Welcome everybody to our full year 2021 earnings presentation. As flagged earlier on, we have switched to a format that you see here with our group CEO, Frank Appel, and our group CFO, Melanie Kreis, presenting to you the full year 2021 results and everything around it. Thank you very much for your understanding for us switching to this more scaled down format on a shorter notice. This format will include a Q&A session for those following within the Zoom webinar that you're logged into. In the Q&A, I will call you up one by one, and if you want to place a question just use the Raise Hand function. With that, I would say let's start right away, and over to you, Melanie.
Yeah. Thank you very much, Martin, and good morning to all of you out there also from my side. Also from my side, thank you for your understanding that we have indeed scaled down what was planned as a full-fledged capital markets day with the whole corporate board. We all felt that it would have been inappropriate, given the current circumstances, to just do business as normal here. Obviously, our feelings and our thoughts are with the Ukrainian people and with our 450 colleagues in the Ukraine. We would have probably had a much different full-year results event if things hadn't happened the way they did over the last two weeks.
We are here now to fulfill our obligation to give you an overview of our numbers. Indeed, despite the circumstances, the year 2021 was a record year for us. When we look at the highlight numbers, so we had a revenue growth of 22%. We added EUR 15 billion in revenue, went to a revenue of EUR 82 billion in the full year 2021. On that basis, we were able to reach a record EBIT number of EUR 8 billion. Also in the Q4, we had a record quarter with EUR 2.2 billion in the final quarter of 2021.
I think what you can see here is clearly the breadth of our portfolio with the B2B exposed divisions and the more B2C exposed divisions coming all nicely together when we saw B2C volumes still on a high level in 2021, and B2B recovery coming into play. What is, of course, very pleasing for me is to also report a record free cash flow number, EUR 4.1 billion. That is clearly also more than what we had aimed for. Like with EBIT, we increased our guidance in the course of the year, and in the end finished even stronger than what we had anticipated in our last guidance.
All of that together has been the basis for proposing a significant increase in our regular dividend up to EUR 1.80 in combination with the new share buyback program in the record amount of EUR 2 billion. As you saw on the title page of the presentation, we feel that we have really reached a new level as a company, and we are convinced that this new level is sustainable and that we want to grow from here going forward. We will talk, Frank and myself, in a bit more detail about how we want to do that. Before coming to the forward-looking pieces, let me quickly talk a bit about the Q4 and the year 2021.
I want to start with talking about the trends we saw over the last two years on the B2C side and on the B2B side, because those are obviously the fundamental drivers for our business. When you look at the B2C exposed businesses, you can see here quite clearly that there is a new level which has been reached under two years with COVID. You see the very significant increase, obviously, from the Q4 2019 pre-pandemic to the pandemic levels reached at the end of 2020. You can see that in the Q4 of 2021, we were actually more or less holding those levels. I think that is not surprising given that the Q4 of 2020 was a very, very strong quarter when we still had significant lockdowns in many countries.
I would say that against these very strong comparison quarters, Q4 2020, but also Q1 2021, we will see a bit of normalization. As you can see here on this slide, this normalization is actually happening on a significantly elevated level compared to the volumes we had pre-pandemic. Which takes me to the B2B businesses, where obviously it took a bit longer to get back to the levels we had seen in the global economy prior to the pandemic. As you can now see here for all of our B2B businesses, air freight, ocean freight, supply chain, B2B volumes, and express, we clearly are back on the levels we had prior to COVID.
The Q4 of 2021 was the Q1 where we actually achieved that for all of our divisions. That is obviously now also leading me to the question, okay, what does the current situation mean? I'll come back to that with the guidance. I already want to point out here at this point in time that the direct exposure we have with our businesses to Russia, the Ukraine, and Belarus is relatively limited. It's less than 1% of our group revenue. In terms of direct impact, it is limited. The big question, which I'm sure we're going to discuss in much more detail, is what is that going to mean for the global economy as a whole?
I think what we can say is that prior to the start of the war in the Ukraine, the global economy was on a good recovery path. I'm not going to go in too much detail over the next two slides, which are just a summary of all the detailed numbers for the Q4 and for the full year for the divisions and the group overall. I think the most relevant numbers from the group level are obviously EUR 82 billion in revenue, a 22.5% growth, EUR 15 billion more in revenue, and the EUR 8 billion overall on the EBIT side, actually a 65% growth compared to the 2020 level. When we look at the divisions in a bit more detail, I know many words on the slides to give you a comprehensive overview.
I'm just going to pick one or two sentences per division because there are quite a number of good messages on that page, and I hope that this will also give you the confidence that this is not just a one-time 2021 effect, but that this is really a solid basis going forward. Starting with Express, a record number of EUR 4.2 billion EBIT in the full year, and a 17.4% EBIT margin. That is clearly a new flying altitude. We are quite confident that this is also what we want to maintain going forward. As you know, in Express, we are very much focused on absolute EBIT numbers, and obviously here the aspiration is to keep that moving in the right direction.
I think we will all have to see how this year plays out. I think these numbers, EUR 4 billion + and a 17% margin, is really the new flying altitude for our Express division. Turning to Global Forwarding, yeah, it was obviously a record year. It's the first year the division made more than EUR 1 billion in EBIT, and then it was immediately EUR 1.3 billion. There's a good contribution from both DGF and from the road freight business in Europe and a 35% GP to EBIT conversion in DGF. Obviously also a new flying level here. There will be a normalization over time. I think at the moment we obviously see no normalization at all, quite on the contrary.
We really have to see now how the next weeks and months play out. It's clear that Global Forwarding, based on the solid trend we saw in the Q4 , already had a good start into 2022 in January, when that trend is currently continuing. Supply Chain, EUR 705 million in EBIT. That's the DHL division where we had the highest impact from our EUR 300 employee COVID bonus. If you take that out, the number is more like EUR 750 million, a 5.4% underlying EBIT margin, so really also on record levels in the Supply Chain division.
Last but not least from the DHL side, eCommerce Solutions in the third year of its existence, more than EUR 400 million in EBIT, a 7% EBIT margin. We are naturally quite pleased also with the development in our eCommerce Solutions division, which takes me last but not least to Post & Parcel Germany. We saw continued good growth for the full year on the parcel side, but then this beginning normalization phase in the Q4 , whilst at the same time in line with what we had anticipated. The mail volumes we had lost under COVID are not coming back. Overall, the revenue on the postal side was stable for the year.
What we now expect going forward is that, in Q1, in the H1 of the year, when we are comparing against very high benchmarks, on the parcel side, we will probably see a bit of normalization and decline on the volume side. Over time, we expect a return to the structural growth rates for parcel and the structural decline rates for post that we had seen for many years prior to the pandemic. That takes me from accounting and EBIT to cash and what ultimately counts. I already said it, EUR 4.1 billion in free cash flow. That is, of course, an absolutely new flying altitude also on the cash flow side.
When you look a little bit at the details, what is happening between EBIT and operating cash flow, I think there are two main factors to be mentioned. The first one is working capital. In the end, we had a working capital outflow of EUR 430 million in the year, which I think is a really good achievement given the EUR 15 billion in revenue growth we had. I think it is natural that you have a bit of working capital drain with such a fast-growing business. We were quite happy that we were able to really limit it.
The second big driver between EBIT and OCF is an increase we have not only seen in our tax rate in the P&L but also in taxes paid. That is something which comes with higher profitability and is also something we expect going forward. Including also the increase in investments, as said before, we ended up with EUR 4.1 billion. I know that immediately raises the question, what are we going to do with this new level of cash generation. I will come back to that in the second part of my presentation after Frank has given you the strategic overview.
Before I hand over to Frank, I want to talk a little bit about our guidance, which I guess by now you will all have seen. I want to explain a little bit what are the key moving parts. We had agreed on this guidance when we officially closed the books on the February 18, i.e. before the start of the war in Ukraine. You can read here what we had assumed as the basis for our guidance on the next page. I think the first assumption is that we will see a continuation of GDP growth in line with the long-term trend, in line with the strong recovery we had also seen in the Q4 .
We had anticipated that it would probably not be as dynamic as the growth we had seen in parts of 2021. Good GDP growth and a gradual normalization in the freight markets probably more in the H2 of 2022. Those are, of course, the key drivers for Express B2B, for Global Forwarding, Freight, and for Supply Chain. On the B2C side, as already mentioned, we do expect that there will be a bit of a normalization phase which we anticipate to see both on the eCommerce Solutions side, on the Post & Parcel Germany side, in the beginning of the year. After this normalization phase from the higher levels reached under COVID, we will see a continuation of structural growth going forward.
With regard to Post and Parcel Germany, I think we are back to the fundamental transformation challenge, the team has been working with successfully over the last years, and that is a transition from mail to parcel, where, again, after the normalization phase, we expect normal growth rates for parcel and normal decline rates for mail. The key here will be to better utilize the production system and to really work on the productivity. On the basis of those continued structural mix effects, you will see that in our P&P guidance, we expect a relatively stable number around EUR 1.5 billion going forward. Our growth is going to come from the DHL divisions. That's nothing new.
We are very confident that we can keep P&P on a nicely profitable, stable level also going forward. Then on the inflation side, we had, of course, already seen inflation in the end of 2021 and also going into 2022, which we had included also in our pricing decisions for the year 2022, because that is, of course, the main thing, how can we address inflation, then also on the pricing side? There is a strong focus, there was a strong focus, on this topic already before the world changed mid-February, but even more so now. I think that is obviously, like everybody else, something we will now have to watch very closely. Those were the key ingredients going into our guidance, which I will talk about on the next page.
Fundamentally, we still think that those drivers are valid, but we don't have a crystal ball either. I think, we now really have to see over the next weeks and months how the world will develop. Obviously, there is the fear that the spillover effect from the war in the Ukraine is going to drive inflation to new levels, which we're already seeing on the energy side, obviously. That would then have an impact on consumer confidence and consumer spending, but also and that would be probably different to COVID, potentially on the kind of like business side and industrial investments. It's too early to say how this whole thing is going to play out, but that's obviously the one important factor for us to watch.
The other important factor is, what is that all going to mean for the global transportation markets? There is obviously already a significant extra amount of distortion in the market, which was already quite tight and capacity-constrained in many dimensions before. Obviously, there is constant rejigging now on the flying side. More air capacity has been lost, and that is something where it is also very difficult to assess what this will mean in the coming weeks, and what we are closely monitoring. Putting all that together, we still feel that our guidance, that we want to stay around the EUR 8 billion level which we achieved last year, with a ±5% deviation, is our best judgment of what to expect for 2022.
Obviously, as I already said, the growth in 2022, but then also in our medium-term guidance, is coming from the DHL divisions. For Post & Parcel Germany, we are confident that it will stay a nicely profitable contributing business around the EUR 1.5 billion ±10%, but the growth will come from the DHL side. For Group Functions, we have actually increased the number a little bit. That was a conscious decision which we will of course reassess in the course of the year, because we said we also want to invest a bit more in things like our global brand compared to what we did over the last years. When you look at the free cash flow guidance, I first want to make a technical remark here.
We had, in the past, always given our guidance including M&A, because they were very small numbers normally. Given that we now have the Hillebrand acquisition coming with EUR 1.5 billion, we felt it's probably more relevant for you to give you a guidance for free cash flow before M&A. Because that gives you a feeling for the true operating cash generation of the business, and that is why we have added this note that our free cash flow guidance now excludes M&A. The guidance here is EUR 3.6 billion ±5%. You may ask, hey, why is that a bit lower than the EUR 4.1 billion? I think there are two simple reasons.
The first one is that we are still catching up a little bit on the investment side, to cope with the very significant volume growth we have seen across the networks, which is why gross CapEx is going up to EUR 4.2 billion. The second element is the cash taxes paid. I think that explains why there is a little step back on the free cash flow side. Again, also with our medium-term guidance, there is a very clear indication that we are planning to hold this new level of around EUR 3.5 billion-EUR 4 billion on the free cash flow side.
Yeah, on the tax rate, 29%, in line with what we had already talked about several years ago, that we will see this normalization in our tax rate with tax losses increasingly being used up. Again, we don't know what the war in Ukraine is going to do to the global economy, what it will do to transportation markets. We are currently, like everybody else, very closely following the events as they unfold. When you all put it together, this is our best feeling for our guidance for 2022 and also for the medium term. I think that's also a very important message.
As you can see here, we are confident that we are not only going to stay on the new flying altitude, but that we will incrementally go up from here to around EUR 8.5 billion EBIT in 2024, with the accompanying cash flow as indicated in the cumulative free cash flow guidance, whilst continuing to invest, but in a very controlled way. I think the end of the year has shown you that we are now on a new level. We have confirmed our aspiration to stay on that level with our guidance.
Of course, with the strong cash flow, we have created the basis for attractive shareholder returns going forward and a bit of fine-tuning to our financial policy. I will cover that in the second part of my presentation. I will now first hand over to Frank, who's going to talk about the bigger strategic picture for the group. Thank you.
Yeah, welcome as well from my side. Given that the war in the Ukraine is a shock to all of us, and that peace in Europe is not safe evidently any longer, we worry more about our colleagues and of course the people in the Ukraine. It feels a little bit awkward to talk about the outlook and the strategy of the company. You know, we feel that this is important as well. You know, we have been in the COVID-19 crisis a significant stabilizing factor for the world, and we hope that we can play that role as well. Therefore, let me talk a little bit about, you know, things Melanie has already mentioned and some additions.
First of all, yes, we believe we have reached a new sustainable earnings level, because, you know, all the divisions have really made tremendous progress in our strategic positions and operational performance. We have seen a significant growth in e-commerce, which we believe mid-term, long-term will be sustained, and on that base, we will grow, despite that we might see some short-term impacts from the war. Thirdly, digitalization will play and has played an important role to improve our performance. Finally, we think that the ESG roadmap we put in place, I think is spot on in exactly triggering the right things going forward, and we wanna be there. The strategy overall is in full swing. Let me then summarize some of the key figures beyond the financials. Melanie talked about the financials.
First of all, we added significant number of colleagues, which is important because that is a way to get people really participate, you know, in the growth of the company, but also in societies. Our engagement of the people has gone up significantly in the last two years. We made 7 percentage points progress in employee engagement, which is a great achievement and shows the engagement of our colleagues. You know, that has led to very good customer feedback. We've heard, you know, they are very happy that we help them to continue with service across the world. Of course, we are all challenged by the high prices we face at the moment, but customers really experience good service quality.
You know, the numbers Melanie talked already about, you know, a record EBIT result that enables us to pay a significantly higher dividend and to do another share buyback for the next years to come. Finally, you know, on ESG, we really made good progress in many dimensions. You know, we have really reduced our carbon footprint, despite the overall carbon footprint is still growing due to the growth. We have made good progress with women in leadership position, so more than 2 percentage points in total, progress. Also, we have reduced the number of accidents and incidents in our operations, which is for us also important because we want to ensure that everybody comes home in good shape.
This is, you know, the overall progress, and you have seen us talking about the three bottom lines and giving back to society and working on sustainability for a long time. It is great to see that we really made tremendous progress in 2021. The trends we have talked about are still in place and are continued to shape, you know, the future for our company. You know, the first one is globalization. Globalization is back. It is beyond the level we have seen before COVID-19. You know, in hindsight, you know, the COVID crisis was a demand, a consumer demand driven crisis, which might be different this time with the war, where maybe demand from consumers might drop short-term as well because they are worried. Also, maybe some of our customers will delay decisions, investment decisions.
It depends very much what will happen in the next couple of weeks, how stable and resilient the rest of the world outside of Belarus, Russia and Ukraine is. That will depend very much if we stay on that level or we see a slight decline again, or even stronger decline depending on how big the impact might be. We have been pretty resilient against that, as we have demonstrated our portfolio's resilience against these challenges overall. E-commerce is a theme we have talked about massively and it's now 1/4 of our total revenue is e-commerce related, so a big step forward.
I think that's a strong sign for us because this, you know, e-commerce world will continue to grow and we have a strong footprint in that area, which is good news, I think, for us as a company. Therefore, the e-commerce trend where we put our, you know, our efforts behind for quite some time is definitely something which will drive our success going forward. You know, digitalization, and you know, here are some of the, you know, examples we are working internally about, you know, the, like the blockchain, the IoT, our data lake. You know, it's always the same. We wanna make, you know, the customer experience better by visibility tools.
We have deployed DHL for instance in Global Forwarding or in Supply Chain, in our Supply Chain business, many others, so that our customers can manage their supply chains with our help better. Just one. You know, of course, on the optimization side, route optimization, working with collaborative robots in warehouses, all these things will help us to make us faster, more agile, you know, and leaner somehow, and we have seen that in the last couple of quarters already. You know, our journey to invest EUR 2 billion into digitalization until 2025 is in full swing. We see acceleration.
You know, when we review that in our business review meeting, Melanie and I with sub-divisional boards, it is amazing to see how much progress and how much traction we've got in digitalization. I'm very optimistic. This will help also if maybe the economic outlook will be not as great as it was at the end of the year or the beginning of this year. That definitely will help us as well to keep our costs under control well. The fourth is, of course, our commitment to reduce our carbon footprint until 2030. We told you already before that the challenge is that our carbon footprint will go up first before it comes down.
The reason is the growth, in particular the growth we have seen last year. It was particularly driven by more freighters, and freighters are having a less efficient carbon footprint than belly space. Of course, in the DGF business, we can see that. That will continue for still a couple of years, despite that we are taking action. You know, I talked about that we saved already 700,000 tons last year. We're going now for almost 1 million tons this year carbon, you know, reduction. We will invest significantly under 2030, as we told you already a year ago. You know, that is our clear plan. It's full execution.
We are working on two big sustainable aviation fuel deals on biowaste solution, which we hopefully can announce soon, and that will help us to start this journey really to get our biggest footprint in air freight reduced by replacing kerosene by sustainable fuel. I'm very optimistic that is a great way to go, but we have already started the journey with you know some deals we already have announced and some which will come very soon. Not to forget what we wanna do on the you know van and trucking side, where we have started, and of course, our warehouses, but of course, the most important element is our kerosene in the air. On the employee front, I talked already about the addition of people. I think that is important.
That shows, you know, the underlying growth of the business because we needed more people. Of course, I'm very pleased that, you know, we have really increased the engagement of all people in all divisions. Of course, I'm particularly proud that we became Great Place to Work number one, as an external assessment of our capabilities, and that's really great to see because we believe in the service industry, the people on a daily basis are making the difference. We definitely could experience that in the last two years. You know, the morale of all folks around the world to really do the right stuff for our customers has been tremendous. That I think is really a competitive advantage we have. Many people talk about that. I think in our company, we really made tremendous progress.
That is also reflected in our variable income for one year, as we told you already before as well. The variable income for this year has 1/3 linked to ESG goals, you know. That means our measures to reduce our carbon footprint by 1 million ton. You know, in the S part that we keep our highly engaged workers above the level of 80%, we believe that this is really the turning point when we really have loyal employees and we are nicely above that, but it will be hard work to keep it on that level.
On governance, we have chosen now as a measurable indicator how many of our senior team around the world has been done all the trainings, and we should hear that 95% of the total, you know, executive team around the world is fully trained in the respective trainings. Why not 100? Because we always have turnover in that, and therefore, you know, we can't expect the people who are just joining have done all the trainings properly and, you know, they have to understand first what our policies are. But we wanna measure that as well, and we'll report back then on this on a regular basis. The strategy I have already talked about. You know, we launched it in September of 2019. I think it's still spot on. We have stress tested the strategy several times.
You know, with our vision, our values, and our purpose, I think that's spot on. Also, the excellence simply delivered in a sustainable way, I think is really the right, you know, promise to our customers and the focus on our profitable core has proven to be a very good decision. We concluded most of that already before the COVID-19, and you have seen the impact by being focused on what our strengths are. All that supported by digitalization. The strategy was right when we launched it, and is still right and gives us a very clear compass for how we wanna progress until 2025. Here you can also see, and that's support as well about the mix we have in our business.
That, you know, more businesses are now really driven by GDP growth and e-commerce, which is the upper end, and these are the normal business and express and P&P parts of that. You can read that here. We really have 2/3 of our revenue is now coming from really structural, you know, GDP growth supported by structural e-commerce growth, which is great, of course, that we have such a strong footprint there. We have our Global Forwarding, Freight, which is more cyclical of course, because it's more linked to GDP, but asset light. Also attractive because it doesn't carry too much CapEx, and has some volatility, but has proven as well to improve. The dependence of our company from the mail business has declined further. That's some of the message of that.
You know, the importance of a mail business is significantly less than it was five years ago. It was 10 years or 14 years ago when I started, you know, 80%+ of all profit came from that business, and you have seen now the numbers, you see now the revenue share. Of course, that's good because, you know, we have moved the company from being a, you know, a postal operator which is very much depending on the German business now to a global player who has a fantastic footprint around the world. Of course, Melanie talked already about that in a slightly different form. Overall, these are the opportunities we have. In Express, of course, it's the B2B GDP growth and the B2C structural change.
You know, Global Forwarding, we have, you know, the opportunity through gaining market share, growing with the market as we have done. You know, we outperformed the market in the last couple of quarters. Of course, we have still, you know, many opportunities we can capture through the new introduction of the TMS system. Supply Chain, I think, made under Oscar great progress in getting more standardized, a clear strategic footprint. We have seen that by stronger growth than we have seen for a long, long time. More standardization, which gives us a capability to provide premium quality to our customers, and that has led to the nice growth we have seen. eCommerce Solutions, you know, maybe there will be some challenges, as Melanie already said, in the short term, depending on how consumers will behave.
You can maybe argue that maybe this summer, despite that everybody wanna go on vacation, maybe that has also some impact, depending on how many people will go on vacation given the environment we are heading to and the worry people might have. It's unclear really how fast we see a growth rate. Long term, of course, e-commerce is a key driver for the growth of that division. In P&P, nothing new. You know, we have a decline in mail, and we will see the same situation like in eCommerce Solutions. Maybe short term, some challenges before we want longer-term growth again. Overall, the portfolio is very balanced, has plenty of opportunity, and that makes us confident that we really can deliver against our 2022 targets and beyond, as we outlined.
Not knowing what the GDP will be depending on what will happen in the next weeks and of course, not knowing what it means for the market. We have positive and negative impacts potentially on our P&L. That has led us to say, yes, we are at the moment, you know, somewhat more confident if nothing completely disastrous for the world economy is happening, that we can deliver what we have promised. That brings me to the end. Before I hand over back to Melanie to give you a little bit more insights into our financial policy going forward, I think we really have a resilient, you know, portfolio, which is good news, I think, for investors. The second is we have tremendous growth opportunity at the same time. We are resilient, but we have growth opportunity.
I think we are really on the journey, and it's more on your agenda now as well as investors that, you know, we have a clear comprehensive ESG strategy which we will swiftly execute. I really believe that, you know, I have visited now about 80 countries virtually in the last two years or so, one year, 3/4 . I have seen tremendous engagement with regard to ESG since we launched that, you know, last spring. You know, people are buying in very small countries electric vehicles. They are looking in carbon reductions in their warehouses or sorting centers.
We really have energized the organization to take care of that problem. You know, not to talk even about employer of choice and all these kind of things we are doing now for many, many years, and not talk about that, you know, compliance has been a part of our DNA all the time. Anyway, we have a clear roadmap here as well, and I think that is something you as a shareholder should know as well. With that, I would like to hand over to Melanie to explain to you a little bit what our intention with the finance policy going forward is. Thank you for listening.
Yeah. Thank you very much, Frank. As it has already been said, we had originally planned to now give you a lot more insight from the divisional colleagues talking about what is happening in their divisions, and me then talking about our updated finance policy. Due to the circumstances, as you know, we decided to postpone the divisional updates. We will hopefully be able to do that at a later point in time. We decided that it would be good to talk about the updated finance policy nevertheless, because that is, I know, very close to your heart and also something where we start applying it as we speak. What is the background to that?
Well, I think the background to that is nicely captured in this slide. We are on a new level also in terms of free cash flow generation. You can see a bit of the history where we were really fighting for a couple of years to get through the EUR 2 billion mark. We got pretty close in 2017, then we had setbacks in 2018 and 2019. Then in 2020, for the first time, we achieved free cash flow exceeding the EUR 2 billion. Now, as already mentioned, EUR 4.1 billion in 2021, with a clear guidance that we want to maintain that level also going forward.
The question is, what are we going to do with this cash and the strength of our balance sheet, which clearly shouldn't be forgotten. What we have done and what we have aimed for over the last years is still true and correct going forward. For us, it's about the right balanced use of cash, and there are three important areas. Still, I think number one for us is investment into organic growth. We are deeply convinced that we have great growth opportunities in our five operating divisions, and that we really want to keep investing for organic top-line growth and translating into good EBIT growth and ultimately into good cash generation.
The second priority is naturally delivering attractive returns to you, to our shareholders, where the regular dividend is a key must-have annual component. Increasingly, we are obviously also in a position to think about additional shareholder return measures, where we have already last year returned EUR 1 billion in our second larger share buyback, and where we have now announced a new order of magnitude with a EUR 2 billion share buyback. The third element is targeted value-accretive M&A, like the Hillebrand acquisition announced last year, which we now expect to close in the next couple of weeks. Let me talk about each of those three elements in a bit more detail, starting with investments into organic growth.
The nice thing is, as you will have seen from Frank and my slides so far, we are in an attractive industry. We have growth opportunities in the B2B businesses. We naturally have e-commerce as a very structural extra boosting growth element. That means that we have to build out our infrastructure, our capacity. That is what we have been doing over the last years. That is also the reason why we are now increasing CapEx for the current year to EUR 4.2 billion. Of course, the whole digital elements and also the investments into sustainability also play a role here. What is important for you and also for us is clearly making sure that this money is invested in a way which yields attractive returns.
You can see here how our group ROSI has developed over the last years. You know, we had this reset with the introduction of IFRS 16. Ever since, we have been steadily improving our ROSI up to 18% now. Just to also maybe put that into perspective with some other ROSI numbers you may see from competitors, we are taking a very strict definition here, probably really the strictest possible definition. We are including the whole lease assets here, so money which we haven't spent, which we are in many cases going to spend over a decade. This right-of-use asset is completely included in the denominator. We are including the whole pension liabilities and also the goodwill.
Just taking out the goodwill would already increase the number to 25%. For us, the important thing is, however, not playing around with definitions, but really making sure that within one very clearly and stringently applied definition, we get better every year. I think that is nicely visible on the slide here. We have organic growth opportunities. We are going to invest into those, and we are able to plan to do so also going forward, to deliver attractive returns. That takes me to the next element, our continued commitment to shareholder return. As already mentioned, we are proposing an increase of the regular dividend to EUR 1.80. That's going to be decided in the AGM on the sixth of May.
It's a 33% increase compared to the EUR 1.35 we paid last year. It is at the lower end of our payout corridor of 40%-60%, which we are also going to keep now going forward as the benchmark for our regular dividend. We are very much aware of that, but I think that gives us also flexibility independent of how things may develop going forward to really not only stick to that commitment, but also have a very nice trajectory going forward. Yeah, and on the share buyback side, in the past, we did two EUR 1 billion share buybacks when we had accumulated excess liquidity.
I believe this excess liquidity and accumulating it over years idea was from a time when we were still struggling to get to the EUR 2 billion in free cash flow. We now want to take a more holistic view, so we are going to look at how much cash we generate. We are going to look also at the overall strength of the balance sheet. We have hence decided to now go into a more ongoing philosophy with regard to share buybacks, and that is why we have now announced a program in sync with our overall guidance time horizon from 2022 to 2024 amounting to EUR 2 billion.
When you take the EUR 2.2 billion from the regular dividend plus the EUR 2 billion from the share buyback, we're actually talking about EUR 4.2 billion in shareholder returns here. That takes me to the third element, value accretive targeted M&A. I know when we announced Hillebrand last summer, we got a lot of questions. Oh, are you now going to do much more of M&A? You can obviously afford it. Let me put that into a very clear perspective here. Yes, we obviously can do more on the M&A side based on our cash generation, based on the strength of our balance sheet.
Also for the financing of M&A activities, we will probably take more of a deal-specific approach, looking at the best way to fund a specific transaction, always keeping in mind our targeted rating. I'll come to that in a second. There is more flexibility, but I think just because you can do something and you can afford to buy something doesn't mean that it's a good idea, which is why we are going to be very strict on M&A. We have three criteria which are equally important for us. The first one is we are not interested to use M&A to wander outside of our core business. We are looking for strategically attractive M&A targets in our core logistics area. That's where our strategic focus is. The second important element is it has to be at an attractive price.
It has to be value accretive. We are going to apply a very strict discipline also when looking at the financial business case for any M&A transaction. The third one is we are now at a point where all five operating divisions are really running like smooth oiled machines, and they are in that way able to also deal with turbulences like COVID or now rerouting due to the war in Ukraine. We are very keen to make sure that this does not get derailed through an acquisition, and we want to be sure if we acquire something that we have a clear path and a manageable path how to do with the integration. I think Hillebrand is a fantastic example here.
Very core in our global forwarding ocean freight business. Very attractive on the financial side and a very clear path to integration. This is how we are thinking about M&A. When I put all that together in our updated financial policy, I would say it's clearly more evolution than revolution. I already talked about our organic growth focus. On the shareholder return side, we are still committed to pay 40%-60% of our net profit as our regular dividend. On the share buyback side, we will regularly look at ways to boost the regular dividend with additional measures, where we will look at the cash generation but also at the overall situation, including M&A.
I think the EUR 2 billion announcement gives you a very good flavor of how we are going to apply that. Then on the M&A side, as already said, value accretive, targeted, looking at the right financing structure depending on the deal. The last element is on the rating target side. I mean, you know that we already have with one of our rating agencies an A-minus rating. We had so far the target to be triple B plus. We are widening that range. I think we are comfortable in the range between triple B plus and A-minus.
Of course, everything on the upper part of the page has to withstand the test that this rating framework is achieved. That's our updated finance policy. I think with the announcement on regular dividend and share buyback, we have already given you a flavor of how we are applying this going forward. That takes me to the summary slide before we come to your questions. We are on a new level. We're deeply convinced of that as the management team.
We believe that this combination of GDP-driven businesses combined with e-commerce growth as a booster is creating this basis for sustainably higher earning levels, which we are obviously very keen on making sure that this also translates into cash flow, generating the basis for good shareholder returns. As you heard very clearly from Frank, we are seriously committed to our ESG roadmap, and digitalization is a key driver for us to get a little bit better every day. With that, thank you very much from my side, and I will now hand over to Martin for the Q&A.
Great. Thanks, Melanie. Thanks, Frank, for taking us through the deck. This is now the opportunity for those in the Zoom forum to place their questions. I can already see a couple of raised hands here. We're gonna do it like this. I'm going to call up the next caller and the one after that. Even after two years of practicing, you can switch your camera on, decide how you wanna be seen, sitting in, all the rest of it. With that, I would like to start with Andy Chu from Deutsche Bank. After that, Christian from UBS will be the next. Andy, we can see you. Can you hear us?
Yeah, indeed. Hi, everyone. Just a quick question, please, around P&P. If I look at the 2021 EBIT, excluding the one-offs, we're looking at sort of a division that's generated EUR 1.8 billion of EBIT. I'm just wondering in assessing the sort of midpoint or the base case of EUR 1.5 billion, of this EUR 300 million delta, how much is due to sort of cost pressures, and how much is due to sort of volume and revenue pressure? That would be helpful. Thank you very much.
Yeah, I think I would say, Andy, I mean, that's of course a very good question, of course, also absolutely the right math. It is a mix of both. Obviously, we already saw a cost inflation in P&P in the second half of 2021, going into 2022. The limitation we have in P&P, unlike to the DHL divisions, is that we still have a sizable chunk of revenue with limited flexibility on the pricing side, the whole regulated mail side. We got a 4.6% price increase for three years, which is, of course, absolutely insufficient in the current inflation environment. There is a cost inflation pressure with the limited opportunities to pass it on element in here.
We have some special effects. We still have quite a bit of extra cost in the Q1 due to all the COVID measures and also quite a high sickness rate at the beginning of the year due to the Omicron wave we had. We have this impact of normalization on the parcel volume side in the H1 of the year and the continued mail decline. It's not one factor, but it's a combination. I think that led to this assessment of 1.5 ± 10%. It's a relatively wide range because it can go in the better direction. It can be more challenging on the inflation side.
I think also the important message beyond 2022 on P&P is that this is probably also the order of magnitude where we want to keep the business going forward. It will be a nice profitable, stable business, but it won't be much of a growing business. The growth, as indicated in the 8.5%, is coming from DHL. You're on mute.
Question around
Yeah.
Just following up in terms of wage negotiations and whether you're able to say anything at this stage in terms of timing of those negotiations. Will you have to wait until next year? Your comments there, Melanie, around sort of keeping the sort of EUR 1.5 billion, will 2023 potentially be a year that you might step down again from whatever levels you reach in 2022? Could 2023 be an abnormal year for P&P? Thank you.
I mean, 2023 is going to be the year, the last year of the three-year price regime. In that sense, 2024 is going to be the year where we have the last year of the price regime. 2023 is the year where we have the wage increase. On the other hand, I think in terms of passing on the cost inflation, also on the parcel side, I guess 2022 is going to be quite an interesting year. I would say the pros and cons on the different years, also with ups and downs, across the year.
I think one very important factor coming to your wage question, so we have a deal with the union until the end of this year, so we will only have to negotiate at the beginning of 2023. I think we now have to see what is the best approach, when to start the discussions. The interesting thing is in the H2 of the year, the minimum wage in Germany is going to step up quite significantly, to 12 EUR, which I think is going to be a big factor for our competitors, who had, in many cases, built their business models on cheap labor, and that is getting increasingly difficult. I think that is then also something going into 2023, which may also create some tailwind for us.
Okay, thank you, Andy. Before I come to Cristian Nedelcu from UBS, I wanna pre-alert Alex Irving from AB Bernstein, who's going to be next. I know your habit of three, if I may. Given time constraints and the number of people queuing up, you have to decide what are your top two questions that you wanna place. Thank you for that.
Thank you very much, Martin. My first question, if I could ask on your share buyback, I mean, your guidance implies excess free cash flow of around EUR 1.5 billion per year, but the run rate of your share buyback program is only around EUR 700 million per year. How should we interpret this? Is this just the uncertainty over the last few weeks? Is this a sign that maybe the M&A aspirations have increased a little bit in terms of the funds that you are willing to allocate there? How should we think, or would you revise this going forward? My second and last question, looking at air freight, and especially the Asia-Europe trade lane.
Now, I think you have 50% market share in Express on Asia-Europe, and we're seeing current airspace restrictions effectively lowering the effective capacity. Lufthansa Cargo is seeing 10% lower capacity in their network on Asia-Europe. How should we think about the drag in terms of volumes for you on this trade lane? Secondly, in terms of pricing and can you talk a little bit, how does Express benefit from potentially higher air freight rates on this trade lane in the context in which your contracts are already signed? What are the levers there to benefit from this? Thank you.
Yeah. Let me start with the first question on the share buyback. So I would say that if we commit to a number, we want to be 100% sure that we can certainly deliver at least that number. So I think the EUR 2 billion is a number. With all these uncertainties out there, we are very confident that we will deliver. Then we have to see how the next quarters progress. I think it's now also nice that we have it in sync with our medium-term guidance frame. If everything goes better, I think we will have to take a fresh look at it.
I think the very strong message is the EUR 4.2 billion from the regular dividend from the share buyback. We are extremely certain that we are going to execute on that. On the freight rate question, Asia to Europe. Yeah, I mean, as you know, the market was already quite tight on the capacity side. Rates were already high before this additional mega stress was created two weeks ago. I think what we see at the moment is longer flying routes because everybody has to fly around Russia. That is of course increasing the costs, reducing the capacity because you have to put more fuel into the plane.
It, of course, also has eliminated capacity in the market because many Russian planes cannot fly anymore. It is putting significant stress on the system. That is also, of course, something where our Express team and also our Global Forwarding team has to rejig the network, look for additional capacity, and it is quite stressful at the moment. I think we have simply the best and most experienced team in this turbulent market. They have already put so many actions in place that I am quite confident that we will get the capacity to keep serving our customers, which is our number one priority. Of course, we will pass extra cost on to the customers like we have done now over the last two years with the COVID ESS surcharge.
Okay.
Let me add maybe one thing. You know, the COVID crisis has demonstrated that complexity is good for players who can manage the complexity. Of course, we have, like in the COVID-19 situation at the beginning, it has normalized and over time. We're having a maximum complex situation now. I have no doubt that our folks will manage that very well on all dimensions. You know, it's a little bit weird, you know, if a war is there that you say, you know, we are capable in managing complexity, and I think we have proven that in the last two years very well.
Great point. Thanks, Chris. Before we come to Alex Irving from Bernstein, pre-alert to Alexia from Barclays. Alex, your best two.
Thanks. Two for me, please, both on Express. The first is around the risk of demand disruption, so specifically on the impact of rising inflation on Express demand in both fuel and non-fuel and independent of if we get a recession. But you're able to pass on some cost increases like fuel through the escalator, that's well understood, but are you worried about demand falling off as the cost to your customers gets higher? My second question is on your guidance through to 2024.
Probably fair to say that Express is doing quite a bit of the heavy lifting here, given that we've got the normalization to come on the freight forwarding side. Now, clearly, you don't give specific divisional guidance, but on broad principles, how much of the earnings growth in Express is going to be volumes, pricing, and margin in your view?
I think on the first question, Express, I mean, I think that is what we meant. We also have no crystal ball to know exactly how the whole demand patterns are now going to develop. That is, of course, also relating to the Express customer demand. What we have seen in the past is that also on Express, the breadth of the portfolio has made us much more resilient. Because in Express we are really diversified across sectors. When you look at pharma sector and so on, we don't see anything in terms of slowdown. We have the sectorial balance. We have this good split between small, medium, and large customers.
We have the geographic breadth in Express where, for example, on the whole Intra-Asia side, it is going on quite unchanged. I think the bigger problem in Asia at the moment is the COVID situation in Hong Kong. You don't feel much of an impact of the Ukraine there. Of course, the underlying thing is this structural e-com growth where we also see a lot of upside from the B2B side. I'm quite confident that Express will be able to find the right balance here. Naturally, if we go into a mega global recession, that is also going to be felt on the Express side.
I think it is, and has been, proven to be one of the mega resilient businesses, and very good in passing on inflationary costs, like through the fuel surcharge. In terms of who is going to contribute how much to 2024, as I already said, it's not P&P, which we assume relatively stable. It is growth from all of the DHL divisions. Naturally, just given the relative weight, the absolute uplift is higher also from the bigger divisions than from the smaller divisions. For Express, we have assumed a return over the horizon to more normal mid-single-digit volume growth rates, and a continued disciplined pricing environment.
Yeah.
Well, may-may-
Thank you very much.
-as well on Express. You know, we have said probably last quarter that we easily could make more profits if we had followed what the air freight market has done. We have not squeezed the orange to the max. That means we have not said, "Listen, you know, you have a customer have to pay now because freighter rates are so high," because we are an end-to-end service. We have done proper things, and therefore you should always look for the full year, not quarter by quarter. You know, we had a slightly lower margin the Q4 as well, and these are reasons some are related to mix and all this kind of stuff, but on the long run we have improved, but we didn't squeeze the orange to the max.
We have even gained in the air freight market and, you know, if markets are now even getting more tighter, I think we have a good opportunity in Express to stay on course. In DGF, you might read next question is what it means for DGF. DGF means, you know, we are in the process of gaining market share, and we have a lot of still improvements internally which can cover then if markets are getting more difficult to provide right pricing or whatsoever. I think we are well positioned there, and we have not taken the extreme in Express, I think, and that was very wise and will help us as well. When things are getting even more complex, customers are looking for us as a reliable partner.
Great. Thanks for the detail.
You're welcome.
Okay. Thanks, Alex. Before we come to Alexia from Barclays, Rob from BNP, get yourself ready. Alexia.
Hello. Thank you for taking my questions. Just my first one on DHL Express, I noticed that the aircraft deployed has increased quite considerably to over 320 aircraft. Can you just give us an indication of how much more growth do you expect in the capacity over the next couple of years, notwithstanding the eight or so aircraft that we still have to see from the 777 order? And in that context, if you could give us a sense of how well-utilized that capacity is on a kind of weight-adjusted load factor. So that's my first question. And then my second question is on fuel hedging.
Can you just give us an update on fuel exposure and again, how you manage, kind of the buying and obviously, notwithstanding the fact that you have this kind of automated, fuel surcharges, but any kind of additional color that would be massively helpful. Thank you.
Yeah. Thank you, Alexia. Two good questions. First of all, on the Express fleet. You may have seen that, we just ordered an additional six 777 s, which will only come in 2024, 2025. You could assume that we are kind of like, ramping up and growing further. You have to put that into perspective as a flexibility we have in the fleet.
When we ordered the original 777 s, the idea was that we would retire older 747 s. That is still what we assume in the medium to long term. Far, we have only executed half of the retirement compared to what we had originally assumed because we simply need the capacity. I think my honest answer is it will depend. We will continue renewing the fleet, which is also for ESG reasons the right thing, but which is of course also giving us a better utilization on the jet fuel side. Depending on the demand, we will accelerate or slow down the retirement of older aircraft.
That's the overall game plan, and that is why it's so important for us that we always keep a significant amount of flexibility short and medium term to also ramp down if growth should slow down. I think at the moment, obviously, the name of the game is more getting capacity with the Russian capacity now going out of the market, that is, of course, impacting the whole airfreight industry significantly. So I'm more glad than ever that we increased the fleet and that we have those planes now. In terms of fuel hedging, we really mostly rely on mechanisms which allow us to pass on increases in fuel costs to the customers.
We don't do massive hedges on fuel. We decided against that a couple of years ago and really went for these fuel surcharge mechanisms. In the most affected division, I think that's a very well-established mechanism. You have to deal with the two months time lag which we are of course feeling at the moment. I can still say that we had a good start into the year in Express. In Global Forwarding, it's baked into the rates. The divisions where we have a bit of exposure is, for example, in Parcel, in Post & Parcel Germany, in some of the Supply Chain things where ultimately we will have to take the right pricing decisions to pass it on. Yeah?
Great. Thanks, Alexia. Before we come to you, Rob, after that it's gonna be Johannes Braun from Stifel. Hi, Rob.
Hey, good morning, everybody. A couple questions, first on Express pricing. I appreciate that TDI pricing isn't directly related to air cargo rates. Nonetheless, as Frank alluded to a few minutes ago, when air cargo rates are so high, it is pretty helpful in terms of pricing power. So in that context, would it be fair to assume that the TDI price increases put through at beginning of 2022 were more assertive than what was put through at beginning of 2021? And then just a couple questions on cost. First of all, fuel costs, just a follow-up from a previous question. Could you clarify what percentage of fuel consumption across the group is passed through to customers, versus what isn't? And then the German minimum wage increase.
Just to be clear on this, because this is something that some of your investors were worried about going into today. You said that this would be a competitive tailwind for Deutsche Post. Are you saying that Deutsche Post won't be impacted at all by the minimum wage increases, or are you saying that it simply won't be impacted to anywhere near the extent that your competitors will be? Thank you.
Yeah. May I take the first, and Melanie, you can correct me. I think the first and the third. The first, I think, yes, we have seen a good, you know, the general price increase has been taken up well from the market. On the minimum wage, we have very few people who are paid below the new target price. Most of them are above that. That means, you know, for us, it will not change anything because we're paying already our people above that minimum wage. Maybe on the second, on the fuel, Melanie, you.
Yeah. I mean, absolutely right. Very assertive on the price increase in Express, no impact on the minimum wage and on the fuel. Our biggest overall exposure, when you look at our spend on fuel, is in the flying pieces. There on Express, we have this fuel surcharge mechanism where we have to deal with the two months time lag. On the air freight market, it's baked into the rates, where, of course, it depends in some cases on the specific contractual conditions. Normally, this is also something which is ending up with the customers. The overall exposure for the group is not as big as you may think in the beginning.
In certain countries, like in Supply Chain, where we have countries with a higher proportion of closed book contracts, that could have an impact. I think obviously in Germany, we have the problem, as I said before, that part of our revenue has a very limited headroom for price increases, and that is where it then gets a bit more difficult.
Okay, great. Thanks, Rob. Before we see Johannes Braun appearing, Muneeba from BofA, you're next. Johannes, hi.
Yes, hey. Two questions from me also. First one would be on forwarding. As you said, the GP to EBIT conversion in last year was 35%. I think the target once was between 20 and 30. Of course, the good performance was obviously driven by the higher freight rate level. Still, how do we have to think about the GP to EBIT conversion going forward, also in light of the implementation of CargoWise?
The second one, on the increasing CapEx, as you said, you have EUR 300 million more CapEx this year than last year. My understanding is that most of it goes into the eCommerce Solutions segment. Question would be, why does this segment need EUR 300 million more CapEx when it usually only spends around EUR 200 million in total?
Yeah, two good questions. On the DGF, GP to EBIT conversion is 35%. That is something Tim would have talked about in his capital markets day presentation. Obviously, we expect a certain element of normalization over time in the market. I think at the moment, it doesn't look like it. It's as discussed before, probably getting tighter, but eventually there will be a normalization. At the same time, we feel that there will be the increased benefits from our new systems and the aligned processes.
Obviously, aspiration would be that we don't fall back significantly, but that 35% is also directly the new flying altitude. We have to see how the normalization goes, but I think that clearly has to be the aspiration. On the CapEx side, just to be precise, I mean, we have a bit of catching up to do in other areas in eCommerce Solutions. We also have in Supply Chain the regular growth in CapEx in line with customer implementations and so on. I think just relative to the limited CapEx in eCommerce Solutions, that's probably percentage-wise, the area where we have a bit more catching up to do.
We have countries like the Netherlands, but also in the U.S., where we have seen just such enormous growth, that we are at the complete capacity limit, and we have to do some catch-up investments, which kind of like add up in 2022.
Great. Thank you.
Thank you, Johannes. Muneeba Kayani, you're next. After that, we're looking forward to have Sathish from Citi. Muneeba. You on mute? No, Muneeba, somehow that's not working. Let's see for you to sort it out. We have Sathish maybe chipping in, and we will then see that you maybe sorted your hardware setting out or whatever. Thanks.
Hi.
Hi, Sathish. We can hear you.
Yeah.
That's good. Yeah?
Okay. That's good, yeah. This is my line. Yeah. Thanks again for your time today. I got two questions. Firstly, on the medium-term guidance. How should actually one think about margin progression as we go into 2024 versus, say, in 2019? If you could share some color on what will be the relative margin uplift. Then secondly, on the cost, it's more specific to the P&P, actually. What is your level of automation today in Post & Parcel segment, and what levers do you have to actually offset some of the inflationary or wage-related pressure that might come through in the next couple of years?
Yeah. Maybe I'm starting with the first question on the medium-term guidance and what we will expect in terms of margin. That's difficult to answer for the group overall because it is quite different from division to division. I think on Express, having now achieved 17.4%, the focus will be more on absolute margin growth, and kind of like holding this new level with maybe incremental improvements, but it will be more kind of like an absolute EBIT growth, also driven by top-line growth in combination with a very good margin. In Global Forwarding, the value of EBIT margin is limited, because that really depends a lot on what the revenue is going to do with the development of the freight rates.
I think here more the important thing is the 35% GP to EBIT conversion we talked about. In Supply Chain, we have now achieved underlying a solid more than 5% EBIT margin, and I think that shows what that division is capable, and I think is also something we should aspire for going forward. In E-commerce Solutions, kind of like this 7% range, I think is a fantastic achievement. I think it will be now, given that this is also going to be a growth game going forward, I don't want to push beyond that.
It's kind of like really keeping the right growth with this order of magnitude on the margin, maybe even a little bit less, but really making sure that absolute EBIT grows nicely out of the combination of revenue growth and this order of magnitude on the EBIT margin side. On P&P, yeah, it will be more about keeping this absolute EBIT contribution. That's kind of like how we think about the different family members here. With regard to automation level in P&P, I think on the whole sortation side, we are very, very automated. We have been kind of like, I think, the leader in the postal operators here.
The big cost inflationary drivers are kind of like the last mile, where we have the majority of the staff costs because it is still a very people-intense business, and the transportation side, where we need trucks and, to a lesser degree, trains to do the long distance. That is where the inflationary pressures are mainly happening.
Great.
Yeah. Thanks very much.
Thanks, Sathish. I think Muneeba, the team reached out to you and you have your questions mailed to them, and then they hit my desk here. Which means we're going to continue with Andre Mulder from Kepler. Hi, Andre.
Hi. Yeah, I got two questions from my side as well. Firstly, analysts love numbers rather than words. So should we expect divisional standard growth rates and margin targets maybe later on? I do not know whether, Melanie, you referred to that, of holding back for the time being. Second question, looking at the sort of range that you gave for the EBIT in P&P, normally you would expect that will be the most stable division there. Is it so that especially the cost side is bringing you a bit of a question mark there?
Maybe on the margins, may I start with that somehow? Yes, we had originally intention to give you a little bit more guidance on that today. We will definitely do that soon, but we felt that this probably a little bit of awkward situation to give a new set of targets now out at the moment. Originally, we had the intent to do that. We are working on that because I think that would help, you know, analysts and investors quite a bit to understand that more and, you know, yeah. It should come, you know, if, you know, if the situation is more stabilized, I think then we will come up with more clearer targets we have for going forward. On P&P, I think we answered the question somehow. Melanie answered the question already.
You know, it's a mixture of different things. You know, we had you know a fantastic Q1 last year due to all the lockdowns. We had now no lockdowns. That means people went more out shopping in Germany. We had at the same time a higher infection rate which has driven costs up as well. Of course, these things we have anticipated already that they might happen. Therefore, we assume that the H1 of 2022 will not be as stellar anyway in P&P because you know these are facts. You know, one thing is going away, and you have seen with other postal operators as well. It's a little bit the normalization given that the parcels are not coming.
Then of course, you know, the overall situation is also, you know, not in the favor at the moment. Let's see that, how that works. I think the H2 , that's our assumption. The H2 should be relatively better than the H1 and that gives us and also the confidence that we can stabilize the profitability around the level. I think, you know, we had just some tailwind last year as well, and that is what you saw in our 1.75. That goes our way, in particular in the Q1 . It was, you know, massively last year if you look into, you know, what happened over the year. You know, we- I think we have taken a prudent decision to say, "Okay, that's the goal, and that, on that, around that level we can stabilize the business.
Okay, thanks.
You're welcome.
Great. Thanks. Before we continue here live via Zoom with Sumit from Société Générale, let me chip in the questions that we got in the meantime from Muneeba. Melanie, the first one, parcel volumes in Germany in Q1 this year, what to think about it? You talked about normalization, so where's that gonna be relative to 2021 or 2020?
Yeah. On the parcel volumes, I think we will see a decline in parcel volumes in Germany, and I think that is driven by two factors. The first one is that we see generally in the market that yeah, with COVID lockdowns being over compared to the Q1 still under strict lockdown in 2021, there is the normalization we had anticipated. The second factor is also something we had anticipated. There is insourcing from Amazon in line with our expectations. I think on that basis, parcel volumes in Q1 2022 will be below Q1 2021.
Excellent. The second one probably also for you. We've seen Express TDI revenue being very different to volume. What's the main driver there?
Yeah. Also a very good question. Indeed, there is quite a bit of a difference between volume development and revenue development in express. There are two main factors for that. The first one is that we still have this emergency situation surcharge in there, which has been supporting revenue, offsetting the additional costs we have on the flying side. The second thing is a trend we saw increasingly in the H2 of 2021, and that was more growth from heavier shipments with more kilos per shipment and hence more revenue per shipment. That is of course something where we also expect a bit of normalization over time. We also see that there are probably pieces of that growth which we can really hang on to.
Okay. Wait would be the answer.
Wait.
Wait would be the answer, Muneeba. I hope it didn't ruin your questions. We continue live now with Sumit, please. After that, Cedar from Morgan Stanley will be the next.
Thank you. Frank and Melanie, given the risks to the global trade growth, how confident are you with the current EBITDA and free cash flow guidance? How much do you think is it reflected in your ±5% range that you share with us today? Secondly, Melanie, can you give us some indication of the push you get from the Hillebrand acquisition in your guidance? I can imagine it's the first time you get a chance to include it in the guidance. Those are my two. Thank you.
Maybe, you know, on the first one, you know, what we have given to the guidance somehow, you know, there is definitely a challenging factor which could be that we see, you know, GDP decline or less growth than we anticipated. On the other side, you know, the whole Ukraine situation has led to tremendous constraints for the supply chains, and we have seen that in the COVID-19 as well. You know, the last one will be positive for our numbers. The first one will be probably negative. We believe that this will balance out somehow. As far as we know now, of course, you know, if you really have a global recession, which lasts long, it's the same discussion we had when COVID came. You know, what is the formation, is that now lasting forever or whatsoever?
It's a little bit difficult to predict at the moment. That's the reason why we said, you know, overall we have a very robust, resilient business model, given the circumstance, it should continue to grow. At the moment, the best estimate is that the two elements I just mentioned are balancing out each other. If things are getting worse, then of course the markets get worse probably as well on the logistics and maybe then still it's balancing out, but to which extent, we don't know. Therefore, I think we don't know. If that should be then reflected equally, you know, in our cash flow and not only in our EBIT. That's the reason why we stick to. We had the discussion, should we withdraw the guidance for 2022?
We felt no, given what we know now, I think that's prudent what we are guiding for. But also saying that these effects could happen, and we can only judge it, I think, in due course. That is, I think, you know, true for all indicators we have given to you today. Maybe on the second, Melanie?
Yeah, on the Hillebrand question. We are waiting for the final antitrust clearances and anticipate that we should close the transaction in the next couple of weeks. I would probably assume that, let's talk about an annual EBIT run rate of around EUR 100 million to start with. We will have some integration costs. If you then say it comes towards kind of like second quarter with some integration costs, probably half of the EUR 100 million should give us support in 2022.
Okay, perfect. Thanks, Melanie. Thanks, Sumit. We're coming to the last two callers actually. Next is Carolina from Morgan Stanley before we close with Sam from JPMorgan. Carolina.
Hi. Hello. Good morning, everyone. My question is, it's mainly on competition. What are you seeing in terms of the competitive landscape in e-commerce? You assume you are taking share under the business plan in the current countries, or you're just expanding in countries? Also curious how you're seeing the competitive landscape in Express. Are you taking share, and if so, in each markets, or you're just growing in line with the markets? Thank you.
Yeah, maybe on starting with the deferred parcel. In Germany, we definitely have gained market share if you exclude Amazon Logistics. You know, if you include Amazon Logistics due to the insourcing, all players have lost market share, including us. If you take them out, we have gained market share. In Europe, we believe we have seen market share growth in most markets as well. Particularly strong in the Netherlands, where we really gained market share, but also in others. In the U.S., you know, we are only a player in a very lightweight products, where we think we will have achieved significant market share already because the others are not particularly interested. This is an area where we are working very well together with the postal service.
It is a nice area because that's from all segments around the world, the fastest growing segment. That's the reason why we have grown so rapidly and gained market share in that segment as well. In India, I think we are the premium provider, and in B2B, we kept definitely our market share. This is very fragmented, somewhat still market. India is more the overall growth opportunity is tremendous due to the size of the population. Of course, you know, if you get out of COVID again, these markets will undoubtedly start to grow again quite rapidly, I think. Overall, it's, you know, it's not one single answer to that. That was the question number one.
On Express, I think, you know, overall, you know, if you exclude the U.S., I think because the U.S. is a significant part of the express market, we definitely think that we have gained market share. We have not done recently a survey, but from the indirect statistics about volumes, we have, you know, we have managed in the international express business, we believe we have gained market share too.
Great. Thanks, Alexia. Yeah, that means we're closing off with Sam Bland from JPMorgan. Hi, Sam.
Hi. Thanks for taking the questions. Got two, please. The first one is on Express. I think it's related to what Frank was saying earlier. You know, in Q4, we saw margins down a little bit. I appreciate you maybe don't wanna squeeze the orange, as you said, as much as you could, but I guess we were seeing margin growth up until Q4. Just, was there something that changed in Q4 that made you maybe couldn't push pricing as much as otherwise? And the second question is on just getting some thoughts on the sort of initial impact to the air freight market of Russia-Ukraine. I think the presumption is that it's kind of adding to tightness and congestion and probably pushing up freight rates. Is that what you're seeing from the initial indicators or not? Thank you.
Yeah. The second is a very easy answer, yes. The market is even tighter than before because, you know, some Russian carrier is out of business now. They can't operate, you know, any longer, and therefore, the market is tighter than ever before, and the rates are going up quite a bit. You remember the first, Melanie?
I think on the first, we really focused consciously, and we had already said that before year-end on quality. I'm not concerned about kind of like a downhill slope for the express margins. As I said, the 17.4% for the whole year, I think that's a nice order of magnitude, and I wouldn't overinterpret Q4.
All right. Okay, thank you.
Great. Thanks, Sam, and that's concluding the Q&A round. Thanks to everyone out there for the very focused manner. I hope the answers were as focused and useful also to you. We covered all the ground that we expected to cover. Looking forward to see you over the next couple of weeks, maybe even in person. I want to thank you and hand over to Frank for his closing remarks.
Yeah. Given the circumstances with the war in Ukraine, of course, you know, it is, you know, a very strange feeling somehow to talk to you about the prospect of the business, because probably we all have our mind on the people who are so heavily impacted by that and the potential consequences. Nevertheless, you know, let's summarize what we have told you. You know, we had the best year ever in this company, because, you know, we have really done a lot in the five divisions, and of course we are well-positioned to a structurally growing market. As we said, I think we have as well a very clear strategy focusing on all key elements, how we can be long-term successful.
The team is currently working really on managing the challenging situation on the short end, but that doesn't take us away from believing that we have really achieved a new level, you know, in performance, and on that we can grow, you know, in the next couple of years successfully. You know, that is what the story is now all about. I think, you know, the next weeks and months might be distorted to a certain extent, but I'm very sure that our organization will do their utmost to really help, you know, our customers in the world to keep going and get proper connection between the different dots. Therefore, I would like to say thank you for participating, and hopefully we see each other soon in person again, and hopefully that nightmare is over as well very soon.
Doesn't look very promising at the moment, but you never know. I hope that this goes over fast and then we can look into a normalization of everything. With that, thank you very much for joining us and have a great rest of the day. Thank you.