Hamburger Hafen und Logistik Aktiengesellschaft (HHFA) Earnings Call Transcript & Summary

Thank you. Good afternoon, ladies and gentlemen. I would like to welcome you to our conference call presenting our results for the financial year 2020. It gives me really great pleasure to introduce the results on a positive note. HHLA has weathered the coronavirus pandemic well so far. We were able to maintain the operational stability of HHLA at all times. There was not a single day on which production was brought to a standstill by the pandemic. Moreover, the company is still in a stable financial position despite a challenging financial year. Even in times of crisis, we were investing in promising markets and business fields. We have acquired majority stakes in a multifunctional terminal in Trieste as well as in a specialist for automation technology, to name just 2 examples. While the first half of the year was affected by pandemic-related blank sailings and a drop in volumes, we benefited from the revival of industrial production, especially in Asia, in the second half of 2020. However, we do not want to conceal the fact that we had and we still have to cope with imbalances in trade flows that resulted in a lack of empty containers and shipping space. All of this led to delays in sailing schedules, which put high pressure on our terminals and hinterland transport systems. Thanks to the joint efforts for the entire group, we achieved a positive result in the past financial year. However, to enhance the performance and competitiveness of our core business, an efficiency program has been launched for our container terminals in Hamburg. EUR 43 million was set aside in Q4 to ensure the systematic and determined implementation of the necessary measures. We will later talk about this. But first, I would like to hand over to my colleague, Roland, to dive deeper into the divisional development.

Yes. Good afternoon also for me -- from me, and thank you, Angela. Moving directly to the segmental reporting, I will start with the development of our Container segment. Volume development saw a strong decline of 10.6%. Virtually all shipping regions were impacted by pandemic-related volume shortfalls. The loss of a Far East service in Hamburg in May 2020 had a further adverse effect. The drop in throughput volumes resulted in a revenue decline of 7.8%. The average revenue per container handled at the key side increased moderately year-on-year by 4.3%. This disproportionate development was caused by an advantageous modal split and temporary higher storage fees, especially towards the end of the year. The latter resulted from longer dwell times brought about by blank sailings and delays caused by the aforementioned imbalances in cargo flows. The rise in EBIT cost of 2.1% was mainly attributable to provisions of EUR 43 million that had been set aside for restructuring measures in connection with the efficiency program Angela mentioned before. Subsidies of public authorities totaling EUR 8.1 million had an opposing effect. Adjusted by these 2 effects, EBIT costs would have been down by 3.3% year-on-year. The net provisions were also the key factor for the strong EBIT decline of more than 50% year-on-year. Without these provisions, the EBIT for the subgroup was -- have amounted to approximately EUR 153 million. So let's move on the next slide on the Intermodal segment. In a challenging and highly competitive year, our Intermodal companies only recorded a slight decline in volumes. Due to the strong recovery in transport volumes beginning in the third quarter 2020, the declines of the first half were almost fully offset on all routes. The decrease in road transport, minus 5.2%, was much more pronounced than in rail transport, accounting for approximately minus 1% only. Strong growth in continental traffic made up for the reduction in maritime traffic from North German seaports. Revenue declined by 2.1% despite a slight increase in rail share, which is normally a positive for revenue. However, average revenue per TEU decreased due to the disadvantageous mix of short and long-haul distances. Besides falling volumes and revenue, the EBIT development was affected by increased fluctuations in import and export cargo, with a resulting fall in capacity utilization of rail systems. Still, the EBIT margin was at a sound level of more than 18%. Let's turn briefly to our smallest segment, the Logistics segment, where we have pooled vehicle logistics, consulting activities, digital projects and participations. The consolidated companies reported total revenue of EUR 51.4 million in 2020. The vehicle logistics division suffered a strong decline in revenue as a result of falling volumes, while consultancy revenue was also down significantly on the previous year. The expected revenue growth from new activities was also held back by the pandemic-related downturn. The EBIT was burdened by temporarily increases in start-up losses and planned new activities. This trend was compounded by pandemic-related decline in earnings of existing activities, such as vehicle logistics and consultancy. As a result, the segment posted a negative result of EUR 3.9 million in the reporting period compared to a positive result in 2019. At-equity earnings remained positive but fell -- but well short of the previous year. Coming back to the Port Logistics subgroup as a whole, let's have a closer look now at our cash flow development. Against the background of an EBIT decline of approximately EUR 94 million in the Port Logistics subgroup, year-on-year cash flow from operating activities decreased by approximately EUR 32 million compared to previous year. There was an opposing effect from the year-on-year decline of EUR 20 million in income tax payments and the change in provisions of EUR 47 million, mainly related to the aforementioned efficiency program. Even though our investment cash flow appears lower, we continue to invest in our core business. Capital expenditure focused on extending the Hamburg container terminals and Intermodal capacities. However, in the prior year, we made some payments for short-term deposits, which did not repeat this year. Free cash flow decreased to EUR 111.4 million. Financing cash flow was below the previous year figure, preliminary due to lower cash dividend payments than in the previous year since the majority of shareholders opted for a scrip dividend. Higher payments of profit shares to noncontrolling shareholders had an opposing effect. Overall, our available liquidity as of 31st of December stood at EUR 201.3 million. Since the initial public offering in 2007, HHLA has remained committed to its profit orientated dividend policy, which aims to pay out between 50% and 70% of annual net profit after minority interest. We will uphold this commitment this even for the challenging year 2020 and will prepare a scrip dividend of EUR 0.45 per A class share to our shareholders. For the calculation, we decided to adjust the EPS by the effect of the restructuring provision of EUR 43 million. Based on adjusted EPS, the payout ratio stands at the lower end of the communicated corridor. As in the prior year, shareholders will again have the option of choosing between a cash dividend and subscription to new shares. This year, we will extend our offer even to U.S. investors. The Free and Hanseatic City of Hamburg has already decided to support us by receiving the dividend in the form of listed shares in HHLA. This will further help our liquidity position. For a review of our EGS performance and an outlook for the 2021 financial year, I would now like to hand over again to Angela.

Thank you, Roland. As you all know, we have published our sustainability report today together with the annual report. I would therefore like to point out a few highlights. With regard to our nonfinancial [ sets ] of activity, the healthy and safety of our staff had the highest priority in 2020. All measures devised under the leadership of the Executive Board succeeded in maintaining the health and safety of HHLA's employees at any time. On top of that, we neither introduced short-term working nor cut wages. With regard to our carbon emissions, we were able to achieve a further reduction. Having said that, we are upholding our targets of achieving largely climate-neutral production by 2040. The same is true for our promise to half our CO2 emissions by 2030 compared to 2008. Another example of our efforts to implement our sustainability strategy is the initiative of our rail subsidiary, Metrans. Almost all of the approximately 3,000 container wagons have now been fitted with so-called whisper brakes, which reduce the driving and breaking noise of the wagons by half. We are convinced that the future of HHLA is based not only on technological innovation but above all on sustainable innovation. Therefore, we do not only review the benefit for our business of every innovation and new technical development but also the sustainability aspect. For us, shaping the future to us also means taking a responsible approach and acting sustainability. Ladies and gentlemen, well, following the pandemic-related downturn of the global economy and world trade in 2020, research institutes forecast the powerful upturn of the global economic activity and throughput volumes for 2021. Nevertheless, these assumptions are subject to the successful control of the pandemic, rapid vaccination of the population and high catch-up effects over the course of the year. On the background of these constraints, we expect a moderate year-on-year increase for both container throughput and transport. Revenue of the Port Logistics subgroup is also expected to increase moderately compared to the previous year. Since the operating result of 2020 was impacted by restructuring expenses of around EUR 43 million for the aforementioned efficiency program in the Container segment, EBIT is expected to be in the range of EUR 140 million to EUR 165 million in the current financial year. In order to further increase productivity in the Container and Intermodal segments, capital expenditure at subgroup level is expected to be in the range of EUR 220 million to EUR 250 million in 2020. The main focus will be on the implementation of a restructuring and efficiency program in the Container segment and on the renewal and expansion of the group's own transport and handling capacities in the Intermodal segment. Last but not least, I would like to emphasize that HHLA remains committed to its profit-oriented dividend policy, which aims to pay out between 50% and 70% of annual net profit after minority taxes. Well, so much for the guidance for the 2021 financial year. Now I would like to take you through how we intend to strengthen HHLA's core business in the upcoming years up to 2025 and make the Port Logistics subgroup fit for the future. For this, I would like to begin by taking a brief look at the sector development over the last decade. And I'm happy to start with some good news that most of you will have already noticed. The Federal Ministry of Transport and Digital Infrastructure announced in mid-March that the deepening of the Elbe was completed. The new target steps are now gradually being released for ships. This is good news for us and the Port of Hamburg as a whole. However, the nautical restrictions of the Elbe have been only one of the many challenges we had to face in recent years. Our markets and customers have changed, and they will continue to evolve. We see this as a clear challenge for us to evolve as well. What is more? We want to actively shape the evolution and help drive it forward. Therefore, we will make the most of the current situation and use the pandemic-related underutilization at our terminals in Hamburg to push our efficiency program. Our aim is always to offer our customers the best possible solution for the quick, safe, and efficient transport of their goods. For this, we are investing in our ability to process ultra-large container vessels and the optimization of our processes and structures. So what does that mean in concrete terms? On the operational side, we have already started to implement the measures. We successfully introduced the N4 terminal software our Container Terminal Tollerort in 2019 and plan to conclude the rollout for all terminals in Hamburg by the end of 2022. Another important component for an improved productivity in line with the customers' expectations is the level of automization. The transition of our biggest container terminal in Hamburg is well underway. For instance, 12 automated block storages are already in operation and 10 more are still to come. The next steps are clear and are being executed on a tight schedule. We intend to complete the next component of automization of CTB by 2025. Even though automation is key to remaining competitive, it also means lower manpower requirements. In order to adapt our manpower usage, we will use many different instruments for socially responsible staff reductions. All these measures will be taken in a close collaboration with the works council, as it is very important for us to implement redundancies in the most socially acceptable way possible. Their successful implementation is the key to achieving our targets for the Port Logistics subgroup that we presented 4 years ago and can confirm today. We want to generate an EBIT of EUR 300 million in 2025. To achieve this target, we plan to invest around EUR 1 billion over the next 5 years in the Port Logistics subgroup. All of our 3 segments will contribute to this goal even if they each have their own independent focus area. In our Container segment, the focus is on optimizing processes, further automating our facilities and boosting efficiency to lay the foundation for regaining market share. The signs in the Intermodal segment are clearly pointing to expansion. Its success story will be continued by increasing frequency on existing connections and adding new connections, particularly in Southern and Southeastern Europe. We also want to give a further boost to our new business fields that complete the portfolio of the Logistics segment in addition to specialist handling and consulting. This is demonstrated by the numerous projects we have developed either alone or with our partners. We turn ideas into business cases, which, in addition to our traditional business fields, will generate future growth and will contribute to the subgroup's profitability target in the medium term. With this review of the segment contribution, I would like to end. Roland and myself, we are now looking forward to answering your questions. Thank you.

[Operator Instructions] And the first question comes from the line of Adrian Pehl of Commerzbank.

A couple of questions. Well, first of all, clearly linked to your outlook statement, which obviously caused some share price declines today. One -- on one hand, you could argue that analysts have probably been a bit too optimistic. On the other hand, I'm nevertheless struggling a little bit to understand what you're guiding us for in terms of segments, because I would have thought actually that Intermodal should continue to grow its profitability. And having said this, that leaves quite a -- yes, probably very low result or even, potentially, when you look at the 3 terminals you operate, even worse results at CTB and CTT most likely. So I'm struggling a little bit what is baked in here, first of all, in terms of assumptions on your cost base. Otherwise, you are guiding us, obviously, for moderate growth, and that should unfold into some operating leverage. So is that impaired to some extent in the current fiscal year? And then a question also linked to it. Obviously, there's quite a wide range of EUR 140 million to EUR 165 million. What is the, let's say, prerequisite to achieve either end, i.e. the lower end or the upper end of that? And lastly, on your updated CapEx outlook, the EUR 200 million, could you -- per annum for the next 5 years, could you please give us more details on where the investment is actually going to be spent? And should we understand that your unchanged long-term guidance of EUR 300 million for EBIT is just now more costly to be achieved? Or how should we think of it? And then I might have a follow-up.

Well, I would like to hand over to Roland. He will answer this. But I would like to draw to everybody as well the attention that 2021 is still a year of pandemic. Therefore, we have done some scenario working. I think as nobody of us can predict very clearly the future, but we can take some assumptions. And for the assumptions, I think, Roland.

Yes. One comment before I dig into the details of the question Adrian addressed to us. We mentioned the constraints of our guidance on the slide, and this means the path of recovery is uncertain regarding the intensity and the timing, and this has to be factored in if you want to get a better understanding about the range we guide in terms of EBIT for the full year because if I look at the current situation here in Germany, today, I think there's a lot of uncertainty regarding the intensity of recovery. That depends very much on the speed of vaccinating the population to return to normal. And of course, it has an impact on the recovery of the economy. But this remains uncertain, and we have to live with this uncertainty, and this is reflected in the range that we guided. This remark one. Remark two is what's the comparison basis? If you adjust -- first of all, we talk about the subgroup that is listed. And referring to the subgroup results adjusted for the restructuring provision, this means operationally-wise, this subgroup turned out by approximately EUR 150 million, EUR 153 million last year, whereas we guided you for the current year in the span of EUR 140 million to EUR 165 million, if you look at the upper end. And again linking it to the existing uncertainty, it's clearly above previous year. So whether it will materialize remains to be seen, but this is how we see and try to quantify the path of recovery in terms of EBIT in 2021. So you mentioned what are the assumptions for the lower end and upper end as outlined before? The ongoing uncertainty of the path of recovery. This is reflected in the range and I can't more precisely underlie, it's simply the uncertainty that we have to live with this way or the other. With regard to the trends in the segments, of course, you have -- we give you the guidance for the full year. And we have to factor into it aspects that had an impact on the cost base. On one hand, there is the pandemic effect. And the other thing, there is the loss of Far East service that affected us from May 2020 onwards. So in the first 5 months, we will have a comparison basis that includes this service, whereas from May onwards, we will see a normalization of the volume flows in line with the assumption of the recovery trends to overcome the effects of pandemic. So all in all, this means for us with -- how to deal with the underutilization, a quite a tough operational challenge to offset the costs that are affected by underutilization on one hand due to the loss of the service and the expected recovery of the volumes due to the solution that will hopefully speed up with regard to it to recover from the negative effects. So the -- why don't we guide you on segmental level? We expect, to a certain extent, a similar recovery this way or the other because whether we talk about Intermodal or Container business, we are working in the same transport chain -- in different transport modes, but in principle we are handling the same cargo. So this is why we do not differentiate. And last remark, to get a better understanding about the dimension of the recovery that you might feel, it might have surprised you, the intensity of establishing new business. Typically, what's the characteristics of new business? As I outlined before, we concentrate unless we want to build or we want to strengthen our Logistics segment that this means in practical terms. At the beginning, you have to factor in ramp-up costs this way or the other, and we do. We are on track with regard to all the initiatives that we have in mind, that we roll out step by step. The last thing that we released to the market is mobility. It's a platform for the Intermodal segment, where we see, in the midterm, as outlined before, a high potential. But this means if you start -- if you launch a new product into the market, you have to factor in the ramp-up cost economy, and we do so. And again, this is reflected in the guidance for the full year in 2021 as well. So hopefully, I answered most of your question. And then I think there was a remaining one regarding the midterm view and the CapEx breakdown. First of all, we make use of the underutilization speed up with the transition. And this is reflected in the provision that we built in 2020, on one hand, and is reflected in the CapEx with regard to complete the next phase of automation. This means, on one hand, have sufficient automatic blocks on -- in the yard on hand and combine it with the replacement of AGVs that are fully automated that kept for the horizontal transport between the ship to shore crane and the yard area. That is today handled by straddle carriers that are labor force intensive. The prerequisite to do so is to have a little bit more front-loaded CapEx components in the Intermodal -- in the Container segment. And this is reflected in the approximately EUR 1 billion in the next 5 years to come. The other aspect in the Container segment is that we come closer to the point that we will start to prepare CTA for the next term of amortization. This means we will -- we come close to the point where we have to replace components, and we will do so. And you see the -- entering into this phase from 2025 onwards. So the -- at the end of the 5 years perspective, the CapEx is, to a certain extent, already loaned by the replacement phase that starts at CDA at this time. In principle, I think you should expect a well-balanced breakdown, more or less equal between Intermodal and Container in the next 5 years to come.

And then on the mentioned ramp-up costs, could you quantify how much that actually is? And a question linked to the guidance distribution over 2021. So should we nevertheless expect a quite strong first half and then actually a bit softer second half on volume? So what you're currently seeing? Or is that not the case? And then thirdly, to the -- you're mentioning the lost service as of May 2020. I mean, I'm still struggling a little bit with it because that actually did not keep you from posting underlying record results in Q4, for example. So obviously, so far, let's say, that worked out quite nicely for you. So where is actually then the underlying change to that? And lastly, on the consistency of the outlook. I mean, I would understand if you would say, hey, look, guys, the outlook is uncertain to the extent that corona is still out there. But then I would have expected you to be providing a range for, let's say, the volume side of things, not necessarily then EBIT or link it to the volume side of things. I'm curious to hear your thoughts about this.

Two remarks on that. Why have the financial results been that stable in 2020? I would draw your attention to the development of the average income per box that has temporarily been up due to the increase of dwell time, as a consequence, the growing portion of storage fees included in the average income per box. So this is a temporary effect. And of course, with regard to the assumption in 2021, we expected at least sequentially to fade out this way or the other. And this makes the difference if you combine it to the gross development year-on-year, but it has helped us definitely to stabilize the results in 2020. And the other aspect, again, is with regard to activities, I think it doesn't make sense to break down the data more in detail. I simply want to make the principal remark. We are working on that. It's clearly -- it's part of our strategy. And don't expect start-up activities to materialize in terms of contribution to P&L in a positive way, in a quarterly frequency. It's a midterm view. As outlined before, think 2, 3 years ahead, and then it will start to contribute to P&L, but not on a quarterly basis.

[Operator Instructions] And the next question is from the line of Nikolas Mauder of Kepler Cheuvreux.

Two if I may. First question is on the level of the EUR 43 million provisioning. Can you maybe back that up with sort of how secure is this level? Do you have negotiation agreements with the unions already? How sure are you about this? And second question is, so going through the slide on the structural sector developments talking about dedicated terminals and cooperation of port authorities, it seems like that strategic choices made in the past for the Hamburg-based terminals has been maybe a bit wrong. So do you see a structural change in the way you do business going forward? And will this perhaps result in a dedicated terminal or a cooperation going forward?

Well, I start with the EUR 43 million. No. We have no negotiation agreement yet with our unions. But we have started already in more than 100 calls, peers to peers, management to peers to, first of all, elaborate about what we want to do as well how we want to do it as well as convincing our employees that we do it as we have done in the past in a social entrepreneurial way, taking into recognition that our employees have contributed to the HHLA success in the past years. In terms of your question with regard to the dedicated terminals, common user terminals, the strategical question, whether Hamburg has done their mistake, well, first of all, history, you cannot change, right? We are living in the present. And until now, the HHLA IG with their terminals in Hamburg has benefited very beneficially from the common user terminal approach. I think what you are saying -- so that's why I would not evaluate this as a wrong strategic decision. And by the way, we have a strategic terminal participation with Hapag-Lloyd at the CTA, and we do this already successfully together with a common user approach, so not a dedicated user approach, but a common user approach where one customer is participating. We do this in a very successful way as well as we obviously are always researching, analyzing, discussing whether the strategy is still true for the future or due to the fact that we have in oligopoly, so we have a very strong demand customer side with, and I think this is even more important, overcapacity in the north range whether this would change in one or the other way. But this is still an open strategic discussion, which depends obviously as well on availability, appetite as well as right timing.

[Operator Instructions] And we have a follow-up question from the line of Adrian Pehl, Commerzbank.

Yes. It's me again. Actually drilling deeper into your outlook. I'm sorry for that to bother you. But the point is also -- I mean the restructuring you booked in Q4 was quite significant, obviously. And so the question that I have, as I understood that not much has been outlined in detail yet, but nevertheless, shouldn't we expect from this significant, let's say, restructuring quite some benefits already somewhere in 2021, in particular, also probably then on a full basis in 2022? And a question again on the EUR 300 million target longer term, is that -- I mean has the composition of it, has it changed in any way? i.e., I mean, you've been quite nicely investing into your Intermodal capabilities, but also in the Adriatic port. So would you achieve that level of EBIT on the existing setup of entities? Or would it require you to continue, let's say, doing your business on a mix of organic growth and additional M&A on this one?

Two questions. I will comment on the first. If we talk about adjustment of headcount, that is executed socially responsible, and we aim at early retirement programs. You might be aware of the details how it works in Germany. That, typically, it's a midterm program that you divide into 2 phases. One is an active phase and the second is where we lay off the people. And this typically has a time line of 2 plus 2 years or 3 plus 3 years, so up to 5 or 6 years. So if you ask a question whether we should expect P&L effective -- P&L effectiveness in personnel costs in 2021 already, this is definitely not the case. The other way around. It's a prerequisite to get the intensity of labor costs geared to the growing degree of automation in a midterm view. And this is why I mentioned one of the other prerequisite is to have a little bit more front-loaded CapEx requirements with regard to drive the degree of automation. And to complete, as Angela mentioned, the next component of automation is the horizontal transport by replacing straddle carriers, and as a consequence, lay off the drivers of the straddle carriers. And we prepare for by making use of the early retirement program. That it works in a way that you should expect P&L effective things from 2023 onwards. As outlined on the last slide where we give you some background on the personnel measures that we are working on. So it's not -- again, it's not a question. If you do it socially responsible, to fire people in the next quarter, to adjust headcount, it's more the other way around. We prepare for, aiming at early retirement of a certain portion of people in line with outrolling more automatic components in the next maybe 2 to 3 years, aiming at, as mentioned before, replacing labor-intensive straddle carrier horizontal transport by fully automated systems. And this will have a substantial impact on the OpEx costs going forward. And coming back to the breakdown, the EUR 300 million, yes, we confirmed the guidance for 2025 given -- despite the fact that we are affected by the pandemic to a certain extent. But as mentioned before, we make use of the current situation. Having a certain underutilization, this gives us freedom to restructure the terminal on one hand, yes, to the expense of a higher CapEx short term, of course, and to the expense of building -- having built a provision, but on the other hand, aiming at operational costs, OpEx costs that are substantially lower due to the automation going forward.

Maybe just quickly to follow up again. That's the last question from my side, and I'll leave you. Well, obviously, as you booked already EUR 43 million, I mean I would expect actually the P&L effect then to be probably rather -- I mean you're consuming then the provision. I mean if you would have said, well, the cash outflow for this restructuring program is then coming later as you anticipated the P&L effect, but what you're saying sounds like that, on top of the EUR 43 million, there is an additional personnel expense we should factor in as some sort of one-off for the program. Is that correct in that regard?

No. I don't expect any substantial extra costs until we lay off the people, achieve the passive phase of the typical early retirement, construction of the so-called block model here in Germany. This I don't expect. But as you have to factor in the active phase, it takes some time until you reach this point. And you do not have to carry these personnel cost any longer on P&L. This way it works. But I do not expect any substantial extra cost during the active phase. This is why we build a provision.

Yes, exactly. But then also, I mean then again -- sorry, I'll come back to the first question that I had, obviously. Then again, I'm struggling a little bit with, you're saying volumes are going up. You have, let's say, easing P&L effects from the personnel cost side, but then still the guidance is flat year-on-year. That's where I'm still struggling with. When you would have said, hey, okay, there's something coming on top of it. You mentioned also the ramp-up cost. The amount was not, let's say, clarified how much it is, from the, let's say, program. I would understand that most of it should have been provisioned for. So you're resolving this provision, but the cash outcomes, obviously, then later. And that's the reason why you anticipated, let's say, this P&L effect via provisioning EUR 43 million in Q4. So that's how I see it. But obviously, I'm still getting something wrong or what's the point?

You have to factor in -- what I mentioned before is reflect your assumption for the average income per box in 2021 compared to previous year because the increase is very much related to the poor schedule reliability, all the things that we had to bridge on the terminals. And of course, we charged temporarily increasing storage fees to our client, but expect this impact fading out. And this means if you look at the EBIT line on segmental level, on one hand, it's the recovery -- the moderate recovery in terms of volume, on the other hand, assume a normalization of the revenue per box.

And this effect, should we assume it to be on the delta of the effect that you're obviously expecting is then like, what? EUR 20 million, EUR 30 million?

I leave the calculation for you.

The next question is from the line of Christian Cohrs of Warburg Research.

Yes. Then maybe just coming on the revenue per box. I understand that you said, I think there will be lower or most likely lower storage fees and revenue per box could be lower. Is this just due to lower storage fees since you anticipate that line-up schedules will get back in order? Or do you face also lower revenues per box due to the lower fees since you face -- yes, simply due to -- I mean your -- continuous renegotiation of your contracts since -- so that you are facing a lower reward from the line-up side? Second question relates also to the EUR 1 billion CapEx program. Can you maybe point out or give us some indication about the useful lifetime of assets you're investing in. In your annual report, you cite 5 to 25 years for technical equipment and machinery. Can you maybe narrow the range a bit so that we get an idea about the depreciation charge in the years going forward? Then thirdly, on the volume picture, there were some news that THE Alliance will suspend a North Atlantic service AL1. Can you confirm? And do you expect do you expect a negative volume impact on your terminals? And lastly, you nicely pointed out your ambitions with regards to becoming climate -- or carbon-neutral. Is management remuneration at HHLA -- also on the Executive Board side, is this actually linked to ESG criteria? And if not, do you have plans or are there some plans to do so?

Okay. I'll start with the last one. Yes, the Executive Board as well as our managers, their remuneration is linked to the ESG targets, by the way, already since many, many years. Second, your question with regards to lower rewards, revenue per box. Obviously, we are in competition. And obviously, we are all competing in the market. But as Roland pointed out, there, we are expecting not a lower reward per box because of that but because of storage costs. And again, looking into the crystal ball, we do not know whether caused by storms or by other incidents, the late arrivals of ships here in Hamburg is going to continue. I'm drawing your attention to just what has happened on Tuesday night at the Suez Canal and the blockage coming with that. Obviously, this was not planned by us, but obviously, we are all observing very carefully what does this mean in terms of the waiting time or other, let's say, actions which is needed there. So it's just one example to say, planning sometimes is planning and reality sometimes is overcoming planning. So let's see what's going to happen. Did I miss one question? There was...

Yes. Yes. Regarding the range of useful lifetime that is mentioned in the notes of the report. I think at the lower end, it is evident, software is a quite fast-aging asset. So this determines the lower end, I think. And it continues to age fast. So nothing to adjust of that thing. And the upper end of the range assume the typical infrastructure-related assets, whether we talk about cranes or so -- or buildings and all these things. And this gives you a little bit more background on the range. But I think it's an easy exercise if you look at the capital employed. And the grid of the assets that it carry on the balance sheet on one hand and look at the annual amortization, you can easily calculate an average useful lifetime for the total capital employed if you -- again, this I would leave for you.

Yes. I can do that retrospectively about your current capital employed. But my question was related to the EUR 1 billion CapEx spent. So that's -- will this actually materially change the average depreciation period of HHLA group? Or -- yes, will it change or not? I mean it's a difference whether you invest. So how much -- what is portion you invest into gantry, into cranes, into equipment? How much are you investing into software? This, obviously, is leaving traces on the depreciation period. And therefore, my question simply was this EUR 1 billion, is this going to be linked with a different time horizon of useful asset times compared to the status quo? Or should we take the status quo as an average assumption for the useful lifetime? Or it should be penciled in longer or shorter?

It's a good question. Typically, the useful lifetime, if you automatically operate assets, might be a little bit higher compared to assets that are driven by people. For instance, if you compare AGVs vis-à-vis straddle carriers, the useful lifetime is a little bit higher. But I would -- it says, in principle, as a rough indication, nothing substantially different compared to the current situation.

Okay. And then one question is missing, or the one answer is missing that was regarding the suspension of the North Atlantic service by THE Alliance, AL1, I think. So do you expect a negative impact? Or do you think this was simply compensated by larger vessels taking, yes, more cargo and boats, and so therefore, it won't have an impact?

It won't have an impact. That is through slot charter agreements among THE Alliance compensated.

And there are no more questions at this time. I hand back to Angela Titzrath for closing comments.

So thank you very much for your questions and for the interest that you have shown to us. And looking forward to talk to you again for the next quarter. In the meantime, stay up with the spirit and stay healthy. And you can trust HHLA. We are servicing Germany as well as Europe. Thank you.