Ladies and gentlemen, Welcome to the Half Year 2023 Results Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. In the interest of time, please limit yourselves to two questions only. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Stefan Paul, CEO of Kuehne+ Nagel. Please go ahead, sir. Thank you very much, Sandra. Good afternoon, Welcome to the Presentation of Kuehne + Nagel's First Half, 2023 Financial Results. I'm Group CEO, Stefan Paul, joined on the call today by our Group CFO, Markus Blanka-Graff. Let's move into page 2, half year results and the highlights. The financial results for the first half of 2023 were marked by accelerated cost management against a backdrop of declining demand for logistics services. As we all know, the declines are relative to an extraordinary comparison period of 2022. EBIT for the first half would have been the strongest in history, excluding the pandemic years, 2021 and 2022. Net turnover in Swiss Francs was CHF 12.7 billion, gross profit CHF 4.6 billion, EBIT at CHF 1.1 billion. Over the first half, the focus on cost control intensified and was most visible in Q2. This marks yet another example of our well-established ability to adjust our variable cost base to the market environment. An ability we have demonstrated through many economic cycles and periods of economic volatility. Following our strategy, yield management efforts supported the financial results in both Q1 and Q2. More on positive mix development later in this presentation. Page 3, the highlights on Sea Logistics, volume, GP, EBIT, and the variance. Over the first half, Sea Logistics generated an EBIT of CHF 639 million. Cost measures intensified in Q2 as unit costs declined by 13% year-over-year and by 14% versus Q1. In Q2, our volume trend improved to flat year-on-year versus the broader market decline of 4%-5%. The market share gains were strongest in the Transpacific trade lane. The current data does not indicate a robust peak season this year. We do believe that we may be near an inflection point with the potential to return to a positive year-on-year volume growth versus easier comps in H2. A critical point that I would like to emphasize is that our market share gains were not won on the expense of yield or mix development. SME, so small, medium-sized enterprise volumes, expanded by 9% year-on-year in the first half, bringing the share of SME volume in the Sea Logistics portfolio to approximately now 50% of total. Our monthly yields over the course of the second quarter were roughly stable. Under such circumstances, it is fair to expect continued cost discipline in the second half in order to deliver further unit cost improvement. At the same time, we believe the second half will bring further normalization with average yields in the upper CHF 400s. Next page 4, Air Logistics, tons, volume, GP in 100 and EBIT 100. Underneath, the variance. Air Logistics delivered EBIT of CHF 293 million during the first half of 2023. As was the case for Sea Logistics, cost management was a central focus as unit costs declined by 9% year-over-year and by 10% versus the first quarter. In Q2, our volume trend improved slightly. The year-on-year decline of 15% was broadly in line with the market. With easier comps, comparison on the horizon for the second half, we believe year-on-year volume declines may moderate to a high single-digit decline over the near term, with the potential for a return to growth before year-end. In terms of mix, we experienced low double-digit growth in perishables and more than doubling of volume of small base in the semicon segment, a strategic focus of our Roadmap 2026. This partially offset softer demand in general cargo, high tech, and healthcare. Monthly yields over the course of the second quarter showed modest variation. In light of the volume outlook for the second half, we anticipate average yields to settle around +90 per 100 kilo in CHF. Next page 5, Road Logistics. Road Logistics EBIT of CHF 93 million is the highest ever achieved for a first half of the year. Our overall order volume was stable year-on-year over the first half of 2023. This corresponds to 5% cross profit growth in the first half, excluding any currency effects. The conversion rate in Q2 was the strongest ever in a second quarter, except, of course, for the last year's Q2 result. The outcome is a credit to continued high-end utilization of our network, our yield management, and the benefit from an ongoing rollout of our proprietary RoadLOG TMS system, which is now rolled out in 43 countries, with six added over the first half of 2023. Page number 6, Contract Logistics. As we saw in Road, Contract Logistics also delivered the strongest ever first half EBIT. The result was CHF 110 million, or CHF 101 million, excluding a real estate gain in Q1. Gross profit grew by 9% in the first half, excluding currency effects. We believe our market share expands during the period, thanks to further inroads in healthcare and e-commerce. We continue to observe faster growth in these specific verticals than in many others. It's important to flag that we saw evidence of destocking over the course of the first half this year. Utilization of warehouse space, so our own operational capability remained at a high level. Next is page number 7, Roadmap 2026. I'm pleased to provide a short update on our Roadmap 2026 progress achieved in Q2 in the last quarter. Earlier, I touched upon key achievements, which was the consistent expansion of our share of Sea Logistics SME, small medium-sized enterprise volumes, through the first half. We also expanded our SME-focused e-commerce capabilities. We were talking about that during the Capital Markets Day. In selected markets with the first customers onboarded for new integrated offerings, combining multi-user fulfillment centers, cross-border, and last mile capabilities. We also advanced our strategic trade line efforts with a major commercial event for Japanese and Korean customers. Beginning of this month, we visited both countries. This would not have been possible without the hiring of experienced native speaking sales colleagues in recent quarters, which we positioned around the globe. In air logistics, we made progress on two fronts. First, we won a sizable semiconductor contract, which includes SAF power transports. The semiconductor contract was not the only ESG-related success, by the way. We also rolled out real-time Scope one and two dashboards in 800 client facilities, concluded the purchase of 6 million liters of SAF from IAG Cargo. With this, let me hand over to Markus, please. Thank you, Stefan, good afternoon, everyone. Thank you for your interest in Kuehne+Nagel and taking the time today. As Stefan has outlined, we aim to secure a new sustainable level of profitability against the backdrop of a normalization in supply chain conditions in Sea and Air Logistics. One element is our focus on cost control that intensified during the first six months of 2023. As a company, we have been managing through countless economic cycles and periods of unforeseen volatility. I credit to our highly flexible asset light business model, combined with the legendary entrepreneurial spirit. Cost actions taken since the start of the year culminated in a much more visible reduction of unit costs in the second quarter. This reflects both a reduction of absolute cost with stable to increasing sequential volumes in sea and air freight. Contract Logistics and Road Logistics, as we have heard, continue to further increase their profitability levels in quite volatile market dynamics. Let's start from a page number 9 with the income statement. As expected, we can see negative developments in nearly every P&L line compared to last year. What matters is the absolute performance with earnings before tax of CHF 549 million in the second quarter, or roughly CHF 1.1 billion in the first six months. Let's remind ourselves that could have been a full year result in any year before the pandemic. Gross profit margin continued to outperform 2022, confirming some early successes in our strategy to focus on higher-yielding business. We see a solid conversion rate of 24.4% for the group, also supported by diligent FTE resource management. There were no reported non-recurring impacts in the second quarter. In the prior year, just for reference, we had had a negative earnings before interest and tax impact of CHF 28 million out of the exit from Russia. Headwinds are consistently coming from currency, they have even increased with a negative impact of around 4%, equaling CHF 230 million at the gross profit level, and around 3% or the equal of CHF 59 million on earnings before tax. In the second quarter, the group minorities, preempting a question of yours, that result suggests a loss from Apex, which is not correct. That was impacted from a large withholding tax impact from the intragroup dividends that Apex has provided towards KN International. The total minorities result operationally would have been comparable to the first quarter. Reading through the P&L, I want to give you also some update on the air freight initiatives on eTouch, page 10. As a brief reminder, you have seen that slide repeatedly in the past. As a brief reminder, let me summarize the impact of eTouch, which uses integrated technology to standardize and centralize processes. Repetitive work processes are digitized, automated, or shifted into global service centers with the aim to expand customer-facing capacities to provide greater efficiencies and extraordinary service experience. Let's look at the numbers. Next page 11. We have saved 1.7 million staff hours with a positive effect of approximately 2.6 percentage points on the air freight conversion rate. Not only have we continued the improvements in the well-known categories that you have seen, we have also now made initial progress in the carrier and supplier communication category for the first time. This exemplifies the continuous efforts to widen the scope for our eTouch processes. Coming back to the working capital development, page number 12. Working capital, currently at CHF 741 million. One of the topics that has been on our agenda for the last couple of quarters, was quickly contracting due to the reduction of receivables and contract assets. Receivables predominantly have reduced as a function of lower rates, accessorial charges, and lower volumes in the network businesses, sea and air freight. Looking forward, I anticipate stable networking capital for the next quarters to come. The DSO have expanded slightly against the beginning of the year, less so against the same time last year. DPO, on the other hand, have increased quite significantly, mainly due to a reduction on our air freight charter contracts that usually don't offer any payment terms. As a result, the spread between DSO and DPO has increased to 12.7 days. Next page on cash and free cash flow generation, page number 13. Clearly, quarter two free cash flow is low and well below the expectations and the consensus. Two elements that drove this. Elements for good reason and well explained, I think. Relatively large cash bonus payments linked to record profitability in 2022. On the one side, good news, record profitability. On the other side, for sure, from a cash flow perspective, that was linked to larger bonus payments. In addition to that, lesser so good news, I would call it, higher tax payments and dividend withholding tax in the quarter. The relative measure of the networking capital, as reported on the page, is based on a narrower selection of working capital items in the cash flow statement. Our networking capital intensity improved, as we have seen on the previous page, to 2.8% at the end of Q2 from 3% at the close of Q1. I want to emphasize with that explanation that the operational networking capital, so the management DPOs, DSOs, so receivables, payables, remains extremely robust and has actually improved over the past quarter. It is not the contributor to the weaker than expected free cash flow generation, but what I explained is to be looked at into the bonus payments and the tax payments. With these comments, I'm on page number 14, I would like to end our presentation for today with a couple of key takeaways. For the quarter, a solid Q2 result. Cost controls showed the first results. Volume development is as expected. Our active yield and portfolio management continues, and as Stefan has alluded to, the Roadmap 2026 initiatives are well underway. With this short presentation, I want to thank you, and I would like to open the line now for the Q&A session. Over to Sandra, please. We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment, may press star and 1 on the touchtone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only hands when asking a question. In the interest of time, please limit yourselves to two questions only. Anyone with a question may press star and 1 at this time. The first question comes from Samuel Bland, from J.P. Morgan. Please go ahead. Thanks. Thanks for taking the question. I have two, please. The first one is, you mentioned the sort of yield focus now. I suppose if we look at the results, you're probably doing quite well on market share, but maybe there's a little bit of undershooting maybe on the yield versus what I think, you know, certainly I expected. I think there were some external expectations as well. Is the yield focus unchanged from what it was before, or have you possibly decided to focus a little bit more on volume for the time being? The second question is, we've heard elsewhere that there's this sort of shipments versus volume dynamic. Is that also the case at Kuehne+Nagel, where you have more LCL or you have, you know, smaller, weight per shipment, and that sort of is increasing the unit margins, as that, as that goes on? Those are two questions. Thank you. Sam, thanks. First on the yield focus. No, the yield focus is unchanged. As said, during the Capital Markets Day and even before last year, we have a clear expectation on the yield, and this is unchanged, and we fully focus on the execution of our roadmap, and as I said, on higher yields versus the pre-pandemic. That's the first statement. The second one is, what you see as well is that the order count, the shipment orders, has less declined than the volume as such. In sea freight, for instance, our orders are single digit down and not double digit. What we see as well is, the shipment size has as well gone down a little bit, so it's less in terms of order versus or more orders than volume decline, and same as well here. We see that the number, the shipment volume, the tonnage of the shipment is going down. We see the same. Is it just a function of what the market is doing, or is it more? Yes. deliberate Kuehne+Nagel strategy to target? No. Yes. else... No, this is market driven. This is market driven. Yeah. Understood. Okay, thank you. Welcome. The next question comes from Muneeba Kayani from Bank of America. Please go ahead. Good afternoon, Stefan and Markus. Two questions, please. Firstly, just on your cost-cutting during 2Q, how should we be thinking about your costs into the second half and into peak season as volumes pick up, both on a unit cost basis and kind of an absolute cost basis? Secondly, on SME gains during the quarter. This seems a bit earlier than you were probably expecting at the time of the CMD. If you can talk a little bit more about kind of your progress on more SME on the sea side. Is this a market-driven move, or is this your strategy which is benefiting here? Thank you. Hello, Muneeba. How are you doing? I will take the first question on the cost. I think we don't usually use the word cost-cutting. What we do is we adapt our cost base towards the volumes and the market conditions. I think that is what I would like to emphasize first, and I think that goes also for the next couple of quarters. I think it's important when we look into the volume development, there is always a management into both directions, into both vectors. You know, the one into the yield focus and of course, the other into the volume development. I think you have to have a balanced growth, and you have to work, and that's what we do. We have to work with the knowledgeable, with the right people on the customer experience. That is what we are doing. On the air side, more specifically also for you, I think on the air side, the cost will remain on a flattish level. On the sea freight side, I think we will see further reductions going into the year. I take the SME question. Yes, you're absolutely right. We mentioned it during Capital Markets Day, what we have done is even before, at the end of Q3, beginning of Q4, 2022, we started already to hire new additional field sales people, so hunting forces. We have in the meanwhile, similar to the first quarter, a little bit more than 100 new field sales reps, hired for the group, of which 70% roughly are in Sea Logistics. They get a lot of traction currently in the marketplace. We are more than happy, with this resulted in the 9% increase in SME and in sea freight, very balanced portfolio now between key accounts and SME. Thank you. If I could just follow up, Markus, on your comment on air and sea costs, was that absolute or unit cost? That is unit cost I'm talking about. Of course, Thank you. When we have a massive increase in volume, then, you know, the unit cost may come down, but I'm careful on the volume predictions here. May I add to the SME topic, right? We have seen market gain shares in Asia, Europe, and Transpac, and this is mainly driven by this initiative. Thank you. The next question comes from Sathish Sivakumar from Citi. Please go ahead. Thanks for taking my questions. I got two questions here. Firstly, given the free cash flow impact that we had in Q2, obviously it's one-off thing. How should we think about the dividend for the full year? Would it be like, say, where the consensus is around, say, CHF 10, or would it be more geared towards last year's number? Secondly, on the market share gains, is there any specific verticals that you are actually gaining market share versus the peers? Yeah, any color on that would be helpful. Also it's very trans-specific oriented. Looks like that's how you're getting more market share. I mean, any color on that, helpful. Thank you. Hello, Sathish. I take the question on the, basically on the dividends. Yes, you're right on the free cash flow. I think this quarter was extraordinarily impacted. Looking at the balance sheet, I think the company can solidly look forward towards a good level of dividends. I think that remains still at the entire discretion of the AGM. I would suggest looking at the balance sheet and the, hopefully, until the end of the year, continuous good performance of the company with, let's say, a reasonable macroeconomic background. I think we should look at a fairly decent dividend outlook. Let me reflect on the market share gains. As I stated, SME, we do not focus pretty much on any vertical. SME is more commoditized, hunting focus, right? With higher yields. What we can say is that, and we shared this already, that we get a lot of traction in the renewable energy sector, one hand. We see that in particular in air freight, we gain more and more customers in the semicon industry, which is rather new for us, right? OEMs in the semicon industry, which as well, shows traction or has shown traction in the last couple of months this year. Yeah. Thank you. Just to follow up on the dividend. Should we, like, say, are you comfortable with where the consensus is today in terms of, like, say, maintaining it there? Or do you see, like, increasing the payout ratio so that you get a slightly better outcome? I think, the current dividend policy, that is unwritten, but we usually historically, when you tie that back, is somewhere between 50% and 60%. I think that would be most likely at the lower end of what we would be looking at. Yeah. Thanks, Markus. Thanks, Stefan. Thank you very much. You're welcome. The next question comes from Robert Joynson from BNP Paribas. Please go ahead. Good afternoon, gentlemen, and thank you for the presentation. First question on the GP per container. If I heard correctly, you said that the GP per TEU is expected to be in the upper CHF 400 range in H2. If that's the case, could you maybe just provide some color on the trajectory by quarter? For example, do you expect the GP per TEUs to go down to the upper CHF 400s in Q3 and then stay there in Q4? Is it more a case of a step down in Q3, followed by another step down in Q4? Then the second question on the GP per ton. We've now seen that metric fall for six consecutive quarters on my counting. You talked about the yield, I think, declining further in H2 to a level at around CHF 900, if I heard correctly. If that's the case, should we expect the GP per ton to stabilize at around that level, or could it potentially ease further going into 2024? Thank you. Let me take the GP per ton question first. We expect Q3 and Q4 rather similar from a yield perspective, maybe Q4 a little bit up versus Q3, based on everything what we see and based on the discussions we have with our partners. In the high 400 range, yes, close to 500, maybe a slightly above, but this is the range where we expect the yields to come in in Q3 and Q4, paired with a slightly improvement of volumes on the sea freight side. Right. Air freight, the GP per ton, I think, we currently see that when I look into the quarterly trajectory, so look into the month of the quarter, that, you're right, we have seen consistent slide of the GP number. When I look within the quarters into the months, what are the exit rates? I would expect that we would see air yields to stabilize at that level that we are now. That is high nineties, and if it's gonna be like, I don't know, 95s, that's still good. I think that is somewhere where I would expect stable yield going forward. Just to clarify, Markus, you said mid-900s rather than. Yeah. around CHF 900. Is that correct? Yeah. Yeah. That is right. Right. Great. I'm using 100 kilos, but you're right, mid-900. Yeah. Okay. Sure. Thank you. Thank you. The next question comes from Alexia Dogani from Barclays. Please go ahead. Ms. Dogani, your line is open. Sorry, can you hear me? Yes. Yeah. Perfect. Okay, good afternoon. Thank you for taking my question. Basically, I had two questions. Just firstly, on the unit cost evolution, can you just explain a little bit the movement between total costs in H1 being down year-over-year versus FTE numbers being up? I mean, what kind of drove the discrepancy between the two? Secondly, would you offer us a little bit of a comment around current consensus expectations and the evolution for next year? Are you comfortable with what the market is expecting, or do you see anything different? Thanks. Hi, Alexia. Let me take both questions. I think let me start with the consensus. I think, you will understand that we don't give an outlook, and we don't confirm consensus. I think we give a lot of details around, how the business develops, and I think there is a, there's a good mix of, experts, out there, that builds their models around the consensus. No comment from my side on this one. First question on the unit cost develop, evolution. I, let me just ask you, when you look at total cost down and FTE up, are you looking at total company or what are you comparing with? Yeah, the total company. Yeah. -for the group level in H1, expenses versus number of employees. Right. We have two very distinct differences in the business model of contract logistics and the business model of the network model. Contract logistics grows with an increase of FTEs. More locations, more people, more business. That's what we actually like when the profitability is within our thresholds, which is. You know, when you look at contract logistics, this has performed extremely well over the first six months. From that perspective, adding FTEs is actually a good thing. From the network business perspective, from the air and sea freight perspective, we obviously adapt our FTEs towards the workload we have. That can be volumes, that can be orders. That is where we have reduced FTEs in air freight and sea freight, and hence, also adjusted the cost base. I think that's not a paradox in itself. It's contract logistic growth with FTE at cost. Air freight and sea freight adapts to efficiency and to the right cost base. There we have reduced FTE alongside or even in excess to what our volume development was. Thank you. That's helpful. Can I just ask a different one then, because my first one was unsuccessful. I guess when you talk about Q2 relative to pre-pandemic years, are you suggesting that you feel there is no pandemic overhang still in the Q2 performance? Because that's slightly how I interpret it, but maybe incorrectly. Well, overhang, you would have to look into, is there still disruption in the supply chains? I would at least for a large stretch of the second quarter, I would say there was no more disruptions in the supply chain anymore. Hence, we should talk about a normal supply chain situation, and I think that would be a fair assessment. Yeah. Fully concur with this. All right. Thank you very much. Thanks, Alexia. The next question comes from Parash Jain from HSBC. Please go ahead. Hi, thank you. I'm Parash from HSBC, Hong Kong. I have two questions. First, can you share what are you seeing from your customers with respect to 2023 peak season, both in terms of sea cargo as well as air cargo? My second question is with respect to yield normalization going into the second half of this year or, 2024. Is it the change of mix? Is it the higher underlying freight rate? If you can just remind us what are some of the key drivers that will ensure that your normalized yield will settle at about close to 50% higher than pre-pandemic level? Thank you. Let me take the peak season and the question: What do we hear from our customers? Unfortunately, for us, there will be no real peak season. There is no peak season to be expected in 2023, so there are no signals, neither on air nor sea, at least not for the time being. We have to be very cautious on that. That was reflected as well in Markus' comment on the, our cost efficiency and the focus on our cost position. The yield normalization is pretty much as we shared a couple of times already. We focus on higher yielding business, whether it's healthcare, whether it's the new semicon, whether it's the renewable energy, where we need to come up with complex or with solutions on complex questions. Last but not least, which is a very important puzzle piece, and we talked about it a couple of minutes ago, is the focus on SME customers, on small, medium-sized enterprises, 100 toy, 200 toy, a couple of 100 shipments in air freight. Air freight is less dependent, of course, on SME, but in road and in sea freight, it's definitely the focus on SME customers, which will help us to maintain the yield at a significant higher level versus the pre-pandemic phase. Lovely. Thank you so much. The next question comes from Andy Chu from DB. Please go ahead. Good afternoon, Stefan and Markus. A couple of questions, please, maybe one each. The first numbers question is around sea unit costs. Is it possible to give us a flavor, sort of more quantitatively in terms of where that goes in the second half? I guess, sea unit costs fell by 14% quarter-on-quarter. Is it possible just give us indication of that, where that may go in the second half? Secondly, in terms of the change of leadership at the Sea division with Otto Schacht, kind of stepping down after, you know, a long time. Could you just talk to us a little bit about, explain what Michael Aldwell will bring to the business and changes from that leadership? Thank you. You're welcome, Andy. I will take the cost per TEU question. I think we're now in the second quarter and the level of CHF 297. You may recall that we said we want to have a somewhere, a cost base around CHF 300. I think when I look through the volume development over the quarter, volumes have consistently, you know, improved throughout the second quarter. I would expect that with the further effects on cost adaption and efficiency, we will most likely stay below CHF 300 and improve a little bit further than what we see right now. Somewhere between CHF 250 and CHF 300, I think should somewhere be the run rate for or the best rate, call it that. Call it the best rate until the end of the year. I take the leadership question. With Michael, we have now brought the next generation of leadership into the organization, into the management board of Kuehne+Nagel. Michael currently is focusing on the products, reporting into Otto Schacht. In particular, he is managing our field sales unit in Sea Logistics as well. By adding 9% of volume the last couple of months, he has already confirmed that he has the can-do attitude. What you can expect from him is two things, pretty much customer focus. This is in line with our Roadmap 2026. A very good understanding of processes, as well as when it comes to our digital ecosystem. I will believe he will be able to bring this business unit to the next level of profits and volume. Brilliant. Thank you very much. The next question comes from Tobias Rumi from Bernstein. Please, go ahead. Hello, thank you very much for taking my question. I have two on yields, please. It looks like the shift to high yielding volumes, especially to SMEs, is very successful. I was just wondering, since you implemented the new strategy, what have you learned? Any particular insight from that? Also, perhaps on, are you able to bind those clients for the longer term, or is it gonna sort of go back to what you've had before? Maybe the second one, given your great results this quarter and previous quarters, we were just wondering whether the next quarters into mid-2024, will be substantially above your 2026 conversion target rate, of above 40% in S&A. Is that something maybe you could give a bit more color around? Thank you. Let me start with the yield question or with the learnings while we started to roll out our strategy, our Roadmap 2026. What we already said a couple of times is that we need to really come up with the highest quality, the best, the highest trust in this industry from our customers. This has to do with the execution power and to create the extraordinary moments and the customer experience, which is second to none. This is what we are aiming for. That is something which, what we learned the last couple of years, with a different color, with a different focus and the customer experience, which is second to none. As mentioned before, you can maintain your SME customer base much longer, these customers are overall, not only the SMEs, are willing to accept higher price levels. That's the reason why we put so much emphasis on the KN Experience, the CX, the customer experience, the employee experience, in order to deliver exactly what we said, higher yields, for the company moving forward. Second question, conversion rate. Yeah, indeed, we are at least in sea freight, above our 35%-40% target, 2026. In the air freight, you see we are in excess of 30%. I think the conversion rate will get towards the 35% level also in the year 2024. I think, and we should continue to monitor that obviously. The current level of around 50% in sea freight, I would expect that we see a bit of pressure on this. Versus in the air freight, I would expect that we could improve from that 30% level. That was also in our models when we worked on the Roadmap 2026, that we will have periods where we are on the lower end of the expectation versus the upper end. In total, I think we should expect for 2024, somewhere in the range of 35%-40% already. The question obviously is fair, if that's already then there, so what's then to come for 2026? Let's get there first and then talk about the 2026 targets. Awesome. Thank you. Maybe just a quick follow-up regarding Stefan's answer. Stefan, is it large corporate volumes missing, or is it real growth in SME, the 9% you mentioned earlier? It's real growth. Of course, it's real growth in SME. What is missing is the commoditized volumes, and that was deliberately stated already a couple of months ago. We will give up the focus on the low-yielding business, like trash or timber or what have you, right? That is missing, of course. Okay, thank you. The next question comes from Gian Marco Werro from ZKB. Please go ahead. Thank you, everyone. Good day. First question for me, stockpiling. In the last update, you mentioned that you see stockpiling coming more and more to an end in March, with some uptick then also in contract logistics. Can you maybe give us some more visibility there, what you see currently in the market? We also heard this morning from a competitor that there might be some also stocking in again now in the third quarter of this year. That's the first question. The second question is also the number of your SME customers again. In the first quarter, you mentioned that they increased by around 10%. Now we just discussed 9%. Can I understand that this is now the increase in the second quarter, or for the first half year, that you increased the number of small mid-sized clients by 9%? Thank you. I take this, the second question first. Maybe this was a misunderstanding. We have grown volume with SME customers by 9%. It's not the number of customers overall. We have roughly 450 customers overall in the company. We measure the volume growth with either key accounts or with SMEs, and the number 9% is the growth of volume with SME accounts in the Sea Logistic s business unit. Hi, Gian Marco. It's Markus. on the stock, I think, rightfully, you have mentioned the first quarter as a starting point with high stock levels. We have certainly seen some evidence of destocking. Because, I mean, the evidence is a conclusive evidence, if you like, because we are seeing inbound orders down and outbound, up. Clearly, we see that a destocking evidence. The key question is, and I'm being very, very blunt to you. We don't know when a restocking is gonna start again. The only thing we surely know is, the later customers will restock, the higher there is a risk that restocking is gonna run into higher cost supply chain solutions. Be it air freight or express services or anything like that. I think, as anybody else, I think, I cannot give you the exact point in time other than saying, yes, we have evidences of destocking, and we see a certain stabilization now, but we will see if there is any rush restocking coming in the future. That we don't know. Very clear. Thank you, Stefan and Markus. Thank you. Thank you. The next question comes from Sebastian Vogel. Please go ahead. Hello, good afternoon. There's just one left on my side. It's related to Apex, and Markus, you mentioned there some special factors. If you take those aside, if you look there on the current profitability levels of Apex, how does it sort of compare with the underlying business case when you bought this business? Hi, Sebastian. We usually don't disclose that information. What I said is, that when we eliminate the one-offs. We would look at a very similar performance as in the first quarter. I would be vague enough in saying that Apex has completely fulfilled the business case expectations and continues to go in line with that at the current level. Got it. Many thanks. Thank you. The next question comes from Lars Heindorff from Nordea. Please go ahead. Good afternoon. Thank you for taking my question. It's around the volumes. I think Stefan, you said there will be no peak season in neither sea nor air, if I understood you correctly. I know you're not guiding for the full year, but most other companies have been decent their guidance for the full year, those that provide that. I've been assuming a gradual pickup. Also, you've been talking a little bit about destocking and maybe also now or when the restocking will start again. Maybe a few words on what you expect in terms of volumes for the second half year. As I said, a real peak season for me is a 10%-15% growth during the peak or even more. This is definitely not to be expected. I would really taken by a surprise if this is going to happen, right? Talking to many customers on a regular basis. From a sea freight perspective, as I said, repeating myself, I think air freight will see somehow the same demand from a customer perspective, from a demand perspective, as we have seen now in Q2. I think that is a realistic level moving forward before it picks up again, most probably beginning of next year. We don't expect it this year. In sea freight, it's a little bit different. In sea freight, we see already, that there might be a little bit of an uptake in the, in the third and particularly in the fourth quarter. This is how we see it, right? If you compare like for like the Q4 in air freight, maybe let me add that one. Due to the fact that the last quarter in 2022 was already a bit weaker, the comparison will be much more in favor this year. Overall, again, there is no peak to be expected. Okay. All right. Thank you very much. Sandra, are you there? Do we still have questions in the queue? Hello? I think we have lost our operator. Hello, Sandra, are you still there? No, I think. Hello? Hello? Okay, I think we have lost our operator. Thank you for joining the call today, and, we will close it at that point in time. Sorry, this is your operator speaking. Okay. We have a question from Mr. Nikolas Mauder from Kepler Cheuvreux. Please go ahead. Thanks for giving me the chance. I hope Markus is still okay to ask the question. Oh, absolutely. We didn't hear anything, so. Well, I wasn't aware that was my turn. Two quick ones. Throughout the call, you mentioned yield stability throughout the second quarter months. With volumes likely like stabilizing or actually improving on a year-on-year basis, what triggers the normalization in H2? Can you perhaps provide some color here? Secondly, if I interpret, you know, this nice organic growth breakdown that you provide in your details, it seems like you trimmed some loss-making activities in Q2, especially in contract logistics. Can you perhaps share what they were? Thank you. Maybe I take the second one. We didn't trim any loss-making activities in contract logistics. What we did, and we started that already a couple of quarters ago, we increased our expectation on the EBIT numbers. We have an internal guideline, commercial policy, what is the minimum expectation we have on certain contracts, and we have increased that by 2 percentage points, and this is what you see now coming more and more in. Stable growth on healthcare and e-commerce, and on the other side, a much better profitability versus the past. When I think on the first one, yield normalization, I think we never used normalization in the context of the yield. I think for us, it was normalization in the context of the supply chain execution and the if there's still some disruption out there. I think that was my comment that in the certainly last, in the fourth quarter and also on the fourth quarter last year and the first quarter this year, there were still some residual you know, challenges in the supply chain, that was still leading to some extra effort and certainly to some extra profitability. Through the first quarter into the second quarter, we have seen a situation of freight rates, especially in the sea freight, coming down very quickly. As you know, when rates fall very quickly, there is always a certain element of lag into the customer pricing, which is supporting us. From that perspective, I said the second quarter was normal because this disruption in a supply chain was not there anymore. I would expect that a situation like in the second quarter to continue into the third and the fourth, with everything we have said today, maybe simplistically summarizing, continuing our efforts in shaping our customer portfolio towards SME and higher customer experience. At the same time, with a focus on balanced growth. I think that's something that is kind of. I'm thankful for your question at that point in time. I think that's something that we can leave here and take as a summary of what we have done in the first six months. Okay, very good. Thank you. Thank you, Nicholas. Gentlemen, this was the last question for today. Okay. Thank you very much. Thank you. Everybody on the call, thank you for taking the time, and see you in or hear you in next quarter, on the third quarter call in October. Thank you very much from my side as well, and have a good summer. Ladies and gentlemen, the conference is now over. 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