Ladies and gentlemen, thank you for standing by. I am Emma, your Chorus Call operator. Welcome. Thank you for joining Deutsche Post conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touch-tone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Martin Ziegenbalg, Head of IR. Please go ahead.
Thank you. Good morning, and a warm welcome to everyone out there to our scheduled Q2 2020 reporting call. As you've seen in the invite, I've got Melanie, our group CFO with us, who will take you through the presentation, which I take it you have in front of you. After that, there will be time for Q&A. The usual procedure. Melanie, over to you.
Thank you, Martin, and good morning, everybody. Welcome, also from my side, to our Q2 call. As you know, we pre-released our Q2 numbers in early July. I think the 1st important message is that in the second quarter, our group EBIT was back to growth. I think what is extremely pleasing, and you will see that in the remainder of the presentation, all five operating divisions had a positive EBIT, and actually four out of five divisions showed year-over-year EBIT growth. The 2nd positive message is that cash flow development has been very strong in the second quarter, but overall for the first half of the year 2020. For me, this is both a confirmation of the fundamentally sound operating performance in our divisions, but it's also the result of our strong internal focus on improved cash generation.
Obviously, it has been quite a dynamic development in the last month. In the beginning of the pandemic, our focus had been very much on preserving liquidity, keeping us in a super safe balance sheet position. In early July, based on the good performance we had seen in the second quarter, we had a discussion in the corporate board, to reassess our cash allocation. As you will have seen on that basis, we first of all took the decision to reward our employees with a bonus for their exceptional efforts throughout the last month. We also scheduled a date for our AGM, and honored our commitment to dividend continuity with a proposal of a EUR 1.15 dividend to the AGM. I guess overall, so far, we have gone through this Black Swan event quite successfully.
I would say that our investment case, which you can see on page three, is fully intact. The first element of our investment case is sustainable growth from our diversified logistics portfolio, and you can see that in action on page four. As you can see here, we had a reported EBIT revenue growth of 3.1%, organic growth of 4.6%. We, of course, saw an impact of the pandemic situation, for example, in our mail volumes, and also overall in global trade-related flows. Four out of five divisions, nevertheless, were able to report a solid revenue growth in the second quarter. The one division, Supply Chain, where we had a revenue decline, that was driven by the fact that this non-network business is really impacted by lower activity levels in customers' operations.
Quite often, we have dedicated customer sites, and that of course also had an impact on our Supply Chain revenue development. The growth we saw across the group has also been heavily driven by e-commerce. We have talked about that now for quite a long time as a structural growth driver. Of course, that was also an important element now in the second quarter of 2020. The growth in the second quarter is also a manifest of our ability to successfully manage through very unusual market circumstances, like for example, the tight Air Freight market, as well as a very quickly changing volume pattern, which we saw over the last month in Express. Let's take a look at some important volume trends.
I think nothing materially new, but I would still want to talk a bit about what we saw in P&P Express and Global Forwarding on the next three pages, starting with P&P on page five. As previously flagged, dialogue marketing volumes were down significantly, but that was offset by the very significant growth in parcels, up 21% in the second quarter. One of the positive numbers on this page here is the mail communication decline, which with -3%, has held up very well. Just as a reminder, we had a change in product portfolio at the start of the year, which led to some shift from dialogue marketing to mail communication. We lost more on the dialogue mail volume side than what we gained on the mail communication side. Of course, particularly in dialogue marketing, we also see the impact of the pandemic.
You can also see the strong effect of our continuous yield measures, driving higher average unit prices in both mail and parcels. The positive developments, particularly on the parcel side, are really the result of the very focused yield initiatives we have been driving for the last two years since the summer of 2018. That is also a very structural trend which we're seeing here, which has been helped in the second quarter also by a very healthy customer mix under the pandemic. Express volumes on page six show, 1st on the left side, the monthly pattern, which we also described early on. We had a very good start into the year in January. We saw the effect of the pandemic in February in China and Asia. Early March, we were back into growth.
Of course, with the lockdowns in Europe and the U.S. taking effect in the second half of March, we turned into negative territory in March again. April was the low point. By May, we were back into growth, in June, we saw a very strong and healthy growth in our Express TDI volumes. This growth is strongly driven by e-commerce. Just as a reminder, for our Express division, it's premium e-commerce. We always had a very strong focus on taking the right type of e-commerce into our most expensive network. What we always say internally, e-commerce but in a profitable way. You can also see that in the good margin development in Express. On the right side of the graph, you can see the regional split. I think nothing really surprising here. In the first quarter, Asia was the declining region.
In the second quarter, Asia, particularly driven by China, was healthily back into growth, whilst for the quarter overall, we had negative numbers in Europe and the Americas. There as well, we of course, saw an acceleration in growth from April towards June. That takes me to page seven and the forwarding volumes. I think obviously, Global Forwarding and particularly Air Freight, has been the most distorted market, where we saw the most unusual patterns. Volumes are down significantly, but I guess it looks, compared to markets, as if we still performed relatively well, particularly on the Air Freight side. I think I really have to say thank you to our Air Freight team here.
They did an outstanding job in early on securing capacity in this extremely tight market, where the name of the game in the second quarter was getting the right type of capacity at all. By moving swiftly and using our longstanding relationships and our size advantage, we have been able to deliver strong GP uplift, and that has been the main driver for our strong Q2 EBIT overall. That being said, it is also encouraging to see that GP per TEU was up in Ocean Freight, and also on the Road Freight side, our colleagues have equally managed to navigate successfully through these unusual circumstances. One very positive number which you may have noticed is our GP to EBIT conversion for DGF, an order of magnitude we had never achieved before.
As you know, Tim and the team are very focused on structurally improving the GP to EBIT conversion by improving our core processes. We have to be honest, however, the number we now saw in the second quarter is, of course, also due to the unusual circumstances and a positive outlier. The underlying trend is also going in the right direction, but merits take a bit longer in an underlying way. Yeah. That takes me to page nine and the overall profitability improvement, which you can see in our P&L on page nine. In a nutshell, based on a solid revenue increase and strong cost focus, we turned the roughly 5% organic revenue growth into a 19% EBIT increase, which I think is quite a pleasing development. No unexpected moves otherwise below the EBIT line.
Tax is up, reflecting both higher earnings as well as an increase in the tax rate in line with our guidance for the year 2020. The bridge on page 10 is something that we already showed you in early July. We have now updated the page with our final Q2 numbers. The message ultimately remains the same as on July 7th. If you adjust for all non-recurring items, group EBIT was up significantly, plus 26% year-over-year. In that number, we have included all operational COVID impacts. With every month, it got more and more difficult to quantify them in isolation, so we're not doing that anymore. The only precise COVID-induced one-off number we are showing on this page is the -99. Those are the extraordinary asset impairments which we did induce by the lockdown measure. 26% overall operating EBIT growth is a very healthy result.
If you ask me, honestly, probably not the number I would have predicted at the beginning of April, when we were just all going through the low point of the pandemic to date. Yeah. Page 11 recaps the main drivers by division. I'm not going to go through all the numbers and all the information here on the page, just a couple of words by division. I think in P&P, two things are sticking out. Under the pandemic, we have seen an acceleration of the structural shift from mail to parcel. It's a little bit of fast-forward to a state we may have achieved otherwise in maybe three years' time. The positive news is that we have been able to operationally cope with this acceleration in mail volume decline and the boom in parcel.
It has obviously also worked financially, and that is due to the second important point to emphasize on P&P. For the last two years, we have made great progress in all those structural improvement programs, be it the overhead cost reduction, be it the systematic yield improvement programs, and that is what is really helping the strong P&P performance. The Express colleagues have once again done an excellent job in adapting the network to the quickly changing circumstances, and to make sure that the extra cost we had in the network were already also offset on the yield side, where we have been able to really provide our customers with ongoing service quality, and we have been able to give them capacity, which under the current circumstances, wasn't to be taken for granted.
Global Forwarding, as already mentioned, the really great DGF performance is predominantly driven by the strong Air Freight GP development as the main driver. Supply Chain, our not network business. We here also on the EBIT side, see the impact that this business is more closely linked to activity levels of individual customers. I think that explains why the impact of the pandemic in the second quarter has been more pronounced for Supply Chain. However, also here, cost focus and the diversified customer portfolio have been key to maintaining a positive current profit contribution despite the EUR 500 million lower revenue shown earlier. Finally, last but not least, DHL eCommerce Solutions is taking full benefit of orientating its network totally towards B2C.
Our youngest division was just in the positive, despite a EUR 30 million asset impairment in the second quarter, which is great. They are firmly on track towards the first positive EBIT contribution for the full year 2020. With that, I'm turning to the important topic of cash flow generation and cash usage. The Q2 cash flow statement on page 13 shows how the EBIT performance is translating into even stronger OCF growth. Where is that coming from? Well, in addition to the strong reported EBIT growth, this reflects the fact that a lot of the Q2 one-offs are non-cash: the asset impairments, some of the provisions for the StreetScooter restructuring costs. We also delivered an ongoing strong working capital control, and that all leads to our OCF being up EUR 381 million year-over-year. In the second quarter of 2019, we saw the peak in the 777 CapEx.
I think to have an honest free cash flow year-over-year comparison, you have to take out the 777s, and that is what we did in the last line on page 13. You can see that excluding the 777 CapEx, we actually improved our free cash flow by EUR 444 million compared to the second quarter of 2019. Overall, reported a free cash flow of more than EUR 600 million in the second quarter of 2020. On page 14 and 15, we have updated our expectations for the major cash flow drivers in 2020, and we have also given you an indication towards our 2022 guidance. One obvious question when you look at our guidance for the year 2020 is, why are we able to keep our free cash flow guidance at EUR 1.4 billion, which we also had pre-COVID, when we were still targeting a significantly higher EBIT?
I think the 1st thing to bear in mind is that our EBIT guidance, the EUR 3.5 billion- EUR 3.8 billion, includes around EUR 700 million in one-off costs. The biggest chunk of those EUR 700 million are non-cash. Depreciation, amortization, and changes in provisions. Secondly, we have seen a very strong working capital performance so far in 2020, where we are quite confident that we should be able to hold onto at least part of that in the second half of the year. Thirdly, whilst we have EUR 200 million one-off in real cash from the employee bonus, we also expect EUR 200 million lower CapEx than in our original guidance due to a different way of financing the 777.
You can see more details and numbers on those two pages. We do hope that they will be helpful to model the free cash flow, not only for 2020, but also for the outer years towards our 2022 guidance. Let me have a quick word on the balance sheet. You can see that on page 16, where I want to mention two significant movements in the second quarter. The 1st one, also nothing new, is we issued EUR 2.25 billion in bonds in May at record low coupons. That is obviously, I would say, further safety buffer on liquidity.
This has led to a balance sheet extension per quarter end, and of course, it has also been one of the drivers for the step up in our cash and cash equivalents position at the year end 2019, that stood at EUR 2.9 billion, 30th of March EUR 2.6 billion, and now on the 30th of June, up at EUR 4.6 billion. The second point I want to mention is the development in our defined benefit pension obligations. Obviously interest rates have further declined in a very extreme way in the U.K. You can see that in the lower right corner of that page. In Germany, we had a bit of a refinement in the methodology that helped to dampen the decline. I guess the big topic is the U.K.
I guess we will not be the only company to tell you that we are currently in discussions with our U.K. pension trustees how to address this topic. Obviously, that size of a decline, nobody had ever seen in the U.K. before in a quarter. Turning to a couple of pages which are completely unchanged compared to July 7th. I guess I can be rather quick on pages 18- 20, as we basically confirm all guidance components as given in July, as well as our dividend proposal, which is a good sign of stability in our finance policy. Page 18 shows our new 2020 guidance as introduced on July 7th. No change here. I just talked about the bridge to the EUR 1.4 billion free cash flow target.
Page 19 tries to kind of put this guidance a bit into context, pointing towards the one-off, EUR 700 million of one-offs included in the EUR 3.5 billion-EUR 3.8 billion guidance. If you take that out and you look at the operating performance implied by the guidance, you can see that this guidance actually implies 4%-11% growth in 2020 towards an EBIT run rate of EUR 4.2 billion-EUR 4.5 billion, excluding the earlier flagged and explained one-off. On page 20, 22 guidance is also fully confirmed. No changes here. Last but not least, on page 21, I am very happy that based on the good Q2 performance, we felt indeed able to schedule a date for our AGM and to fully deliver on our promise of dividend continuity by proposing a stable dividend of EUR 1.15 per share, also under the very unusual circumstances of the year 2020.
I know every once in a while it still comes back, should any one of you still have 2009 in mind, I hope that this eventually testifies our strong commitment to shareholder returns and our finance policy. Technically, we are in the final stretches of preparing our virtual AGM for August 27th, and the dividend payment is then expected on September 1st. To conclude, it has been a challenging and unusual year, I guess, for all of us. I think on the positive side, it has shown how mission-critical logistics services are to keep the world moving. For us as a company, it has shown how our leading and diversified positions across the industry provide us with a resilient base for sustainable success. That is what gives me strong confidence beyond this second quarter.
Our stable strategic logistics footprint in combination with our agility, which we have proven now in the second quarter, where we really had to respond rapidly to unforeseeable events. The colleagues out there have done an amazing job. I think the fundamental basis for this success has actually what we have worked on continuously over the last years. That is our company culture and the values. We have had our purpose, connecting people, improving lives out there for many years now. Our people across the organization have probably never felt this contribution, this purpose, so real and firsthand like under the pandemic circumstances now in the second quarter. I think that shows that also with our Strategy 2025 aspiration, we are on the right path to keep delivering sustainable performance also for the next quarters. With that, Martin, back to you, and we are happy to take your questions.
Exactly. Thanks, Melanie. Emma, if you will then push all the right buttons to initiate the Q&A, please.
Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session . The 1st question comes the line of Daniel Roeska with Bernstein Research. Please go ahead.
Morning, Daniel. Daniel, can't hear you.
Good morning. Oh, sorry. Good morning, everybody. Maybe 1st on the Express pricing, that seems to be fairly benign, so it didn't really move that much in the quarter, although Air Freight capacity was very tight. What did you see in terms of price and mix development in Express, and how should we think about that in the quarters going forward as Air Freight capacity likely remains fairly tight? 2nd, on Supply Chain, could you comment a little bit on the different verticals in your Supply Chain mix, and again, how you would be thinking about those over the next couple of quarters? It seems that that's a business that really cranked down on cost, and that was a big benefit in Q2. I'm sure there are different developments depending on the verticals and just some guidance on how that's progressing would be helpful.
Lastly, on the pensions, which you already touched on. It seems like the plan assets are proceeding nicely. Of course, there's a question around how plan assets will develop in the next, let's say, 12- 24 months. What scenarios are you considering when it comes to your pension in the medium term? Is there any scenario out there where you would consider funding a little bit more into the pension deficit? Thanks.
Yeah. First of all, on the Express pricing. Our basic philosophy here under those circumstances, as we saw in the second quarter, has been that we have to find a way through special pricing to offset the extra costs we incurred in the network. That is why we introduced an emergency surcharge in the second quarter, which we refined several times in the course of the quarter. I think really the fundamental approach here has been not to really squeeze the orange to the limit and go for the maximum yield, but to also work with our customers and to support our customers, and get to a level where we are able to offset the additional costs. In the second half of the year, we will go through our general annual GPI exercise. Those discussions are ongoing, are of course influenced by the pandemic.
I think the Express team doesn't see a necessity to fundamentally change our approach here. I think this approach has been extremely successful over the last years, where we saw good growth, and a good margin development at the same time. In terms of the Supply Chain verticals, yeah, indeed, a mixed picture. Not surprisingly, the best performing sector has been life science and healthcare. We also had positive developments in part of retail. You know that other parts of retail, like fashion, weren't doing really well. Then of course, in terms of the lowlight, that has been auto mobility, the whole automotive sector. I would say overall, we have now seen towards the end of the second quarter that across all verticals, things are moving in a more positive direction.
We are, for example, tracking the number of closed sites, where there's no activity at all. That has come down significantly. We are also tracking sites where the volume levels are significantly deviating from the normal levels. Here, we still have a number of sites, but also the number has come down overall. For Supply Chain, we also expect a gradual recovery in the second half of the year. Obviously, given that some sectors, like for example automotive, are still not doing well, we won't come back to what we had originally planned for Supply Chain for the second half of the year .
In terms of pensions, the one country where we have to keep a close eye on in terms of pension deficit is the U.K. Due to this dramatic decline in discount rates, the deficit has gone up. As I mentioned before, we are not alone in this situation. What normally happens is that you discuss with the trustees a multi-year approach to closing a gap. The U.K. is really the main country for us. I hope that answers your questions.
Thanks. Basically you're not worried about the German defined benefit at this point?
No. In German, we don't have a required funding level. There's no pressure from anybody. I'm not concerned about the German situation at all.
Right.
Great. Thanks, Daniel. Next question then, please.
The next question comes from the line of David Kerstens with Jefferies. Please go ahead.
Hi. Good morning, everybody. Two questions, please. 1st of all, on your TDI volumes in DHL Express, I was wondering if you could give a split between the growth in, or the decline maybe, in B2B, and the growth offsetting in B2C. I think some of your peers had seen an earlier recovery than June, but I was wondering how strong was the recovery that you experienced in June in TDI volume. Secondly, on the Air Freight market, you seem to have gained substantial market share and still managed to increase the yield by far the strongest in the sector. I was wondering, what's driving that substantial gain in market share? Is it the access to capacity, partly facilitated by DHL Express? Some more color on that would be very useful. Thank you very much.
Yeah, thank you. Two good questions. 1st of all, on the TDI volumes, I think the comparison with peers is always a bit difficult, and I think under the current circumstances, even more so, given that our peers have a much stronger exposure to the Transpacific lane, whilst our portfolio is really globally more balanced. When we look at what we saw on the Transpacific, that is much more in line with what our competitors reported. In terms of B2B, B2C, I would say B2B also recovered in the course of the second quarter compared to the low point in April, but is still negatively impacted towards the end of the quarter.
The strong growth driver for this significant growth in June has been B2C. Again, what is pleasing for me is that, and this is what we consistently showed over the last years, we are able to get the right type of B2C in our Express network. The Express margin was really good now in the second quarter, even with this different mix compared to normal circumstances. On the Air Freight side, I think it's a combination of factors. The good working relationship between Global Forwarding and Express was clearly helpful.
Overall, our Air Freight colleagues did an outstanding job in securing capacity early on. Of course, we were also able to leverage our longstanding carrier relationships and our sheer size because the name of the game in Air Freight in the second quarter was securing capacity, and I think we have been obviously quite successful in doing that for our customers.
Yeah. Understood. Thank you very much.
Thank you.
Thanks, David. Onto the next participant, please.
The next question comes from the line of Sam Bland with JP Morgan. Please go ahead.
Good morning. I've got two questions, please. The first one was to have maybe a little bit more color on P&P and specifically, what you're seeing in dialogue marketing and parcels, as economies open up and shops start reopening. The second question was on CargoWise. I know the statement mentioned some good progress on rolling out CargoWise. How do you think you'll see the eventual efficiency improvements come through? Do you think you'll see a big, some kind of cost savings program to rationalize on the headcount or to take account of that efficiency? Or what do you think, headcount stays the same and you just grow into the higher volume? Thank you.
First of all on the P&P development, what we saw with the lockdown was a dramatic drop in dialogue marketing volumes, I guess not surprisingly. Here we have seen a bit of a recovery now with shops opening up. Overall, the decline rate is still stronger than what we would've expected under normal circumstances. It has improved compared to the low points. On the parcel side, we saw the strongest peak in growth in April. At this point in time, we are still at a growth level, which is significantly higher than what we had assumed in our internal plans at the beginning of the year. It is still very healthy growth on the parcel side, but also in an operationally manageable way.
In terms of CargoWise rollout, yeah, thank you for that question because unnoticed, and relatively surprisingly undeterred from the pandemic circumstances, we have been able to continue with the rollout. We have a bit of a delay, but nothing material in the greater scheme of things. The CargoWise rollout is progressing. The colleagues have found ways to do lots of the training, which had normally happened physically now in an online format
. On that basis, we are also sticking to our plans to over time improve the GP to EBIT conversion on the back of the CargoWise rollout. At the moment, we are still obviously far away from volume growth in Air and Ocean. Over time, the anticipation is that we will grow into the freed up capacities. I think that's really something we now have to see in the second half of the year, depending how both Air and Ocean develop on the demand side.
Good. Thank you very much.
Thank you for Sam. The next caller then, please.
The next question is from the line of Cristian Nedelcu with UBS. Please go ahead.
Hi. Thank you very much for taking my questions. Maybe firstly in Express, how should we think about Express margins going forward into Q3? Is it fair to assume that there should be upwards pressure as volumes are picking up and as the load factors improve sequentially? Secondly, in Parcel Germany, could you give us a bit more color, what is happening with Amazon volumes versus your expectations at the beginning of the year? Secondly, in Parcel Germany, looking at this price mix in Q2 of 6.5% or so, could you elaborate a little bit how much is due to yields? How much is due to the actual customer mix? I'm just trying to think what could be sustainable in the second half of the year. Thank you.
Yeah, so, on the Express margins, we obviously saw now in the second half of the second quarter how good it is for a fixed cost network when volumes are coming back. If that trend now continues in the third quarter, and growth levels have been quite healthy also in July, that should be quite helpful for the Express profitability overall. It's almost a textbook volume coming back into a network business. With regard to Parcel Germany and Amazon, we had said at the beginning of the year that we expect continued insourcing from Amazon, and that this will lead to a reduced exposure with regard to the Amazon share, and that is what we see happening now in the second quarter. Amazon insourcing continues.
I think also on the positive side, we see such a strong and broad-based growth across many customers, that it's really a very healthy development on the mix side, which takes me to the 2nd part of your parcel question. When you look at what we have now shown consistently over the last quarters, we always had a good spread between volume and revenue growth in parcel. The pricing measures are still giving us a solid tailwind here in the second quarter that was complemented also by a very good structural development.
Thank you very much.
Okay, then. Onto the next caller, please.
The next question comes the line of Muneeba Kayani with Bank of America. Please go ahead.
Hi, two questions from me. On parcels in Germany, given the strong volumes that you've seen, how are you thinking about capacity, and do you see need for investments to increase your capacity there? Secondly, on the forwarding side, how should we be thinking about unit GP in the second half of the year, as the Air Freight market somewhat normalizes?
Yeah. Two good questions. First of all, on the parcel capacity side, I think what really helped us enormously here, was the structural work we had done on making also better utilization of freed up capacities on the letter side. For example, using letter sorting centers for small parcels. I think without that, we would have really struggled operationally. As I mentioned before, it's a bit of a fast-forward to a situation we would have seen this normal development probably in two to three years' time. Which brings me to the capacity question. We, of course, will have to continue investing into our parcel network, but that is something we had included in our regular CapEx plans. I don't see any dramatic new spikes now, due to what we saw in the second quarter.
In terms of GP per unit in forwarding, that's a very good question. I think, what we clearly expect is that the supply side will continue to be distorted in the second half of the year. I guess nobody is anticipating a significant increase in intercont air capacity in the short term. The supply side of the Air Freight market will continue to be distorted. I think the difficult question is how quickly, and on what trade lanes will demand actually come back. I think that is going to drive the overall profitability dynamic in the second half of the year. What we have seen now in July was a bit of a continuation of the second quarter trends, but it's really very difficult to predict how long this distorted situation is going to last. We really have to play it this month by month.
Thank you.
Thanks, Muneeba.
Thank you.
I think there's one caller still in the queue.
Yep. If there are any further questions, please press star followed by one to ask a question. The next question comes the line of Mark McVicar with Barclays. Please go ahead.
Yes, good morning. Two questions slightly off the normal beaten track. On the asset impairments, can you say a little more about what sort of sites or assets you've had to impair, and what gives you such certainty that the value won't return or those assets won't become usable again, is the 1st question. 2nd question, could you elaborate a little bit on the alternative 777 financing? If it's not on the balance sheet, it's not an operating lease, what sort of structure are you using? Is it possible that as much as the balance of the order will end up being financed that way and therefore out of CapEx? Thank you.
Two new questions indeed. Thank you, Mark. First of all, on the asset impairments, there are two big elements in the EUR 99 million. The 1st one is EUR 60 million in Supply Chain, which is an asset impairment on our pub drinks delivery business in the U.K., where obviously with pubs being closed, we had a material impact to that business. Also the way we now see things coming back, we had to adjust the growth perspective, that led to the asset impairment to the new assumed fair value. The second big chunk in the asset impairment was in our DHL eCommerce Solutions division, where we have a stake in a parcel shop network in France, which was negatively impacted by the lockdown measures because the majority of the shops was closed, which likewise led to an asset impairment on that investment.
Those were the two big chunks, EUR 60 million, the pub business in the U.K., EUR 30 million, the French parcel shop network. In terms of aircraft financing, we really have a very customized approach for each of the new 777s coming into operation, depending on where we want to operate the aircraft and what is, at that point in time, the best available financing construction. What we now did for the last three 777s was a financing lease type of transaction, which unburdened our cash flow and CapEx from an accounting perspective and is now leading to payments over time. With now each of the new ones coming into service, we will take the best solution for the respective aircraft. It's difficult to give a forecast, which is why we have now assumed that the additional aircraft will be coming out of CapEx.
Okay. That's very clear. Thank you.
Thank you.
Thank you, Mark. Emma, am I right? No further callers?
Yep. There are no further questions at this time.
Okay. That gives me opportunity before handing back to Melanie for closing. Just a bit of advertising on our IR behalf. As you have seen yesterday on the invite, we're going to run another virtual tutorial in September. September 3rd, on how we deal with data analytics and its various aspects throughout the group. Four weeks later, early October, we will have John Pearson and members of the team educating us a bit on why e-com works for Express, which has been topical also in Q2, obviously. Looking forward to that. 1st, let's deal with the month of August. Melanie, over to you.
Thank you very much, Martin. To wrap up, I think the second quarter under those very unusual COVID circumstances has shown the strength of our portfolio and the agility of our organization to really react to unforeseen events. I think we have really lived up to our purpose, connecting people, improving lives. I think on that basis, no matter what shape or form the recovery is going to take over the next quarter, we feel quite confident that we will be able to deal with the new reality and the changed circumstances. Thank you very much and all the best to all of you out there, and have a good summer if you still have a bit of a vacation coming up.
Bye-bye.
Bye.
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.