Deutsche Post AG Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alexander Irving - Sanford C. Bernstein & Co. - Analyst : Hi. Good morning. Two for me, please. First one is on the 2025 guide. Since you didn't change that, can we interpret this as being that April has tracked largely in line with plan at the ACS and the EBIT level? My second question is on DGFF. It looks on the volumes that you've lost share in forwarding. Why would that be and what are you doing to address it, please? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 8:00AM, DHLn.DE - Q1 2025 Deutsche Post AG Earnings Call

Question: Alexia Dogani - JPMorgan Chase & Co - Analyst : Thank you. Good morning. Just two questions as well. So firstly, notwithstanding the comments you just made, Tobias, could you just give us some indication of what you're seeing in terms of bookings out of China currently or maybe in April? And what you see as the opportunity to reallocate some of the lost booked volume from other locations in Asia? And kind of subsequent to that, do you think, overall, given your low exposure to the China to US trade lane, do you think the current situation can actually provide more opportunity than challenges in the current environment? So that's my first question. And then my second question is slightly similar on the 2025 EBIT guide. And I think when you introduced the Fit for Growth cost program, you indicated that most of the benefit will potentially come towards the end of the year. But today, the Express performance was quite strong supported by cost action. So maintaining the guidance and change, is it because you're seeing better cost capture faster that may offset some weakness in kind of current trends? Or how should we think about, yes, the cost versus revenue trade-off? Thank you.

Question: Alexia Dogani - JPMorgan Chase & Co - Analyst : Thank you, Melanie. Can I just ask a follow-up on the wait-and-see approach that Tobias mentioned? Do you think there's a credible scenario that if things kind of materially de-escalate on the level of tariffs that there is a bit of a bullwhip effect of your customers kind of suddenly reordering very quickly, whilst there has been some near-term capacity adjustments if I think about ocean freight blank sailings, if I think of Express taking some capacity out, just kind of your view on that potential scenario?

Question: Cristian Nedelcu - UBS Investment Bank - Analyst : Hi, Thanks very much. Could I please ask a few questions on Express? Firstly, one of your competitors yesterday talked about the second quarter revenue declines and around 400 basis points of EBIT margin erosion in Q2. Your exposure on China-US does not seem very different to theirs. So could you offer us any color on your expectations on Q2 Express? Secondly, remaining on Express. Could you please tell us what percentage of your Express imports into the US are clearing customs under de minimis? And your chart is very helpful, but could you also tell us total US inbound, what percentage of your Express volumes roughly, I think you alluded it's not that much, but if you could offer us some numbers? And the last one, if I may. We've seen the -- in Express, the dedicated freighter capacity and block hours, I think, down 4%, 5% for a while now. I think you started around the middle of last year, if I remember well. Starting the May 1, could you tell us a little bit how you're thinking about capacity in Express? How much is the -- how is that developing year-over-year?

Question: Patrick Creuset - Goldman Sachs Group, Inc. - Analyst : (inaudible) Congrats on the Q1 performance. Just two questions on Express. The first is can you talk a little bit about the weight per shipment trends that you see in Q1, but also to the extent you can go into Q2, I mean, you alluded to some customers shifting to higher value modes of transport. That's the first. Second, you've talked about your limited China-US exposure but I think you have very strong market positions in Southeast Asia. To the extent you can, can you quantify some of this? I mean some of the market shares you have there, your percent of your network, percent of the Asia network, trends you're currently seeing. And big picture, to what extent essentially strength in Southeast Asia offsets the sudden stop in China-US trade?

Question: Patrick Creuset - Goldman Sachs Group, Inc. - Analyst : Okay. Just a quick follow-up, if I may, just on the weight trends. Do you see those underlying dynamics continuing post Q1? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 8:00AM, DHLn.DE - Q1 2025 Deutsche Post AG Earnings Call

Question: Cedar Ekblom - Morgan Stanley - Analyst : Can you guys hear me?

Question: Cedar Ekblom - Morgan Stanley - Analyst : Perfect. Right. I just wanted to shift to the freight forwarding business. It was an area of weakness in the first quarter and it really look down to the cost element and also that land freight business. Can you talk a little bit more about how we should think about tailwind from cost improvement as we move through the rest of the year? How should we think about the evolution of the conversion margin in that business, which took quite a big hit in Q1? So will we be thinking about conversion margins being meaningfully down on a full year basis? Or is there a scope to recover some of that weak start at the beginning of the year? Thank you.

Question: Andy Chu - Deutsche Bank AG - Analyst : Thnak you. Good morning. Just one question for me, probably for Melanie. So profits are up, but the CapEx is down and the guidance is maintained. In sort of past periods when there has been uncertainty, the sort of CapEx has been sort of cut to protect free cash flow. So it feels to me there's a little bit of a sort of conflicting signal between actually the business is doing pretty well in a tough environment at the profit level but CapEx is going the other way. Maybe you could just comment on that, please.

Question: Andy Chu - Deutsche Bank AG - Analyst : That's helpful. Maybe just one just quick follow-up on the guidance. And Melanie, although you gave formal guidance in previous quarters, particularly last year, you did give an indication for quarterly group EBIT, which typically was around about EUR1.3 billion for the first three quarters of last year. Is there any sort of help you can give us this time around, any indication of how we might think about modeling Q2 in a very volatile environment?

Question: Muneeba Kayani - BofA Securities - Analyst : Can you hear me now?

Question: Muneeba Kayani - BofA Securities - Analyst : Okay. Great. Good morning. So firstly, on Express and kind of a bit of a follow-up to the earlier questions around what we heard from your competitor yesterday on their international business. They talked about a kind of lower demand related surcharges in 2Q. Can you explain to us kind of how your demand surcharges have worked in Express? I don't think you have one currently and also how you would think about those through the course of this year, understanding all the volatility and uncertainty that you have talked about. And then second question, we've heard from a couple of companies and industry sources that China, US volumes are down something like 30% or more, but that's being offset by increase in volumes in other trade lanes. Would you agree with that? Is that what you're seeing across your Express and Forwarding businesses?

Question: Marco Limite - Barclays Bank - Analyst : So first question I've got, so you have mentioned before that you're seeing a shift to higher value model transport. But one of your competitors, yes, they was actually mentioning that there will be a shift from air to sea, so opposite direction. So yeah, just if you could give a bit of color on that. And second question is on your follow-up on the road freight business. When do we expect that to say turn around? Or how long we should expect, let's say, negative EBIT? And what are the expectations for the year? And third question is on Express capacity management as well. So you have improved the utilization of your capacity in Express. One, is that the stated target for the remaining part of the year and how easy is to do that in the current environment, which obviously is more volatile than Q1?

Question: Marc Zeck - Kepler Cheuvreux - Analyst : Good morning. Thank you for taking my questions. Just a couple really left for me. You talked about extra costs in road freight forwarding in Germany due to system transition. Can you quantify this cost? Then a similar question for actually the letter business in Germany. Can you quantify what was the EBIT boost from the election, if there was any? And third question really on de-minimis. I would expect that you got some boots on the ground that talk with US customs. Do you feel that US customs this time around is better prepared to handle the changes to the de-minimis unlike like 2-months ago or so where they were utterly unprepared? That's from my side.

Question: Oliver Holmes - Redburn Limited - Analyst : Well. Thanks for squeezing in. Just a quick one. I was just wondering if the current volatility is potentially delaying execution on your 1 billion plus cost out program? I know there were some good stats that you provided, but is there any risk that the volatility is impacting that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 8:00AM, DHLn.DE - Q1 2025 Deutsche Post AG Earnings Call

Question: Michael Aspinall - Jefferies - Analyst : Good morning. Sorry for that. Just sneaking a couple of quick ones in. I mean, hopefully you pointed out some of those services you can provide to your customers. Can you give us a quantum of order of magnitude in terms of how big those products and services like bonded warehouses or Break Bulk Express are currently? And just if you have capacity or the capability to increase those services materially?

Question: Michael Aspinall - Jefferies - Analyst : It's helpful. You would have the capability to increase services in line with demand if required?

Question: Michael Aspinall - Jefferies - Analyst : Okay. And then one, you may not be able to provide maybe more color on this but I'm just thinking again about the kind of US in terms of CDI. Do you have a sense as to how much or what kind of proportion of those shipments you need to ship to other destinations of both countries? I'm just trying to get a sense of how critical those deliveries or components are for your customers to continue to get, for example.