Deutsche Post AG ($DHL)

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

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

Good morning. I'm pleased to inform you about a good quarter. We started with good momentum in the year of 2026 building already on the trends of Q4 of 2025. So group revenue increased 2% on an organic basis, and this is led by DHL supply chain, especially very good momentum in the Americas and our e-commerce division. Group EBIT is up a good 8% year-on-year. Here, Express made a particularly important contribution. It's the seventh consecutive quarter of EBIT growth in our Express division. And we are on a very good momentum as it relates to the strategy and what we wanted to achieve in DHL Express. And you also see good cash flow in the quarter. So good earnings quality with a free cash flow of EUR 1.2 billion, which for Q1 is a very good figure for us also if you compare this historically. This has been a quarter that has been, again, quite volatile relates to the external conditions that we had to deal with. We obviously had the conflict in the Middle East. That impacted our operations there. Now this is a relatively small part of overall group revenue. But there are obviously a broader implications, especially as it relates to the trade lane from Asia to Europe. I think we have been able to deal with that very well. It was a quarter with excellent quality and excellent customer feedback. So I'm very proud how our colleagues in the Middle East have handled the situation but also more broadly how our operating divisions have reacted to the changing environment and continue to execute on the measures that we've talked about earlier, the ability to shift, especially in our asset-intensive Express network to continue to work on cost and structural improvements as well as the established yield mechanisms. We're also making good progress as it relates to the execution of our strategy despite demanding day-to-day -- we are continuing to execute on Fit for Growth measures, the implementation of AI being part of that, but also the legal setup of the group, which will be voted on during the AGM, at least this part measure that relates to P&P. And we have continued to invest, especially in our Supply Chain division. This was a very good quarter in terms of customers signing. And as a result of that, we continue to invest to build the infrastructure that is needed to support those operations. So overall, despite a difficult backdrop of external factors, I think a really good quarter and a good start into the year. On Page 3, some more details on how the situation in the Middle East impacted us. Obviously, in the short term, with such a tragic military conflict. Our concern is about the safety of our employees. But then to continue operation for our customers. We obviously had a significant volume shortfall, activity shortfall in the initial 2 weeks of the conflict, logical outcome of that military activity and the closure of airspace and sea routes. After that period, we saw volume recovering. Very good reaction, which I'll talk about in a second in terms of how we handle the situation operationally. And that also brought some opportunities. But now in this space in transitioning to the long term, I think a worry across the industry and more broadly regarding the macroeconomic impact that the situation has, especially as it relates to the price of energy for us, that being especially the price of kerosene, jet fuel and diesel. Page 4 gives you a little bit of details and the sense of how we operationally reacted to the situation on the air side that being Express in global forwarding air freight. In Express, our regional hub is in Bahrain, which was obviously significantly impacted by the military activities with air space being closed for several weeks. We shifted operations using Riyadh and Muscat as primary airports of entry for our dedicated fleet, which we're able to evacuate some aircraft out of Bahrain after some days into the conflict, and those then being productively deployed into Riyadh and Muscat. So the network -- road network that we have in the region was extremely helpful in this situation to connect via road, Riyadh and Muscat to those areas, the UAE, Qatar, Bahrain, but also Kuwait, where airspace was closed. So that enabled us to provide good service to our customers and given that not all competitors were able to provide such a setup -- it was also visible that our customers were very pleased. On the ocean side, a similar setup with ports in Oman and the Red Sea ports of Saudi Arabia being used for ports of entry into the regions. And then we secured additional trucking capacity very early in the conflict to distribute containerized cargo across the region. Obviously, with the Straits of Hormuz still being closed on the ocean side, there's continued disruption and still cargo that has not reached the region. And on the air side, the capacity shortfall of the Middle Eastern carriers is something that we continue to see, and that continues to impact the trade flows from Asia to Europe and then obviously, the impact of the fuel price, both in its volatility as well as its level is something that concerns our customers. You know that we have established mechanisms to pass higher costs on to customers. Some of those mechanisms have a certain latency. But again, that's something that we're used to. Overall, the Middle Eastern situation not having a significant impact on our Q1 earnings. Page 5 shows a little bit more about the volume and revenue development that we have seen for the group and DHL Express specifically. So the group on the left side achieved 2% organic growth in the first quarter. We obviously continue to face headwinds, especially when it comes to FX. Now that's going to cycle out as we go along from Q2 onwards, we will have less of FX headwinds, at least with current exchange rates relative to last year. And also on the volume side, we have easier comparables. So if you look to the first quarter, we were about 4.5% organically above the first quarter of 2024. And would we continue with that momentum, you would see a significant change in the year-on-year comparisons with Q2. On the Express side, we are very pleased that our measures as it relates to the focus on smart industrial growth are playing out as we plan. We see now significant growth in the weight per day of time definite international in the rest of the world, that excluding those destination U.S. lanes and also, as it relates to Destination U.S., we see a significant improvement as we would expect with now the effects of the U.S. tariff changes annualizing. What has helped us to a great extent, also to stay cost competitive and to grow in areas that are profitable for us is our modern fleet on Page 6, you see the transition that we went through with significant investments that we made as a group over the last 6 years. Now being a very large 777 operator and having the most modern and fuel-efficient fleet in our industry. With current jet fuel prices. This is obviously extremely helpful to act profitably and to be cost competitive for our customers. This is the perfect fleet to support our commercial strategy of smart industrial growth and explains why we have this continued margin expansion in the DHL Express. It is a contributing factor to the success that we have seen in Q1 and the ongoing positive momentum this brings. Page 7, some highlights in terms of continued focus on executing our strategy. Despite the turmoil in the Middle East, we remain focused on regions that benefit from the geopolitical situation we are in, our GT20 countries. So those countries with geo tailwind. We continue to work intensively to improve our market position in those countries, close capability gaps, especially as it relates to the focus sectors that we have globally -- and where we want to make sure that we're particularly successful in those geographies, also by working even better together across the divisions and thereby delivering end-to-end solutions to our customers. Again, on the customer side, this was an extremely successful quarter with very good feedback and very good quality, objective quality KPIs across all divisions, and that supports, obviously, this strategy. Sector focus, last time we talked about life science and health care. Today, a snapshot on data center logistics. This is a value chain that is still unfolding. We see particularly high demand in North America to stage inbound to manufacturing, you could say, inbound to construction might be a better word, supplies there, so to bring the components of data centers close to the location of usage, store them locally to have them just in time available when the construction of the data center progresses. So that's a significant activity that we are engaged in. Next to the international transportation of such goods that not only being a server rack and servers themselves, but a lot of equipment around it, especially electricity related. These are significant components and significant tonnage that is typically transported by air where the collaboration of Dial Global Forwarding and DHL Supply chain is very helpful for our customers and highly appreciate it. As it relates to the guidance for the rest of the year, we uphold what we communicated earlier that we want to increase EBIT, group EBIT above the 2025 level, so above EUR 6.2 billion. The split on DHL P&P and group function remains unchanged. So does the outlook on free cash flow on CapEx, on the tax rate, term outlook. We remain conservative in light of the volatility around us and the potential adverse effects of higher energy prices on global GDP growth. whilst we obviously recognize that we had a very good start into the year and have good momentum. With that, over to Melanie for some more details on the divisional.

Yes. Thank you very much Tobias, and welcome to all of you out there also from my side. Let me indeed briefly provide some more relevant details on our Q1 numbers, starting on the divisional overview on Page 9. So Tobias talked about the nice EBIT growth we saw at group level in Q1. That was mainly driven by another strong quarter from DHL Express. We really see how the team's actions on Fit for Growth have structurally brought down the express cost base, resulting in the seventh consecutive quarter of underlying year-over-year profit growth in a slightly improving but not yet growing market environment. Global Forwarding performance compares well with its closer peer group. So when we look at the numbers, we, of course, see a lot of market trends at work here. In the shorter term, the Middle Eastern changes have been more supportive for air freight versus a temporary burden on Ocean Freight gross profit. And I will come back later to the more structural growth path laid out by Oscar for the division. DHL Supply Chain has seen another strong quarter with growth in revenue, EBIT and new business wins, and that's despite the expected dollar-driven currency headwinds. This really shows how the structural trends like e-commerce, life science, health care, data center infrastructure, which Tobias just talked about, how those trends underpin supply chain growth and how our team is at the forefront of robotics, automation and use of data to drive growth for our customers at strong and rising profitability. Reported revenue growth at DGL e-commerce will be skewed by our U.K. deal with every until the fourth quarter. So what is important for us here is that we continue to drive organic growth at 5% in Q1. In this growth phase, EBIT performance was roughly stable in Q1, and the business continues to be free cash flow positive. So it keeps generating the cash needed for its growth investments. Last but not least, we have seen another strong performance from P&P. Strong in the sense that given the lack of price increases on regulated letters, EBIT is holding up well. And here, this shows the benefits of our structural Fit for Growth measures on core network and indirect costs as well as good parcel growth with a 6% increase in volume and 8% on revenue. So to sum it up, overall, as Tobias already said, we are very pleased to start the year with this Q1 performance. Let me come back to Express with some more important observations on Page 10. We are showing you a look back at the development since 2019. And as you know, we have driven a significant revenue and EBIT increase, even though TDI shipments are done down over the period. So the question is how did we do this? On the revenue side, the basis has been a sustained increase in weight per shipment, as you can see on that slide here as well as our consistent yield management. And the margin increase reflects the earlier mentioned cost measures as well as efficient network flex. So let me be very clear here with higher profitability despite lower shipments is not a coincidence, but the result of how we steer sales, pricing, network cost in close alignment and better data and analytics certainly help in the steering, with a key KPI being weight and not shipments. And this is why we have decided to reflect our internal steering discussions also in the external reporting, with a change in our external main growth KPI from shipments to weight because weight per day is the KPI that is more relevant for network profitability. Let me also quickly come back to DHL Forwarding. Page 11 shows you some extracts of Oscar's Capital Market Briefing, which we held in London a few weeks ago. The full presentation is, of course, available on our IR website. I will not go back to all the detailed measures and levers that Oscar explained. But what I think is important for you to know as our shareholders is Oscar's ambition to grow EBIT and cash flow of this division significantly driven by a combination of above-market volume and GP growth while bringing profitability further up to industry levels. The main drivers to do that are 2 larger turnaround topics that Oscar already tackles, road freight and U.S. airfreight, but more importantly, a structural profitable growth acceleration in the business. And I think this is the most important observation for me here, optimizing our Global Forward performance is not about trading off between growth and profitability. It is about growing in the right verticals, regions and products into lean and efficient structures, so to drive top line growth and increasing margins. And that is actually exactly what Oscar has successfully done in supply chain over the last years. On Page 12, we have added for completeness, a summary of our P&L and cash flow statement. With the main observation here, there are actually no real unusual effects to point out. It is a very strong operating performance from top to bottom line with our share buyback program, again, nicely supporting earnings per share growth on top of that. And while I would ask you to not simply extrapolate the strong Q1 free cash flow number, I think this cash generation is just another testimony of the clean operating strengths that our Q1 numbers show. So our conclusion on Page 13 is rather simple today in a not always so simple world. Q1 was a good start into the year that allows us to confirm with confidence our 2026 targets issued a few weeks ago. In the current circumstances, cost capacity and yield drivers remain in focus as a secure profitable growth independent of market tailwinds. And yes, we also see some traction on the growth side with a sequential improvement in Express shipments and weight, the start of the gradual annualization of the '25 tariffs and of course, our strategic focus on the GDP plus growth opportunities as laid out in our strategy 2030. And with that, we look forward to your questions. Thank you.

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

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

Okay. So yes, thank you for those 2 questions. On the Fit for Growth program, I mean, what we already said in March was that we are very pleased with the traction of the program. It was visible ramping up in our '25 quarterly announcements, and we see the continued good progress in Q1. So we are pushing and looking for further opportunities. As we already said before, we don't expect a lot of cost of change this year. This is why we're not flagging that separately. But yes, so this is obviously, again, strongly supporting our Q1 results in Express, but also across the group. . On the share buyback, as we said in March, we still have well over EUR 1 billion left in the current share buy program, so we didn't see as a necessity, the timing to talk about any further upside on that topic. So yes, I think we are pleased with where we currently are.

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

Or wanted to ask, you said that in Q1, you had limited impact from the Middle East. Can you talk to us about kind of how to think about that in Q2? What have you seen in April? And could there be a bit more of a benefit in Express and Forwarding in the second quarter from the air freight market. And as your fuel surcharges would have caught up now in Express. So that's my first question. . And then secondly, on Slide 5, and thank you for showing the weight data now. So we're seeing the rest of the world weight tick up in Q1. What trade lanes is -- are driving that pickup? If you could help us understand and kind of has April seen that growth momentum continuing?

Thank you, Muneeba, for these 2 questions. On the Middle East, I think the overall impact of our operations there needs to be seen in light of the weight that this has the contribution of the GCC countries is a low single digit of our total revenue. So it's not as decisive. Obviously, there's a broader impact, as you also mentioned on the air freight market, Asia Europe. We continue to see elevated rates as the Middle Eastern capacity is not available. The hub carriers in the Middle East do not provide the same amount of capacity than we are used to. And that definitely continues to have an impact also now. We obviously remain cautious because the jet fuel situation raises prices, raises cost for our customers at some point, that also has effects on the demand side. But certainly, the air freight market from Asia to Europe remains strong. And also on the Express side, we explicitly highlighted that we see ourselves well positioned with the fleet that we have. So relative to competition, I think we're in a good spot here, how the overall market will turn out. I think we have to see it remains very volatile. But as we highlighted, we believe that we developed a good momentum in the first quarter, and that continues. As it relates to the specific question on the weight development with Express and the rest of world, that is pretty broad. That excludes also exports from the United States, for instance, but it really cuts across. So I would not want to highlight anything particular. We really see good momentum across a couple of trade lines. We also see good momentum in the day definite business that we have in Europe, for instance, which is not included here. This is TDI only. So outside these lanes to the United States, we see overall good momentum.

Our next question is from Cedar Ekblom from Morgan Stanley.

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

Cedar, I think this is pretty easy. We have a certain trend established, and I would see no reason why there would be a significant deviation from that trend line. As you rightly said, we had very solid growth. It varies a little bit which region is delivering contributing more to that growth in the last quarter despite the FX headwind. We had very good contributions from the Americas. Overall, we expect that momentum, that positive momentum to carry on, and that would also apply for the margin. New business is not necessarily dilutive. In the past, especially in Europe, it was quite opposite that some prolongations have been dilutive we worked actively to find measures that those prolongations are not dilutive anymore, for instance, with the camp setup so that you do not have the risk of redundancies and related restructuring costs when the customer leaves you. So those are those measures that we've taken over the years to really improve the business model to avoid margin dilution as contracts are renewed. So across the portfolio now, those renewal or first wins do not have a decisive effect what plays more a role or structural measures, our investments also in robotics and the enhancement of our offering through additional features like real estate solutions, that has helped us to improve margins over time.

Our next question is from Jacob Lacks from Wolfe Research.

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

Thank you, Jacob, for those 3 questions. So fuel availability I think we have to differentiate between large hubs or airports where we have our own base where we have dedicated infrastructure as the case in for fuel supply there. We have an intense dialogue, and we have more visibility and more certainty about that supply continuing and being sufficient to fully support our operations versus more spoke locations, especially in Asia, where we do not have such a setup on our very much dependent on the availability of fuel through the local supplier that typically being a regulated market, and our choices being limited. We have seen in some Asian airport constraints, either constraints that were announced, so no fuel being available for additional flights, but also some structural shortages. We still then have the option to tanker in, so to fuel up the inbound flight to a sufficient level that also supports the outbound flight. It is possible for regional and short-haul flights, not possible for intercontinental flights for obvious reasons. So we had a couple of situations where that was the case. I think relative to other airlines, I see ourselves in a good position. But I think we all recognize that if there's a continued shortfall of 10 million, 12 million barrels of crude every day, something has to give at some point. And that's also why higher prices, logical outcome that then allow for fuel to be distributed to those areas where there is the biggest demand and the highest willingness to pay where a lot of operations, I think, would fall clearly into that category. We pass on fuel to our customers. the recovery in Express and Global Forwarding is pretty good over time, but obviously, some latency. So our recovery kicks in a little bit later than what we pay. We pay generally the spot price, even though we have longer-term contracts, that's the usual way jet fuel supply works. So the latency would benefit us, would there be a substantial drop in jet fuel and diesel at some point in time. To your third question, the growth in Express has been supported by B2B. That's the really driver of the recovery of weight as we planned for. So that's clearly execution according to our plans and the specific focus that John Pearson has outlined for the division.

Our next question is from Cristian Nedelcu from UBS.

All on Express. First one, if I calculate well on your May fuel surcharges, it seems that the Express prices year-over-year will be up mid- to high teens. And please correct me if I'm wrong. But I guess my question is a bit conceptually based on what you've seen historically, what's the type of demand elasticity that takes place when you have this type of meaningful price increase. There any comments there? The second one on Express Intra-Asia. We have some of the Southeast Asia countries, which are rationalizing fuel some of your competitors seem to be adding more capacity in Asia. Overall, could you tell us a bit more how much of the Express volumes is on Intra-Asia routes? And maybe what trends are you seeing there in terms of demand in April and what do we expect going forward? And the last one, if you allow me, coming back to the weight per shipment, I think it was up 4.5% in Q1, and you flagged your program on focusing on heavy weights. Could you help us a little bit visualize? I mean where are you on the road map of progressing in this program? I mean, I'm thinking conceptually, you're already getting in some heavyweight shipments, but will you -- will that sequentially further increase in Q2 and Q3? Could this weight per shipment actually see mid- to high single-digit growth year-over-year as we progress through the year as you bring in more heavy shipments? Any color to help us there on the trajectory of bringing in heavy shipments in your network?

Christian, thank you for those questions. So on the elasticity of demand as it relates to price. I think that's not easy to answer because Express is not an isolated element, but obviously adjacent to the general air freight market. I think in the general air freight market, we know that there are some segments that have a certain amount of elasticity. I believe we currently see some of that in the e-commerce segment, Asia, Europe. As you know, our exposure to that is very limited. But looking at the broader market, I believe that there is some demand destruction through the current price level that might also be preparatory steps towards July 1st and the changes in the EU customs regime that the EU Commission has also taken some decisions on this week. So it might be a mix, but I would read some price-related demand destruction into that segment development over the recent days. As it relates to Express, especially in the short term, that elasticity historically is rather low -- and I would also read the current developments accordingly. As it relates to Asia, I think there is no exception to the general business trends. Our participation in that market is roughly proportional to GDP. Our market share is a little bit higher also as it relates to intra-Asia movements than our global market share but not decisively so. So we participate in that market, and it's one of those lanes where we see the trends that you also see globally unfolding, which brings me to the third point, our focus in Express on smart industrial growth. I think it's important to recognize that we are not focusing on 5, 10-ton shipments that are traditionally in the air freight market, this is really targeting specific use cases of industrial customers, where we believe the express the integrated model has a better value proposition. In our last call, I talked about the incremental share gain that we have seen over the last 40 years. the integrators taking 0.3%, 0.4% of market share from the broader airfreight market traditionally, and that not having happened since COVID. I think we simply get back onto that trend and show that the Express model has a better value proposition for some of those industrial customers. The program related to that only just started. So we would see that continue to unfold in the coming quarters. So that is a process -- that is an initiative that is still ongoing, and we would expect it to impact particularly weight per shipment incrementally and gradually as we go along.

Our next question is from Marco Limite from Barclays. -- question.

Can't hear you.

Can you hear me now?

Now we can hear you.

Apologies for that. My question is on your cost savings program. So clearly, a bit this quarter is driven from Express OpEx. So I wanted just to check with you whether you think you are now at the full run rate of your EUR 1 billion program. And actually, if you think that you are outperforming on the EUR 1 billion Fir for program, so you're actually getting more than EUR 250 million cost savings in -- and my second question is on your free cash flow. Clearly, very strong print in Q1, made a comment earlier that we shouldn't read through into this print too much for the full year. But do you think that you can deliver a better outcome than EUR 2 billion this year?

Okay. Let me start on the cost saving and then I hand it over to Melanie. So I would say 2 things to that. day. A, also, if you compare us against our competitors, it's important to note that we obviously report in euros, and they report in U.S. dollars. That also has an impact on how to read cost, especially aviation cost. That being said, and Melanie already repeated that. We see ourselves well underway with the Fit-for-Growth program ahead of schedule. And there's obviously opportunity to get more. Now we called out this program with specific measures at the time, but it should not create the impression that we wouldn't work on cost elsewise either. So even if that program at some point comes to an end, obviously, we'll push for the deployment of new technology and further improvement in our operations. So it's more than a matter of highlighting things and bucketing things and creating transparency around that. There's obviously additional ideas that we do have for structural improvement, and this will continue. Again, we see ourselves well underway and ahead of our original plans as it relates to Fit for Growth.

And I think, if I may add on that point, I think that is in line with what we have done on other topics in the past, right? So if we kind of like want to get a cultural change on a topic into the organization, we start with a dedicated program, and that was fit for growth, and that was really a rallying cry across the organization. I think this is now becoming much more embedded into business as usual, this cost mentality, and that is why we are driving it less as a dedicated program now and more as an ongoing exercise. On the free cash flow, yes, as I said, a very pleasing start into the year. Some of you have been around for a long time and recall Q1 where free cash flow was actually not so nice to look at. So we're very proud that we are now generating cash, not just in the last month of the year, but on a more distributed basis. I think it is a testimony to the underlying health of our business, and that allows us to reiterate our free cash flow guidance for the full year with confidence.

Our next question is from Alexia Dogani from JPMorgan. .

Just coming back to Express and Tobias comments on the value proposition do you feel you are now at the right kind of cost base to pursue market share gains by basically emphasizing this value proposition? And you've talked about in the past about health care and being a predominantly air freight sector, are you making any progress in converting some of these yes, air freight volumes into Express volumes. And related to that, obviously, it's encouraging to see trends improve, but they remain negative. When we look at the trajectory over the next couple of quarters and year, do you think because of these initiatives, you actually can start to see TDI shipment growth or weight growth as you're focusing more on that now. And then apologies if it was touched upon already, but can you give us a little bit, some comments on your -- on the AI opportunity set. Obviously, you've done a good job with Fit for Growth, where you've addressed the kind of the asset element of the cost base. Is there -- yes, what projects do you have ongoing that can increase productivity further in the asset-light segment?

Yes. Thank you, Alexia, for these questions, starting with Express and the value proposition. So I think we have improved the component of cost. I think there's further incremental steps to be done. But also, obviously, the work on quality. So I think we see ourselves overall in a good position now, but also a further improving position with those balanced measures that have helped us on the cost but have also helped us on the quality side, which for us is very important. Express is a premium provider as most of the services that we as DHL are offering and the market quality is very important. So it is extremely important for us that we balance this well, and we deliver a good value proposition to our customers by combining great quality with a good cost position. On Life Science and health care, this is clearly not decisive for Express at the moment. And this will take more time to build infrastructure, to build processes. So as it relates to the developments that you've seen in the quarter, there is no significant impact from our life science and health care initiative. As it relates to Express, this will take some more time given that this is really a structural improvement that we do there, infrastructure projects still initiated and ongoing. So that will take time to have an impact on the business. As it relates to the weight per day development and the overall growth of Express, we do expect that to turn positive. I highlighted, Page 5 with the comparables against 2024. So you see that into Q2, our year-on-year comparison becomes significantly easier. So that would point to a year-on-year improvement simply also because Q2 of 2025 was much softer. So as it relates to the gradual development of Express. You, I think, should expect that the year-on-year comparison turns more favorably. The last question on AI. That's something that is deeply embedded in multiple areas. It is supporting some of the Fit for Growth measures but going way beyond that, again, for us, very important, not only to see the opportunities on the cost side, which we clearly do, but also to see the opportunities to make processes and value proposition better. We highlighted last time the improvements we see as others do in the area of customs but it also extends into other operational areas. I'll give you 1 concrete example, which is the maintenance of our vehicles, where AI helps us to do that much better to judge better what needs to be repaired and to compare ad hoc -- combined ad hoc repairs with regular maintenance, renewal of tires and so forth that is needed. So that helps us now to reduce the number of repair shop visits and reduce costs. The number of those initiatives is very large, and they unfold over time. But both in core operational processes in forwarding and other areas as well as the supporting processes, we see the continued benefit of AI.

Our next question is from Parash Jain from HSBC.

And Tobias, my question is more around what are your ongoing discussion with the customers regarding the potential impact or second order impact of rising fuel prices across the economy. Also, when you look at your supply chain business, it appears to us that inventories is benign, but what are you seeing in terms of the customers' inventory level? And what does that tell us going into the second half? And I appreciate that you maintained the guidance, which was provided just when the war started. So the fact that you reiterated the same, what are some of the key assumptions that has gone with respect to how long will this war last versus where the oil price settles, what are the scenarios with respect to demand? So if you can provide some color based on what your different businesses are seeing?

So on the last part, look, we are humble logistics people, and we focus on competing in our industry. We do not do many scenarios how the planet could evolve over the coming years. We look at experts, macroeconomists to tell us what they see as scenarios for the global economy. And as we have highlighted in previous calls, -- we have learned that taking a conservative view on some of those macro developments. It's generally a good stance for our business as it relates to capacity planning, and the ability to react. That has not changed. And this is how we look at the year as a year that we continue to expect to be operationally demanding and volatile and not giving us much macro tailwind. I'm not sure whether I understood the question around the customers and the inventory level, the inventory level referring to fuel or goods overall. Okay. overall, the -- I do not see that being a significant discussion point yet in most customers' discussions, maybe with the exception of price-sensitive goods, consumer goods being transported. The industrial value chain is quite inelastic to those short-term and midterm developments in price. And we highlighted earlier, whilst the jet fuel price, obviously, is up very considerably. If you look at our overall cost structure across the group, this is a moderate impact. So yes, especially the general airfreight product there, it's a bigger component of the overall cost structure in a lot of other areas, if you think about supply chain, if you think about parcel, it is not such a big component that would significantly influence the decisions of our customers. So general air freight market to be seen. The volatility, and we've seen this again and again, typically counteracts in terms of creating a need for more airfreight as well. So I think we need to see that as a compensating factor that some demand destruction due to higher prices driven by jet fuel prices might be counteracted by higher a certain shift from air to ocean. If the economy stays very volatile, if disruptions continue at least this is what we have seen in the past in similar situations.

Our next question is from Chloe Fu from Citi.

I have 2 questions, please. My first question is, if you see tightness in the current Express network due to the reduced supply availability related to conflict and also the improved sequential volume. If you could just give a bit of color on how utilization has improved in your network? And my second question is related to your fee pass-through mechanism Obviously, the fuel price in Asia is much higher than the U.S. And I was just wondering if it causes any issues? Or is it well captured by your fuel cost pass-through mechanism.

Thank you for those 2 questions, Chloe. So I think in terms of tightness in the Express network, capacity constraints, we don't see that. So as always, in such situations, the colleagues have done a great job in rejigging the network. I think we have showed some of the changes we made to our configuration in the Middle East. So we have done a good job in rebalancing capacity and do currently not see utilization challenges. . On the fuel surcharge mechanism, yes, so I think this is a well-established mechanism. We have tightened it a bit further. So we take a 4-week average of the fuel price and then with 2 months' time lag, we adjust the table. We do that now on a weekly basis. So we feel that we are overall well covered with that established mechanism.

Our final question is from Marc Zeck from Kepler Cheuvreux.

Hope you can hear me. Only able to join late, please excuse if there's any question that was already asked of let's say, 2.5 on Express, you've got now an EBIT margin of 30% in the first quarter roughly. Historically, it's a -- for the summer months, Q2 and Q3, on average, you would have the same EBIT margin Express in the first quarter? Would that be a fair assumption, Q2, but higher Q3 a bit weaker, but on average, some are ones more or less the same at margin in Express? And then a follow-up on Express. Could you remind me what is your exposure here related to U.S. AI CapEx spend, everything that is in servers or any things. They're a major driver currently of your success also from a margin perspective in Express? Or is a rather minor part of your business? Then the real second question on the German consumer. I guess as the volumes so far in Q1 were still pretty healthy. Could you provide a bit of color how this have parcel volumes in Germany have developed throughout the quarter? Was there basically same volume in March in Germany -- or was there a weakening? What do you sequel in the early days of April in terms of parcel volumes in Germany -- that's my question.

Thank you, Mark, for those questions. So as it relates to Express, we do not see any significant changes to a normal seasonal pattern. As you know, we wouldn't get into quarter-by-quarter forecast on such things, but we would not have reason to believe currently why the seasonal patterns across our business, this should be different than as per usual. The second question in terms of exposure of Express to AI CapEx spend for Express, this is relatively low. These are typically large projects and larger movements. I think Express gets more relevant as those facilities are in operations, spare parts are supplied urgent maybe emergency spare parts. That's typical type of Express business, a transformer, 100 server racks and so forth, that is not something that Express would typically do within the normal regular products of TDI. It might well happen that over the weekend, there's a charter operation of some sort, which is then executed by Global Forwarding, but it's not in any way a major driver that AI CapEx spend for Express in the first quarter, which brings me to the German consumer, which is obviously an animal that also has a tendency to be not so easy to forecast in its behaviors and actions. They're also in the parcel market effects of weather, the phasing of holidays and so forth that make it rather difficult to forecast read a single week. I would say that we have seen, I think, across Europe a little bit in easing of the inflow of Asian e-commerce. Now traditionally, that is replaced by more local buying after some weeks or month, would that continue? Elsewise, we do not see any unexpected changes or changes to trends that we have seen in the first quarter. But what I said earlier, obviously applies that with the situation around energy, I think there is a worry that macroeconomics have shared with us on how this impacts the broader economy and Europe and Germany, especially overall being in a relatively weak position, weak underlying growth. So some consumer reaction at some point, we can obviously not exclude. But so far, we see the trends that we discussed continuing with the exception of maybe some slower inflow of Asian e-commerce where we are engaged on the last mile in Germany and elsewhere to distribute that to consumers.

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

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

Yes. Thank you also for these good set of questions, which I think were very complementary and touched upon nearly everything that we would also find worthwhile to talk about. So thank you for that. Overall, I think we had a good first quarter. Also compared to competition, we see ourselves in a good spot and with confidence we enter the rest of the year despite the volatility around us and the concerns that we also discussed on this call, we see our value proposition in multiple segments gradually improving and the work and strategic focus that we had paying off. We highlighted some specific points in this call, including those longer-term investments that now really improve our cost structure, the 777s were mentioned, but there are others that have also a contribution like our investments in modern infrastructure. So that is paying off and that we also see continuing over the quarters to come. And that's why we also, in this rather turbulent and uncertain situation as it relates to the world economy, that's why we stay confident regarding our goals for the year and our value proposition in the markets we operate in. With that, I thank you for your interest in this session and into our company overall.

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