the even more important number, and we now focus on delivering good EBIT growth, which should give us also a healthy margin. But as we all know, the Express margins are also impacted by elements like fuel surcharge and currency and so on. So we will keep measuring predominantly the absolute EBIT contribution.

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

Yes. Our final question comes from Cedar Ekblom with Morgan Stanley.

Two very simple questions on the weight campaign. Could you quantify the margin differential that you make on a heavyweight shipment versus the more traditional shipment? I take the point on sort of the revenue per kilogram being lower, but also the cost to serve being lower. It would be helpful to get a bit of guidance on that.

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

Yes. So I think on the first question, Cedar, as I tried to say before, we look at the profitability of the network before, and we make sure that whatever shipment goes into the network is priced in the right way so that the overall margin develops in the right way. And those pricing mechanisms also apply to the heavyweight shipments. And like we said before, it doesn't make sense for us to differentiate between an e-com profitability and B2B profitability. I think the same is true for the heavyweight stuff. It's really about optimizing the holistic profitability of the network.

On the second question, more details on how many of those heavy things do we have, I would get back to my advertisement from earlier. I think John in September will give some more details on, yes, the role of heavyweight in the network. Of course, it makes a huge difference when you look at it in terms of number of shipments. It's a tiny fraction when you look at it in terms of contribution to the weight. It is a more noticeable impact, but I would really use that opportunity again to say, mid-September, John in London, I think he will talk a lot more about heavyweight growth in Express.

Thank you, Melanie. You got a wonderful [indiscernible] to close our Q&A round. I want to thank each and everyone of you for your interest and your questions. And I want to close the call by passing over to Tobias for his closing remarks.

Yes. Thank you for your interest and your great questions. I would conclude by saying we are satisfied with the performance in the second quarter. Personally, I'm even more satisfied with the great progress on the strategic initiatives, the enhancement of the value proposition that we see with DHL Express, but also -- and especially with DHL Supply Chain and DHL Global Forwarding.

There is more work for us to do, which is great because we have more growth opportunities on the radar that we want to unlock and there are certain areas where, we are very focused on further enhancing performance. So it's not only the volatile environment around us that keeps us busy, but the continued execution on an ambitious plan on a strategy to further accelerate profitable growth. That's what we set out to do. And we're obviously pleased that now with the second quarter, we also see it in the reported numbers, and we are confident to continue on this successful path as the year goes by and we enter the midterm horizon.

With that, again, thank you for your interest and wish you a great day.

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 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.