Ladies and gentlemen, thank you for standing by. I'm Stuart, your Chorus Call operator. Welcome, and thank you for joining the Deutsche Post DHL Group conference call. Please note that the call will be recorded. You can find the privacy notice on the dpdhl.com website. Throughout today's presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press star followed by one on your touch-tone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Martin Ziegenbalg, Head of IR. Please go ahead. Thank you, and a warm welcome from my side to all who dialed in for our Q2 conference call. I've got with me Group CEO Frank Appel and Group CFO Melanie Kreis. Before we start into the Q2 content, just let me remind you with a little advertisement, we are planning for September 8th a management update and a site tour for our express division. We will send out a reminder later this week and encourage you to participate. Okay. Now, with that, Frank, please start us off. Good morning as well from my side. I will hand over in a second to Melanie, who will lead you through the presentation. Just a couple of words at the beginning. Yes, we live in a very volatile, uncertain time at the moment. Taking the war in the Ukraine as a first and then all the consequences which we have from that, and COVID is still around. We definitely have no better insight than many of us. But what we have seen in the second quarter, and we are very proud of that we have managed that storm quite well. Sometimes one division is better than another division is better. Some trends are stronger here than others strong, so there. But I think the portfolio overall has demonstrated the tremendous resilience we have. We had a very good result. It was the best quarter ever, even stronger than the last year, fourth quarter, so that shows the resilience of the portfolio. We believe that there are some positive signs coming. You know, commodity prices are now starting to come down. Rates in our industries are coming down slowly, and we see also a transfer from air freight back to ocean freight. All these things are signs of stabilization of the situation, which is good. You know, still very high employment is also good. Of course, it increases some cost pressure as much as, of course, it needs when our activities, when we get the right people as we could find the right people so far. Overall, complex situation, but I think we have demonstrated that we can keep the existing level we reached last year. That's the reason why we also confirmed today the guidance for this year and for 2024. With that, I hand over to Melanie now, who will lead you through the presentation. Thank you. Yeah. Thank you very much, Frank. Good morning also from my side to all of you. Thank you very much for your interest in our Q2 numbers. When preparing the presentation, we somehow had the feeling that you would be even more interested in talking about the outlook than about the Q2 numbers. You will have seen in the presentation that we kept the Q2 summary very, very brief. Of course, you find additional information in the appendix in our IR stat book. If you have any more detailed questions about Q2, happy to answer those as well. In all brevity, when you kind of, like, look at page two, as Frank said, the second quarter of 2022 was another very, very successful quarter for Deutsche Post DHL Group with an operating result of EUR 2.3 billion. It was actually, as Frank said, our best quarter ever. When you combine that with the first quarter, which had been the second best quarter in the company, you know, the third best quarter in the company history, you will actually see that for the first half, EBIT now stands at EUR 4.5 billion. I'll talk a bit more about the individual contributions by the different divisions in a second. I mean, bottom line, we have really seen the strength of the portfolio. Some of the divisions are going through the e-commerce normalization, the B2B divisions kicked in, so a very solid result from the group all together. I think the key message today is that based on this performance in Q2 in the first half of 2022 we confirm our full guidance set. We are going to talk a bit more about the sensitivities we see for the rest of the year. Obviously, there is a lot of uncertainty out there. There are some very unpleasant potential macro scenarios out there. We are confident that also in the case of a sharp downturn in the second half of 2022 we will be able to deliver on our guidance. In that case, we will be more towards the lower end of the guidance range. Equally, if the business dynamic continues more in line with what we have now seen in the first half, we also see potential upside to the current guidance range of EUR 8 billion ±5%. Much for the super high level overview. When we now turn to page three, that's the page where we have tried to summarize on one side what is happening in the different divisions. Here you can very clearly see how the portfolio comes together between the B2B divisions and the B2C divisions. As expected, DHL Global Forwarding, Freight was again the strongest performer in the portfolio, the division with the highest revenue in the quarter, more than EUR 8 billion. And as you can see here, EUR 746 million in EBIT. That's of course a new record. That is due to the market situation on the one hand, but we should also not forget that we also increasingly see the benefits of our new IT systems, and that is of course the part which will be sustainable also if and when a normalization in the market environment occurs. The second very much a B2B driven division where we saw a very strong performance was DHL Supply Chain. Strong double-digit growth. You may have listened to Oscar in the recent management update. You will know that on that basis, this is nothing that is just happening, but that is really the very systematic approach to standardization, the digitalization activities, all that really nicely coming together, delivering EUR 244 million in EBIT for DHL Supply Chain. DHL Express, where, as you know, we have a mix of B2B and B2C volume developments, delivered a very good absolute EBIT result, EUR 1.1 billion. Yes, it was a bit down compared to the absolute record level we had in the second quarter of last year. I think considering that we here see the expected normalization in B2C volumes, and of course, also the impact of the China lockdowns in the second quarter, that was a very good performance leading to EUR 1.1 billion in EBIT. Yeah. Then in the very much B2C e-commerce driven divisions, DHL eCommerce Solutions and Post & Parcel Germany. We have indeed seen the normalization as anticipated, as we already discussed in the first quarter. I think important message here is that, when you compare Q2 to Q1, we already saw that the rate of normalization is normalizing. That is of course also what we then expect in the second half of the year to continue. Eventually, we still anticipate a return to the structural growth patterns in the e-commerce divisions. Turning to the group P&L on page four, well, I think there's actually not much need for deeper explanations. You can clearly see that we were able to translate the EBIT development into growth in consolidated net profit despite the tax line going up due to higher profit before taxes and the 29% tax rate. I would say a very pleasing and expected flow-through from the top line to EBIT, and then ultimately to earnings per share. That takes me to cash flow on page five. First of all, it is a coincidence that you see the number 254 here three times. We had EUR 254 million more EBIT year-over-year. You can see that on the EBIT, we were down year-over-year. There are two main drivers for that. The first one is that, as expected, we had significantly higher tax payments. They already explained about half of the difference. The second element is a working capital effect, which is not due to a significant worsening in DSO or DPO. It is really mainly driven by the very strong top-line growth we have been experiencing. It's something we are watching very, very closely. I would say it's nothing to be fundamentally concerned about. Given the significant top-line growth we have now seen for several quarters, and given how much we have optimized DSO and DPO over the last years, that is something we will have to live with and manage. Nevertheless, when you put it all together, you can see that we still had EUR 2 billion in OCF. Then you kind of like look at the H1 free cash flow with EUR 1.8 billion, we are well on track to deliver our free cash flow guidance. Yeah, I also want to use that opportunity to quickly comment on the share buyback. As you will have seen, we accelerated that, and execution is in full swing. As we had said, we now want to kind of like get the EUR 500 million done by the end of this month. We're well on track to do that. Then we'll continue with executing the first tranche of EUR 800 million until the fall. The last page before I come to the outlook is a topic which is, as you know, very close to our hearts and is not forgotten despite all the other super relevant topics like inflation and energy prices and so on, which we will discuss in a second. We are still convinced that global warming is the biggest challenge for mankind. We remain totally committed to pushing forward with our decarbonization agenda. One point we want to highlight here on page six is that, based on all the really deep green initiatives from our electric delivery fleet to sustainable aviation fuel to sustainable maritime fuel, we are now at a point where we're really able to offer green products to our customers in all divisions. Those are not offsetting green products, but they are really kind of like deep green products. It's too early to tell how big the uptake and how the willingness to pay will be on the customer side. We are really receiving encouraging signs because obviously particularly the large customers who have also committed to science-based targets, they are also very keen to decarbonize their supply chains, and we are helping them to do that. Much for kind of like what happened so far. Let me now switch to the outlook and let me start with a slide on page seven which we have shown in a similar format a couple of times before, but I think it is probably as relevant as ever. That is how to think about our portfolio. As you know, we are very well diversified. We have a very well-balanced portfolio with the different divisions, with the mix between B2C, B2B exposure across regions, across sectors. That, of course, does not make us immune to what is happening in the world around us. I think this gives us a really solid foundation to deliver throughout the economic cycle where the different elements will have a different dynamic at any given point in time. Having said that, it's not that we kind of like sit on the sideline and just watch what is happening to us. I hope we have shown to you over the past quarters that we are also really actively managing the volatile environment around us. Also in the asset-heavy divisions like DHL Express, there is flexibility in the network. For example, based on the current volume developments, we are already folding in third-party aviation capacity into the network. Adjustments are continuously ongoing in the asset-heavy divisions. Of course, we also have the asset-light divisions, where cost adjustments are particularly in a sharp downturn, even easier. Of course, overall, we have a very strict and established cost management. We know which levers to pull should that be necessary. I'll come back to that in a second. Maybe first, on page eight, let me address the three main themes, which I know are probably relatively high on your agenda, and probably, I should say, on your worry list, inflation, energy prices and interest rates. Let me maybe start on the right with interest rates, because rising interest rates are not really a significant direct topic for us. You know that we have a very strong balance sheet. We have relatively small financial interest costs. The bonds we have outstanding are at fixed rates, so we have no meaningful risk on that end. To the contrary, the rising interest rates have actually improved one position in the balance sheet quite materially, and that's our net pension provision. It's actually down by an amazing EUR 2.4 billion year to date, down to now only EUR 1.4 billion. Some of you may remember there were the days when we were talking about EUR 7 billion or 8 billion in terms of a pension deficit. That's kind of like a positive side effect of the rising interest rates. Regarding energy prices, moving to the middle column. First of all, the big topic here in Germany is obviously gas at the moment. I think on that one, we can give you a very clear message that we only have a very small exposure to gas. It's not critical for our production processes, compared to, for example, what you hear from some of the chemical companies. We need it prominently for heating, and we are of course, also working on alternative plans, should there be a significant gas shortage over the winter. The bigger impact for us are fuel costs, including jet fuel. Here, as you know, we have well-established pass-through mechanisms. We are, in some cases, with a time lag, in most cases, able to pass on fuel increases to customers. Which takes me to the left, inflation. Inflation is, of course, a relevant topic for us, as I guess for any other company at this point in time. Of course, one very important factor for us is wage inflation. At the moment, I think we are really well-positioned to manage that also very strongly on the yield side by making sure that cost increases are passed on to customers. Of course, also the other programs we have been driving, digitalization to increase productivity, are now really helpful, because they are also an important lever to offset inflation. Overall, I'm not saying it's a non-issue, I'm not saying it's easy, but I think we have it well under control, and we know how to manage that topic as well. Which I think takes us to page nine. It's a bit of a, yeah, different way to say what I have pretty much already said. We are of course aware of all the uncertainties out there. For example, when you think about the cost topic, we have not gone into a significant cost-cutting mode now, but we know exactly what would have to happen should the situation get worse. We're not doing that for the first time in all of the divisions. As you know, we have very experienced colleagues. You can rest assured that should that become necessary, we will take the required action. I think the key focus at the moment is actually on the pricing pillar to make sure that the inflationary trends are passed on to customers. The starting point here for us is actually service quality. To really support our customers with reliable logistics solutions was probably never as relevant as it is today, and customers do appreciate it. On that basis, you of course have a completely different discussion on price increases than if you had a poor service quality. As I said, we're not immune. We are prepared, but as you will have also now seen in the Q2 numbers, we are quite experienced and equipped to deal with the uncertainties out there. That brings me to our guidance set on page 10, which is unchanged. Again, we are of course aware of the discussions and worries out there. When you particularly look towards 2023, 2024, there's a very broad portfolio of scenarios and sensitivities you can play with. I'll talk a bit more about the sensitivities we have thought about for 2022 in a second. With regard to 2024, fundamentally, in kind of like the base case range of scenarios, we stay on track to deliver in line with our medium-term guidance. Now turning to the 2022 guidance in a bit more detail. We want to provide you with some more concrete sensitivities around our guidance range. We have achieved EUR 4.5 billion EBIT in H1. Despite all the headlines, we have also not seen that things fall off a cliff in July. Yes, there are some areas where demand is easing, but I would say so far we are on a very solid track. In our base case scenario, we have assumed that there will be a decline in global GDP growth, so macro will slow down towards the end of the year. We have looked at two variations of that. Should there be a sudden sharp decline, which is not what we're seeing at this point in time, to be clear, but should there be a sharp sudden decline in global GDP in the second half of the year, we are still confident that we will deliver within our guidance range, but that would then take us to the lower half of the guidance range between EUR 7.6 billion and EUR 8 billion. Should there be a decline but not as sudden and as sharp, more kind of like moderate and more towards Q4, that would then take us probably towards the upper half of our guidance range, EUR 8 billion-EUR 8.4 billion. Obviously, clearly, based on current solid business momentum, which as I indicated, is more also what we see in July, there should also be some scenarios where we could end up above the EUR 8.4 billion. We are quite confident that we will definitely not surprise with some negative headlines. There is, yeah, depending on how the next months play out, a scenario where you could also see some upside potential. Much from my side, and I would now hand over to Frank for the wrap-up. Melanie, on the last page, we called the presentation Resilience on a New Level because we believe that the fundamental structural trend to e-commerce will help us continuously in the next couple of years. The B2B volumes and globalization will continue as well. That enables us to deliver higher earnings than before. The cash flow orientation has improved significantly in the last couple of years as well, which is, I believe, attractive to our shareholders. In other aspects of a business model, be it digitalization or ESG, I think we are front runner in our industry as well, and we believe that we will generate for us a competitive advantages through that. Overall, we are of course very happy with the outcome of the second quarter. We are not stupid. We understand that the world is complex. I said that at the beginning. You know, there are some challenging signs, but also on the side, some encouraging signs. It's not all black. That's the reason why we feel confident. In any scenario, we definitely will deliver our guidance, and if things are better than expected at the moment, might even have upside potential. With that, I hand over back to Martin. Thank you for joining us, and now we are happy to listen to your questions. Operator, you initiate the Q&A session, please. Okay, thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. First question is from the line of Alexia Dogani from Barclays. Please go ahead. Good morning. Thank you for taking my questions. I had three on DHL Express, please. Just firstly, clearly this is one of the divisions that has materially improved its performance to pre-pandemic levels. If you can kind of talk us through what kind of industry dynamics do you see? Clearly, we've seen UPS and FedEx both talk about, you know, kind of revenue quality, having no significant growth CapEx planned. What does that mean for the stability of the industry and therefore your prospects within it as the industry leader? Secondly, I think we've talked about before, that a lot of that performance has been driven by strong volume growth, initially B2C, but kind of supplemented now by the B2B recovery. I think you've said in the past that there is still some volume in the network that would not naturally be suited to the express network. I'm kind of thinking tires, for instance. Do you have a sense of how much that stuff still represents in your volume mix that we can take a view of whether it stays or not? Finally, a more short-term question. I was a little bit surprised that in Q2, the margin didn't improve from Q1 more because of the introduction of the surcharges and the timing. Why is that? When we look forward, is there a positive tension between the surcharging recovery and the fuel price coming down? Thanks. Thank you. Alexia, may I take number one and three, and Melanie takes number two. You know, you answered your question almost rightly. You know, we have a very healthy industry dynamic. You know, we have been clear for a while that we wanna compete on service quality and not just volume, gain share or something. That's the reason why we have very diligently on pricing and yield. UPS joined us already a while ago. Now FedEx wanna join us in that game as well. I think that's very good news for the overall industry, that we wanna compete on service quality and not on volume. I think that creates tremendous opportunities for us, going forward, because we, as you said, we are market leader, globally and of course will benefit from the global recovery. On the margins, you know, I have said that in many discussions with investors as well, don't go too much obsessed about a quarterly margin development because we will see distortion due to many reasons. Why the margin in the second quarter is not as strong has several reasons. First, we had, you know, imbalance in the network. We had high price increases which we couldn't push immediately through. We have a currency headwinds because we pay everything in dollar and you know that euro has weakened and therefore you should look into margin developments year-over-year, not quarter-over-quarter. But fundamentally you are right. You know, the worst is probably behind us with regard to that. Year-over-year we should see a normalization then in the second half in Express. You know, the quarterly comparison, you can also see that in the first quarter and, you know, the more important thing is and we have seen that in the past as well, you know, do we see good trajectory year-over-year on the margins? We think we will have another very good year in Express with regard to the margin. With that, I hand over to Melanie. You know, maybe she has some more information about the mix in the air. I doubt that we have that at hand, but anyway. I mean, just maybe to kind of like add to the margin question because it's even more extreme. For me the express margin is of secondary importance. The important topic for me is the absolute number, right? Because like I said before, many times, the denominator in the margin is inflated or deflated by revenue, by future charges, by currency and many different factors. The important thing is what's the absolute EBIT number? I think here, I'm super pleased that also in this quarter where we have the lockdowns in China, where we had the significant increase in fuel, where we have a two-month time lag until we can pass it on to the customers, where we had currency headwinds, that we still delivered EUR 1.1 billion. I'm actually quite happy with the express results. Just one addition because that's also kind of like one of the nice additional information we give in our IR stat book. When you look for example at the whole currency topic, which we normally don't make a big fuss about because that is something you just have to manage. But for the quarter, a third of the express revenue growth was actually currency related. EUR 340 million out of the EUR 1 billion increase was actually currency. That was a tailwind on the top line. Actually, in the case of Express, it was a significant headwind on the EBIT, and they still digested that and delivered the EUR 1.1 billion. Just to put it into perspective. On what are we seeing in terms of weight dynamics. Yeah, so I mean, we are seeing a bit of a normalization overall along the supply chains, that some of the heavy stuff, which had moved into the Express network, is going back into air freight. Some of the ocean freight stuff, like docking stations, which had traveled with air freight, is now moving back to ocean, because the reliability is getting a bit better, on the ocean freight side. It's something which, from the Express perspective, the team is managing very well. We are still seeing, due to the B2B factor, a good impact, on the weight side. It's not that we have significant withdrawal to expect here. I think it's more of a moderate normalization over time. Excellent. Thank you very much. I think those were kind of like, yeah, I think obviously that's a big topic. I think the fundamental message from us on Express is, yes, some of the tailwinds which we saw in the second half of 2020 and 2021, the very strong volume growth have become more difficult. I think we are really managing this new environment very successfully experienced team. Excellent. Thanks. Thank you. Alexia. Operator, the next call. The next question is from the line of Samuel Bland from J.P. Morgan. Please go ahead. Good morning. Thanks for taking the question. I have two, please. The first one is, the 2024 guidance. Do you think that's still achievable, if we have that sort of sudden sharp GDP deceleration scenario in the second half of 2022? The second question is, talk about sort of by 2024 having more balanced freight markets. I guess that might be a headwind to forwarding margins. Do you think that will have much of an impact on TDI pricing as freight markets become less congested, less disrupted? Thank you. May we give both some flavor to that. On the guidance, you know, it's so difficult. The earlier, you know, you know, a massive drop in economic activity happens, the stronger 2024 will be, as we have seen, and the later it comes, the more challenging it will be. It's quite unpredictable. That's the reason why we came to the conclusion that we probably will be out of the woods in 2024. That's the reason why we, at the moment, can say yes, you know, we can probably continue to deliver that. If things are happening later, then the situation is different, but then the outlook for 2023 is better. It is unpredictable. Before we change something just for the sake of change, not knowing what really will happen, we believe that it's at the moment the most realistic scenario that you know we probably will be out of the woods by 2024, and that's the reason why we can deliver that result. On the second thing, I think the impact on TDI is significantly less than on freight because we intentionally have never squeezed the margin to the extent we could. We kept our customers on the airplanes with TDI products despite that we could easily sell the freighters for higher prices in the air freight market. We have done that by intention because they, our customers understand what our cost base is in the airline industry because we operate them dedicated, and that's the reason why we have not squeezed our margins. The margins benefited from squeezing prices or pushing prices up to the extent which was possible. We haven't done that. That's the reason why if things are normalizing, the negative impact on yield will be significantly less in TDI than it's in air freight. Maybe, Melanie Kreis, you want to add something in addition to that? Yeah, I think, I mean, when you kind of like look at the whole pricing in Express, and I think that's a bit linked to Alexia's question on the industry dynamics, right? It's an industry where we have a finite number of players and they all operate very expensive fixed-cost networks. I think having a good fundamental pricing discipline has been always absolutely paramount. We are doing that through our general GPI where, of course, this year when we go into the GPI season now in the fall, we will take the inflationary effects fully into account. That is something which is not going to go away even if kind of like the air freight markets normalize. What has been unusual and really due to the distorted aviation market has been this emergency service surcharge, where, however, we have not overdone it, as Frank said it. We have always used that as a cost offset. When things normalize and the cost base also normalizes on the aviation side because there's more belly space available and so on, then we will see the positive impact on the cost side. And then we will work with the ESS, which may actually be then one point in time where you will see kind of like a contracting effect on the top line and the margin booster, even though that doesn't immediately have an impact on the absolute number. Another reason why the EBIT margin is taking this with a bit of caution. To put it all together, fundamental underlying pricing discipline will make sure that TDI pricing is going to hold up going forward. Then some of the extras on the surcharge side will normalize over time if and when markets get more normal. Understood. Thank you very much. Thank you, Sam, for giving us the opportunity to also cover that. Next caller, please. Next question is from the line of Muneeba Kayani from Bank of America. Please go ahead. Hi, Muneeba. Good morning. Just going back to the earlier questions, is it possible to quantify how much benefit Express had from kind of spillover from air cargo and then whatever you were selling on the general air cargo market, and that kind of normalizing is my first question. Secondly, on the TDI, revenue per day being up 15% into Q, can you help break down how much of that was driven by weight and how much was the yield? Thirdly, in your 2024 outlook, kind of what have you assumed for Express volumes and margins for Express? Okay. Yeah. First of all, on the impact of the heavy stuff and the air freight market mix, I think there are two elements in here. First of all, how many heavy shipments do we have as TDI shipments really traveling express with us? There we had a bit of a inflow, but I think it's really nothing you should overestimate. I think what we have now seen in terms of weight development has been more a general rebalancing between B2B and B2C shipments. The big difference is that B2B shipments tend to be twice as heavy as B2C shipments. Whenever you have a stronger development on the B2B volumes, or a stronger decline on the B2C volumes, that has an impact on weight per shipment, and that was much more pronounced than the spillover effect from the air freight industry. On the second part, we are indeed selling off empty excess capacity into the forwarding market, and that's an area where we have benefited from the high rate levels. That is something which we manage as a cost offset. That has been one of the factors to help us offset the higher cost of flying overall. That has not been enough to cover the increase, and hence we have put on the emergency service surcharge to help make sure that the aviation costs in total after the ACS offset is adding up. In terms of yields, yeah, we always peel the onion and try to compare kind of like the previous year revenue composition, like for like, when you kind of like adjust for trade lane and weight and all those effects. Then we come to something which we call the base yield increase. Here the positive news is that this is very much in sync with our announced price increase. It is in the mid single digits, exactly where we want it to be. In terms of outlook for 2024 and what have we assumed for Express, I mean, like everybody else, we're doing a zillion scenarios at the moment. I think the good thing is on Express is you can get to a solid number through a number of combinations. Yeah. If we see a stronger economy with more volume, then we of course have to add additional costs. If we have kind of like lower volume, we will fold in costs. The Express number contributing to the midterm guidance is relatively stable under a number of scenarios. I think the important thing is, fundamentally, after all these normalizations, we do expect that Express will return to around mid-single-digit% growth rate, which we had always given you in the last capital market presentations. John will talk more about that on September eighth in the Express tutorial. Thank you. Thank you. Thanks, Muneeba. Next caller, please. Next question is from the line of Clémentine Flinois from Bernstein. Please go ahead. Hi. Good morning. I have three questions, please. First, continuing on Express, how do your freight loads evolve? Well, we have seen chargeable weight go down and the capacity go up. I get that the load factors are also going down. How does it evolve for you this quarter, and how are they in July? Second question is that your exposure to end industries in TDI and Express, how do you see them evolving? Final question on Air and Sea, contracts. What are you seeing in terms of contract length? Are they evolving more towards long-term one-year contracts or are they still very much on the spot at the moment? Thank you. Thanks, Clementine. The line is a bit shaky. I'm not sure we got the second question, incomplete. You're asking for the exposure to what? To end industries on P&P and Express. What industry are you in Express? Industry. Vertical mix. the vertical mix. All right, good. Thanks. Yeah. Maybe I take the last one and Melanie takes the others. We have seen a significant trend, particularly in the air freight and the ocean freight industry to longer contracts. You know, with rates coming down, of course, you know, this will now move in the other direction again, but we are definitely not a spot market business again yet. What we have done is, of course, when we had committed long-term contract with carriers, we have back-to-back contracts with customers as well. Nevertheless, there will be obviously a discussion with regard to that. Of course, what happened is in the moment when the market gets tight, the willingness to sign long-term contracts is big. If now the markets are turning the corner, we see the opposite trend. I think that needs to be managed in the same way as we have managed the other way. I think the air freight team is very well equipped to do that somehow, because, you know, we have not, you know, bought capacity without having clear commitments from customers for this capacity. Maybe that gave you some opportunity to find some data for the other two questions. Yeah. On the express weight load, I mean, we have seen a very dynamic development in the express network in the last month. Obviously after February twenty-fourth, we had to rejig the network to kind of like accommodate the overflight ban on Russia. We had to kind of like deal with losing the Russian aviation capacity. We had the China lockdowns. It was very dynamic and there are quite a number of differences when you look at the different trade lanes between the weight load factors. I think on balance, we are still holding the weight load factor at a very good level when you compare it to historic weight load factors. It's no longer at the kind of like super optimal perfectly utilized level, which we had kind of like in kind of like the second half of 2020 going into 2021. With regard to factors, that is also difficult to answer. Kind of like in total, we've seen quite a good growth, for example, in retail, in our Supply Chain division. We are seeing the e-commerce normalization, for example, the fashion down trading, in Post & Parcel Germany. We see a very strong balance still across our Express network. There's not one factor I would really want to pick out, overall here. There's no single sector exposure. Yeah. I think exactly one of the reasons why you see this resilient performance, of course, in each customer industry, there's always something for or against them. If you have a broad exposure to each and every industry like we have, then this pretty much balances out. All right. Clémentine, okay? Yeah. Perfect. Thank you very much. Great. Next caller, please. Next question is from the line of Sathish Sivakumar from Citigroup. Please go ahead. Yeah. Thank you again. I've got three questions here. Actually, one is just related to the follow-up on the exposure by vertical. Within your B2B footprint, right, can you comment on what is your European industrial customer exposure? Not just in Express, actually across all segments. What has been your discussion with those customers in these verticals as we go into, say, H2 or Q4? The second question is on supply chain. What is your cost exposure to energy? Given that it's more warehouses and like, quite energy intensive, right? After labor cost, probably that would be your biggest cost input there. Given all the energy costs are outpacing inflation, how does this impact your contracts, both open and closed book portfolio? Would you even able to pass on the energy related cost here? The third one on the Post & Parcel, in Q2, the parcel segment has seen a pricing up by 3%. How should we see this evolve into H2 and catch up with the inflation? Thank you. Okay, in terms of exposure to the European industrial sector, I have to say I don't have the number readily available because I mean, as Martin said, we have a very broad base across different customers and verticals. It's not kind of like the one dominating exposure. It is an element in there, where however, quite frankly, we haven't seen a dramatically negative development at this point in time, either. May I add to that even, you know, that we don't have that information at hand shows that we are not managing along these lines because it had not been historically a problem. We are not looking in the respective development of certain sectors. Because what we have seen is that obviously there are some sectors stronger and others weaker, and on balance, it had hardly any impact on our P&L. That's the reason why we don't know this information, Melanie and I, because we don't manage along these lines because it has proven that it's not necessary. On your second question, the kind of like energy risk in supply chain. I mean, first of all, energy for us overall is not a super significant cost driver. Yes, I mean, when you look at Express, you have the fuel impact, but neither division has kind of like energy costs as the main cost factor. In supply chain, we are, in most cases, actually protected through the contracts. In the open book contract is very simple because open book contract means that you pass the costs on to the customer, so that's not a problem. Even in the closed book contracts, in the majority of those contracts, we have energy price adjustment mechanisms. Again, it's something which has to be managed, but it is something we feel quite confident that the team is on top of it and can deal with that. On the parcel pricing, we did a bit of a price increase for kind of like the standard rate card customers and the discounts at the beginning of the year. We did an increase now on the first of July for the private customers, which is a small portion of the parcel volumes that will come into effect. The big discussion is now what to do in terms of parcel pricing for 2023. Just to clarify, then the next big uplift in parcel pricing would be start of next year? Yeah. We felt that, I mean, for our customers, that is also something where they need also planning security. Of course, I mean, when we now have a very large customer, their contract is up for renewal, then of course, energy prices and general cost inflation is discussed as part individual price negotiation. In terms of adjustments to the general rate cards, this is something where like in Express we have now gone for a yearly price adjustment mechanism. The big activity would then be at the beginning of next year. Okay. Yeah. Thanks, Melanie, Frank, and Martin. Thank you. Thank you. Thank you. The next caller, please. Next question is from the line of Andy Chu from Deutsche Bank. Please go ahead. Good morning, Frank, Melanie, Martin. Two questions from me, please. Could you give us a EBIT number for the Hillebrand acquisition for Q2, please? In terms of the DHL Express Chinese disruption, what do you think that was, please, in EBIT terms, in Q2? I guess that potentially will flow in into the next quarter. Thank you. Okay. I can be very precise on your first question. The underlying EBIT contribution from Hillebrand in Q2 was EUR 37 million. That was better than what we had assumed. I mean, we had always talked about kind of like 100 million run rate for a full year. We were very pleased with the 37. That was not the net impact in our P&L in the first half of the year because we also booked transaction costs. A rough order of magnitude, not just in Q2, but kind of like across the last month, is around EUR 20 million. Fundamentally, I think Hillebrand is well on track to deliver and over-deliver on what we had assumed when we negotiated the purchase price. On the China topic, that is really difficult to kind of like put an individual number on because there are so many moving parts, also around the aviation cost impact that all had. I would say the important number for Express as a network business at the end is the 1.1, the overall EBIT achieved even under those circumstances as a network in Q2. Andy? Happy with that? We lost him. We lost him. Okay. Maybe Andy returns. In the meantime, operator, please to the next caller. Next question is from the line of Johannes Braun from Stifel. Please go ahead. Yes, good morning. Thanks for taking my questions. First question would be on the working capital in Q2. Want to better understand that working capital build up of more than EUR 800 million in the quarter. I think it was more than EUR 400 million higher than last year. Was that more driven by volume or more by pricing? And also to what extent will that EUR 800 million unwind later in the year? Second question, any new thoughts on the upcoming wage talks for the German staff? Then thirdly, obviously, we have seen a lot of chaos at European airports the last weeks and even months. Was that impacting your operations as well, or was your operation more or less isolated? Because I guess the Express hubs are outside of the main passenger hubs in Europe. Yes, may I take the second and the third. The wage discussions, we can't judge yet what really will be the demand. It starts only in January. You know, we will now monitor, of course, what happens in other industry, with what happens with Verdi and other sectors. You know, inflation, let's see how the inflation develops in the next weeks, because, you know, there are also some trends which are heading in the other direction. As you see, you know, the commodity prices are coming down in some areas at least. We don't know yet. It will definitely a difficult discussion. But of course, it's linked as well what we will do then on pricing for parcels, at least on postage. We, you know, we have no opportunity to do something. It will be, of course, an interesting discussion. You know, the importance of that is relatively less than it was in the past. If I see just the second quarter, you know, the profit of P&P, despite that it was not a bad quarter, is just 10% of the total. Therefore, the impact, of course, for the group is significantly more limited than it was in the past. You know, I think at the end of the day, we probably will find a reasonable solution. You know, the union understands that as well, that, you know, the profits are not growing in that sector that much as in the other sectors. On the hubs, we have not seen a significant impact. In many places, we control ground operation anyway ourselves, and we have not seen real impact from that. We have seen impact from the tight labor market, but we have started already early to hire also in Germany from people from other countries where particular youth unemployment is higher than in Germany, and we will continue to do so. The express division is great place to work, number one, and that is visible in the market as well. You know, it's the labor markets are tight, but as I said earlier, that's good news, not bad news, because that is a significant stabilizing factor for the economy. We have not seen any major disruption due to the problems. You know, I would even say, people said always that we are the beneficiary of the COVID. You know, we have seen volumes up 50%, then down 25%. We lost overnight the Russian airplanes, and we had to manage that as well somehow. We had uncertainty, more volumes than I think some airports and passenger airlines. I think, you know, we have managed it very well. Our team is operational excellence, and that what we see on a daily basis. They cope with these problems instantly. That is, and I'm proud of that, you know, the folks have done in all divisions a great work. Despite the tremendous unpredictability of volumes, they cope with that, not only financially but also operationally. I think that's a great sign of the strength of the company. On the working capital question. Indeed, we had more than EUR 800 million cash out from working capital in Q2. We're monitoring that very closely. It was actually EUR 450 million worse than Q2 last year. The main contributor here is third-party trade receivables, where we see the general volume the general revenue trend coming through. It's not volume-driven. It's kind of like the same stuff which drives the revenue also surcharges and so on, which need to be collected. Clear expectation is that we will see an easing in that line in the second half of the year. When you think about our cash flow guidance, there is actually quite a natural hedge. Should there be a better EBIT performance, we will also have better OCF before changes in working capital. We probably also have revenue growth, so it will be a bit more of a drain on the working capital. If the economy slows down, we have less revenue growth, and hence less OCF before changes in working capital, then we will see a release in working capital. That's one of the reasons why we're also quite confident on our free cash flow guidance for the current year. Okay, perfect. Thank you. Okay. Alex, next call. Next question is from the line of Nikolas Mauder from Kepler Cheuvreux. Please go ahead. Good morning. Three questions from my side, please. First one is on space utilization in your supply chain business. Can you please comment here? Assuming it is high, can you perhaps split it into the effect of pull forwards from customers worried about even higher prices in the future, some even overstocking maybe on the one hand. And on the other hand, to what extent it is driven by structurally higher inventories across verticals? That's the first. Then two questions, shorter ones, regarding earlier messages on the tickers. You said you're looking at M&A based on your strong balance sheet. Has this been narrowed down in recent months? Anything specific you're looking at? Then finally, you already recognized EUR 31 million impairments regarding your Russian operations, and there's supposed to be more to come in Q3. Can you quantify that, please? Yeah. Maybe Melanie, you have better insights in number one than I have. In Russia, you can comment as well. Usually on M&A, I think we have last time at the page or maybe the release of the annual numbers, we talked about our clear strategy that, you know, we wanna do something which is strengthening our product offering. Hillebrand and Cameron are great examples for that. They should be straightforward, integratable, which we can see with definitely already Hillebrand, and they should be accretive pretty rapidly. That's, you know, how we look into that. We are not making a big search and say just we wanna buy something just to buy something. We do a search and look into where we can get really these benefits from, and there's always some activity going on. At the moment, we have some smaller activities we are looking at, but it's not clear yet if that materializes or not. We have done that in the past as well. Where you probably are referring to that, of course, if you say the press, you have a strong balance sheet in conjunction with M&A, they'd immediately be suspicious. The truth is, we don't have a need to do something, but we have the opportunity to do something, and this is how we will manage that somehow on M&A. Yeah, on the first question, space utilization and supply chain, that's again a question which is super difficult to answer in an aggregated way because when you think about a consumer warehouse in India, that's a completely different story compared to a high-tech warehouse in the United States. I think the common trend is that our customers in all divisions, but of course very strongly also in supply chain, are interested in making their supply chains more resilient. They're talking with us about optimizing their warehousing setup in general with more of a medium term perspective. I don't think we see any current mega abnormalities. There's a clear trend for more strategic thinking about how to manage inventory across the supply chain in a more resilient way. With regard to Russia, we impaired the fixed assets in the first quarter. We haven't had any material impact in the Q2 numbers, and we now expect that as we ramp down our domestic express business in the third quarter, that we will see a negative impact both on the P&L on the cash side. That should probably be in the same order of magnitude as what we talked about for the fixed asset impairment in Q1. Mid-single-digit EUR millions, order of magnitude, which is totally manageable, and which we have, of course, also factored into our guidance. Thank you very much. Yeah. Thank you. Thank you. Next question is from the line of Cristian Nedelcu from UBS. Please go ahead. Hi. Thank you for taking my questions. The first one on Express. Over the last 1-2 months, have you seen any trends in Europe in Express of your clients trading down to cheaper deferred products? Usually, we saw this during past recessions. Secondly, in Express, you mentioned earlier that in the price negotiations this year, at the end of this year, you will include the higher inflationary pressures. Historically, you raised list prices in Express 5-6% every year. Is it fair for us to assume now another 4-5% on top of that just to account for the higher inflation for next year? The third one, if I may, looking at your scenario for this year with a sudden drop in GDP, that implies in the second half of the year, you will have an EBIT of EUR 3.3 billion. Now, if 2023 is the recession year, can we annualize this and say that EUR 6.6 billion is an annual EBIT floor for a sharp recession or any other moving parts there? On the first one, no, we don't see kind of like a fundamental down trading in Express in Europe towards cheaper means of transportation. I think we are, of course, watching closely the general volume development. As I mentioned, there are some signs in the last 4-6 weeks both in DGF and in Express that volumes are getting a bit softer on the demand side, but we don't see that as a consequence of people are looking for cheaper ways of transportation. On the Express GPI, this is a very structured, well-established process where we really go through it country by country, looking at the inflation on country level, looking also at what the currency is doing in the respective country. John Pearson, the Express CEO, is personally involved in this, and we will really have this differentiated approach. Hypothesis, I think, correct that the aggregated number will probably be a bit higher than around 5% you saw in previous years. It's too early to now say, will it be kind of like +3, +4, +5%. That will be the outcome of this structured process. In terms of extrapolation from a potential recession scenario, second half 2022 EBIT into a 2023 EBIT, it's too early for that. We will give the 2023 guidance next March, as always. I think the key message, which you also see in the title of our presentation. We feel that we will stay on a new level compared to what it was three, four years ago. Details to follow in March for 2023. Excellent. Thank you very much. Thanks, Cristian. I think there's one final caller on the line. Yep. Next question is from the line of Sumit Mehrotra from Société Générale. Please go ahead. Thanks [audio distortion]. Advantage of being the last, good questions already asked. I'll venture one. Have you assessed a little bit your exposure to the geopolitical tensions, should they come through for Taiwan and China? What kind of resilience mechanism would you have in place? Will all the divisions be equally impacted or some more than others? Some thoughts on those. Secondly, without making you look like a bad negotiator, you mentioned M&A. You know, do you think the valuations by and large are better than they looked last year? Thank you. Yeah. Of course, we are monitoring not only just, like, the trip of Ms. Pelosi to Taiwan, the situation, and of course, it is always on our radar what these dynamics have. I think, we don't know what the impact might be for that. You know, there is a mutual dependency of China and U.S., on trade at the current stage. Anyway, the answer to that is, I think what we have to do is we have to keep our global network in good shape because if we see movements here and there, then we should balance that somehow. We have seen that already due to the lockdowns. We have benefited in other parts of the world by movements of our customers to other locations. That's a strength of the company. Of course, if we have really a more intense, you know, sanctions between China and the U.S. or whatsoever, you know, that has impact on global economy and will impact sooner or later on us as well, but not more, probably less on us than on other companies because we have other activities in other places somehow. We monitor that. If you ask the divisions, Supply Chain has sold their China business a while ago already to SF Express, as you might remember. DGF and Express have significant footprints in China. eCommerce Solutions and P&P of course are not present there somehow. There is a different exposure of the divisions to China. The divisions I've mentioned, of course, are very strong in other parts of Asia as well. As we have seen in the lockdowns, you know, we have seen significant volume drops in temporarily in China, and still both divisions had very good results because they can move stuff to other places that we could support. But overall, if there are more tensions between China and the U.S., that's not good news for anybody in the world. Then maybe on the M&A question, I mean, our approach to M&A has been and will be, we are interested in high quality assets at the right price. We are not in a position where we strategically need something under all circumstances and would be willing to overpay. When you look at the Hillebrand acquisition, as I just said, in terms of what they now delivered in the second quarter, that's actually better than what we had assumed in our business plan. We feel that both with Hillebrand, but also with the acquisition in Australia, we acquired high quality assets at a fair price. Actually, I think multipliers are coming down. You can see that as well in our stock, but also on our competitors. It looks like that there is a normalization of multipliers, which should create better opportunities going forward. Thank you so much. You're welcome. All right. Well, thank you. Thank you Melanie, Frank. Thank you out there for the very focused Q&A session. I'm looking forward to seeing you all or most of you September eighth in Cologne for the Express tutorial and the hub visit. With that, I wanna hand over to Frank for the closing remarks. Yeah, nothing too much to add. Resilience on a new level, I think, is what we called the presentation today. I think we have really demonstrated that despite all the challenges, you know, we have seen in the last three years, we are pretty robust against any of these crises, regardless what it is. I think that shows the fundamental strength of the company, which is based on, you know, that we are people-centric, employee-centric organization, and the people have done a great job in the last two years to really deliver great service to our customers. That is a base, I think, for future success. In any case, we can't influence what is happening in the world. We can only influence what we can influence, and that's our own business. I think we will continue to use our strength to continue to invest into our capabilities. I think we will gain even more, or we will gain equally as we have gained over the last two or three years relatively to the competition. With that, I wanna like to thank you for participating and, you know, hopefully sooner or later we can see each other again once in a while in a personal meeting. Thank you for today, and have a great day. Bye-bye. Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant rest of your day.