A
big thank you on behalf of the entire board and my team that you followed our invitation at a warm welcome also to those following us on their screens via the internet. We know that this has become more and more frequent in recent years. And we are very pleased with the combination of a physical press conference and the possibility to join us over the internet. Please mute your mobile phone so that there are no interference if which will make it easier from a technical standpoint. Before I say a few introductory words, let me introduce the two people next to me CEO Frank Happel to my left and next to him, Melanie Christ, CFO of Deutsche Post D.
H. L. I will first give the floor to Frank Apple. And together with Mrs. Christ, he will describe the development of our business activities in Q3 2018, then you'll have the possibility to ask questions.
Thank you very much, Ms. Ayard. Ladies and gentlemen, welcome. First of all, I'd like to give you an overview of the group's current position. And afterwards, Mr.
Kite will give you all the details on our financial KPIs. How can I sum up the results of the quarter? Well, I can sum them up by saying that everything is perfectly in line with our expectations. After we changed our guidance in the summer or in the summer, the DHL divisions are developing very positively as you will see in a moment. And in the PeP division, we can see that our measures are bearing fruit and that also positively impacted on our numbers.
Overall, the economic environment, is shaped by more uncertainty. It certainly hasn't become more stable, but we can say that we are well on track to achieving our goals both for this year and by 2020. So let's take a look at the figures This is not adjusted for currency fluctuations and M and A. But you can see that our business grew overall in the 3rd water, slightly so in the PET division. Last year, we had the positive effect of the German federal elections, which positively impacted on volume.
Express is also growing very strongly. Within forwarding and freight, we are also witnessing growth, even though there is a bit of a volume decrease But our measures have been very successful. And at supply chain, we can see that there's also growth, even though growth, even though the numbers are negative, but that is to do with the effect of the Williams Lee Transact details in a moment. At Express here, you can see the organic growth rates to a different extent. As you can see that at Express, the successful margin trend is continuing.
You can see that we reached almost 12% and this is the 12 month average on a rolling area. Then there was the decrease, within PeP and supply chain, a very positive trend. Margins have improved considerably. Within supply chain that has been a trend for years. But at global forwarding freight, we also see a very positive trend.
We are almost at the historically positive development we witnessed a couple of years ago. We are well diversified and there are different risk profiles, as you can see on this slide. There are two businesses that very much benefit from B2C And E Commerce Business, and that is not directly tied to the overall economic development because there is growth in these areas regardless of the overalls. And we have DGFS. So these are two areas that are more dependent on the overall economic development in the world.
Supply chain is less dependent of that. So that is a balancing factor in the 3rd quarter, but still the figures in the DHL divisions are good. I mean, there are even better predict what the future will look like, but it goes without saying that more tariffs in taxes and cross border trade can't have a positive impact but we are using yield management and other measures to make up for the negative repercussions of such political trends. Trade conflicts, nobody knows how they will develop in the future, but at any rate, they bring more uncertainty. The good news is that we are well positioned to flexibilize our costs and to transfer activities here and there.
And we can see that our customers are following us here After all, we do have a global footprint. Fuel prices are, of course, a major economic factor, Read this division and your conclusions that we are generating per container per ton have developed very positively And as a result, you can see what is shown on the left hand side of the slide here, namely the conversion rate of the gross profit to the EBIT margin and the revenue margin overall has also increased, and we are now approaching the historical levels And here, I'm not only talking about the new transport management system. I'm also talking about other things that we have improved considerably, and therefore, We are seeing a very positive trend overall that we expect to continue. And one of the main drivers is the aforementioned transport. We are now active in around 40 countries.
We will complete the rollout, in sea freight by next year, years ago, in 2015, we decided to finalize or to basically discontinue the HR suite and instead We are now working on the new transport management system. Others started earlier to implement such a system, but they still aren't done, so we've made a lot of progress. We will also go live with this system in air freight before long in the first country. So all the shipments out there, data processing will also become much more effective. Supply Chain.
I would only like to talk about one aspect here. We recently announced that we are selling our domestic business there to SS at a very decent price. And we will enter into a strategic partnership. So we will still be able to share in the growth in the Chinese market because we'll be paid a franchising fee And we believe that this cooperation with a premium provider in the Chinese B2B business is the right step, and it'll help us to establish a long term strategic partnership that looks very promising. I think it's a good step for our company.
Because SF is a very strong partner, which brings me to the business that I'm responsible for myself, in addition to my responsibility for the group overall, which is PeP, we can see a decline in volumes and also in revenue in the third quarter. Which is slightly above the framework that we communicated, but that is only because of the comparison with the positive effect of the German National Elections last year, which boosted revenue, adjusted for this factor, and that is shown on the right hand side here, we are still within the range of the volume trends that the gap between the speed at which volumes and revenues are growing is shrinking. Which is good and that is also a first indicator that the price measures that we have initiated our bearing fruit, even though it would be premature to say that this has already been completed. But internationally, the business is growing very nicely here. Now let's take a look at the PEP pricing measures.
There are several things here. The German regulator made it clear that they still need to analyze some of the figures that we provided. That has to do with our profit warning as a result of which our forecast for 2019 2020 was changed, and the regulator first wanted to analyze what this means specifically. And the regulator told us that they will only take a final decision next year as to whether stamp prices postage prices will actually increase or not, but we believe that there will be a good price postage increase next year. And we've also taken more pricing measures in terms of direct costs, indirect costs, sales activities.
Let me start with direct costs here. We've done quite a lot. Takes a while, of course, for these measures to be implemented and to show some effects. We will see some initial effect in 2019 and then, of course, also in 2020, we've identified various measures that are already showing some first effect. And we are only using what we deem to be the best solutions.
We are rolling out new systems here based on, now is much smaller than in the first half of this year. And as for indirect costs, we can see that the trend is improving from 1 month to the next, and we are able to bring the indirect costs I'll talk about that in a moment. That is currently being implemented, and we are also discussing it with the other side of industry. But so things are still in progress here, but we are well on track. We are refocusing our core business.
We sold the fresh business and all you need. And we are also focusing on reducing our expenses in terms of marketing and IT, we want to become more effectively. I already mentioned the reorganization of the PEP division, we split it up, Ken Allen, who was responsible for supply chain before very successfully so, or for Express rather, sorry, will, in future be responsible for e commerce and parcel Europe, Can Allen, as you know, is a renowned expert, and he has been a very successful member on the board for a long time, and I am very confident that he will just as successful in terms of e Commerce And Parcel Europe. I myself will then be responsible for the German Mail and parcel business as of January next year. Now even though 2018 has been a difficult year, I am pleased employee opinion survey has produced some positive results, employee engagement plus 1 percentage points, for instance.
And let's not forget, we have 500,000 employees and 75% of them took part in the employee survey. So if there is an improvement by 1 percentage point, and that is already a major step forward. You can see active leadership plus 1 percentage point, customer centricity and quality quality plus 1 percentage point. And the PeP division is showing the biggest progress here, which comes unexpected because there are so many changes in the PeP division, so much uncertainty. And we actually expected, the results to to be worse than in the past, but that didn't turn out right.
They're much better than expected, which is good. And I'm pleased to say that PEP is making a major contribution to the positive trends that I've outlined. And that's a good indicator, isn't it? The working morale is right. If people are motivated, then that will ultimately also have a positive effect on the figures.
So this was my last slide. On a very positive note here. And with that, I'll like to hand over to Mrs. Crutch. Thank you very much for listening.
Mr. Apple already gave you all the essential information and I will now follow with the slides with all the figures, but I will focus on the most important points, just underlining what has already been set already. Let me start with a group P and L for the third quarter. Here, I would like to focus on 4 figures: 1st of all, revenues You can see that we had 1.4% growth in revenues, and Mr. Apple already said that this does not look very convincing, but We also had adverse FX effects, and we also feel the sale of William's lead tech last year And if you adjust for these effects and have a look at organic growth, we have a 4.7 percent growth.
So the growth dynamics in spite of all the uncertainties Mr. Apple already mentioned, continues unabated. If you now have a look at the EBIT line, this doesn't look that pleasant declined by 55%. The main driver, as was already mentioned, being the 1,000,000 restructuring costs it at PeP, which lead to PeP showing a negative figure for the third quarter. For the DHL divisions, very pleasing growth by 14%.
What is happening below a bit? Nothing new compared to the 2nd quarter. In the financial results, this year, we can clearly see the first implementation of IFRS Six teen, which is a burden to our results, 1,000,000 in the quarter. And if you adjust for that, we would see a positive development of the financial results. But as we had to apply IFRS 16 for the first time, we've got significant downturn in the financial results.
Together with the EBIT decline in PeP, we have decrease here. The tax result is unchanged and summary is that the growth trends go on unchanged and we also had some improvements at PEP, the one off effects made the figures worse, but for the other DHL, divisions, the growth drivers are fully intact. And this brings me to the individual divisions. Let me start with the PeP area. Here, you can see what we have already mentioned several times in more detail.
In Germany, you know that we are in a significant transformation process and in the third quarter. As expected, we now booked the civil servants, pre retirements, we said that we will invest 1,000,000 into restructuring in 2018 for the retirement for civil servants. And these million are now totally booked after Q3 and the posting in Q3 is ring costs in the third quarter for Pet. And we also announced that next to the 1 off restructuring measures, we will also invest into productivity measures again. And this is to the tune of 1,000,000 per year that this is not only for 2018, but it's also ongoing in the coming years.
And in the third quarter, we also spend 45,000,000 on productivity measures. We want to be around the breakeven line, and this is in e commerce parcel, this is the area that that can earn will be responsible for in the board of management. And this is in with our expectations, I think we strongly focus on the developments in Germany right now. The last figure, which I would like to mention here is the CapEx line, which is also very important for our colleagues in spite of all the challenges that we currently have in PeP we'll continue to invest into this area. You can see that CapEx in the 3rd quarter was significantly higher than in third quarter 2017.
Year to date, we spent as much money as in 2017 altogether, So we are not saving money at the detriment of the future, but we are investing into a sustainable growth of the business in Germany again So in spite of the mail decline, we want to grow soundly again. If you now adjust for all the restructuring efforts into pre retirement and the productivity investments and have a look at the real development of the business, the operating business, you can see that in the third quarter, we are above 1,000,000 below last year you can now interpret it in two ways. First of all, it's not nice that we are still below last year's figures, but it's something that we expected and the trend is going in the right direction. It's significantly better than in Q1. It's better than in Q2 and it's as we expected it.
So we are on the right track, but it's clear that there's still a lot of work to be done and Mr. Apple already mentioned the measures that have initiated have been initiated already to turnaround 2019. A major step, of course, will be the result in Q4. And here, you can see that in the fourth quarter, we still expect a slight decline compared to last year's figures but around, well, between 10,000,001,000,000. So this is what we expect for PeP for the rest of the year.
This brings me to easier figures, the DHL divisions, who expressed Mr. Apple already mentioned this, This is the division which is feeling the adverse currency effects most significantly, both for revenues and for EBIT But it's all the more pleasing to see that we've got an improvement in the operating results by almost 10%, which is a very positive result The cash flow at Express was also excellent in the third quarter, but also in the 9 month of this year. And this is a good basis for us, and we will continue to invest into the Express division. You might remember that we also announced that we want to have new 777 aircraft and we had made down payment in the third quarter, which means that the CapEx is higher than in Q3 2017. This brings me to global forwarding freight.
The trend, well, after a number of good quarters, we can really say that it's a stable trend that we see at Global Forwarding Freight due to the selective focus on profitability and we are growing the results. And this gives us an improvement of 1000000 to 1000000 in Q3 2018. The one figure, which is not as good in Q3 is the cash flow. This is due to working capital. But this is something that also others in the industry felt in the third quarter.
This is clearly a focus issue for the fourth quarter at forwarding freight. For supply chain, Mr. Apple already mentioned the outstanding development in the third quarter. The partnership with SF for the China business We can also note positively that driven by a strong development in almost all regions with the exception of which is in the guidance of 4.4% to 5%, which we also see for 20182020. And I'm quite positive that supply chain will also give us good final results for the whole year.
If you take everything together, you can see our guidance unchanged for the year 2018 and for the year 2020. Nothing has changed in the figures and we have not taken into account the China transaction for supply chain because It is unclear whether the closing will happen at the end of December or only in the new year. You might know that we are talking about around 1,000,000 cash, which is quite a significant figure, which is excluded from the figures here. So an unchanged guidance for the year 2018, a group result of 1,000,000,000, including the restructuring costs for PeP Otherwise, we would have 1,000,000,000. And for the year, 2020, we expect more than 1,000,000,000 operating results at the group level.
And also the other figures shown on this chart have not changed. All in all, it's fair to say that third quarter was as we expected it to be. The PeP restructuring is going according to plan. You can still see sustained growth at the DHL divisions. And on this basis, we confirm the guidance 2018 2020 and we still are committed to IO Financial Strategy.
Well, over to you, over to the journalists here. You might want to press the green button if you want to make a comment We would ask that you briefly represent, just introduce yourself. DPA wants to ask the first question. I take it. Good morning.
Both debits from DPA. With a view to German Mail business, you said that you are still confident that next year postage prices will go up. Can you be more specific about that? What is the price range that you have in mind for a standard letter in Germany that is? And can you tell us why you are expecting that postage prices will increase shortly next year.
Well, first of all, As before, we never comment any expectations and speculations in detail, and we'll stick with this policy. So I'm not going to specify any numbers here because ultimately, this is going to be a decision of the Federal Network Agency. They will define a range and then that range needs to be allocated to the various products out there. Why do I believe that postage will increase next year? Because factoring costs are rising as a result of the most recent collective bargaining agreement here, salaries have risen by 3%.
Factoring costs are rising And at the same time, volumes are declining. And we have a fixed cost network because we are covering all households in Germany 6 days a week. And if you only deliver one letter instead of 2 every day, then that obviously means that earnings are down. And over the past 2 to 3 years, there haven't been any postage price increases. And we will also be witnessing price increases in other areas.
And we are suffering disadvantages because of fewer economies of scale. And therefore, we believe that the federal network will support our stance that postage prices should increase. Mr. Baier will ask the next question. Good morning, Stephan Beyer from DPA AFX.
Well, so maybe there will be a post here. Are you posting such losses only internally Are you just selling vehicles from one department to another? Are you selling them at the same prices as the ones that you'd do. So how about the valuation here? Is the valuation realistic?
Or are the billions of euros expected by the investors not realistic at all? Well, I will try to answer some of the questions you raised, Mr. Keis will then comment on a possible share buyback and how we are reporting the street scooter. First of all, as for the measures, The measures are covering all business segments. It's not only the PeP segment that is making a contribution to us achieving the 1,000,000,000.
When you look at the situation in 2014 and the target for 2020, you can see the lion's share will come from the DHL divisions, the PeP division, only stands on the books of a 3% earnings increase. And we are currently at 1, like I said, we need to step up a little bit here, but overall, we are witnessing a very positive trend. And at Express, for instance, we can see the very positive trend, which is continued at DGF. The turnaround is still in progress and in supply chain, we will also be able to boost our earnings considerably. Back to PeP, we are using all the levers that we've got within the framework of the business model And we are very confident that we'll be able to return to the figures that we used to see in the past.
And the profit increase that we are planning compared to 2014 is mainly based on the income generated abroad. After all, we have globalized our business considerably, and we don't expect the positive trends of that globalization to become any less important in the future. The analysts may not be certain as to whether we'll be able to achieve that, but ultimately, it's all speculations on their part, and we are still very confident that we'll be able to achieve the targets that we communicated. StreetScooter is very successful. Both internally and externally.
External sales are growing continuously, so And we will discuss the option of working with financial investors when the time comes, but overall, we have very happy with the vehicles, including the street scooter. And Mr. Ogilby has made a major contribution here. He's in charge of this matter now on the board of management. And the last thing that I would like to say is, you asked is this reflected in our balance sheet?
Well, actually, I'd like to hand over to Mrs. Kees for that.
Before I talk about the share buyback, let's talk about the guidance and the free cash flow 2020. One point is very important, Mr. Apple already showed you why we think that the 1,000,000,000 can be achieved because we've got concrete plans already, but this is not a matter in it, not a course in itself. Yes, it's not that we just want to have 1,000,000,000 No, I already told you regarding the figures for the third quarter that we continue to invest into the expansion of our business. We are a growing business.
We want to continue to grow, and this means that we'll continue to invest. And this is important to also make progress regarding cash flow and so that we've got enough money to invest into the business. And we are doing this year already. And this is why we said that we wanted to keep up investments and we accept a lower free cash flow 2018. The free cash flow 2018, the guidance without the 777s, we would be around 1,000,000,000.
This is our expectations. So we are investing even if this is bad for our cash flow. So you have to take a holistic point of view in the midterm and now share buyback in our finance policy, we clearly said that if you want to if you generate excess liquidity and we did so in the previous years. This year, it's slightly different, as I explained. But if we generate excess liquidity, then we'll think about how to tributes this money to our shareholders, but this is not a mathematical equation that you say.
Now the so and then we'll have an automatic share buyback or special dividend, but you have to see this against the general background, and this is something that we will discuss at the right point in time, and we will inform you about it. Regarding street scooter, We now have the street scooter in the area corporate incubations. The main customer for the street scooter is the PeP division. Internally, we want to have good intercompany prices at arm's length. Like for external customers, the PEP area will have some discounts, but these are major customer discounts or major count discounts.
This is not due to an in to it being an internal customer getting special rebates. The question was not hurt by the interpreters. I think it would not be sustainable if you had cross subsidies within the company. So we said we will have 1,000,000 of loss and 1,000,000 from corporate incubations. And the biggest area here is the street scooter.
And this means that 420,000,000 for corporate functions is made up like this. Okay. Thank you very much. Then we've got Mrs. Stauer, Can you hear me?
Okay. Orique Dauer Dow Jones on PEP or Post And Parcel Germany, I would like to know Mr. Aphel, how long do you want continue to do this, you said that you are in this position as an interim function, perhaps also until next year? Or what are your plans? You the media said that you are now building up another person to take over this area, perhaps can share some details.
Now on the measures, how can I really see that the measures are already taking effect in the 3rd or fourth quarter? The EBIT margin is improved at the we have lower loss in the EBIT margin. How can we really see this? And then the pre retirement, how many people accepted this already? And what is the percentage compared to the total investments.
And then there was another question where is it again? No, I'll leave it at that for the time being. First of all, how long will I still be tearing the PeP business until next year? And of course, we've got our internal deliberations, how we want to continue. I always said that I will 1st of all start to initiate measures myself and at present, things seem to be going off quite well and then it would be a good basis to hand over to somebody else.
But who this is or when this will be something I cannot tell you right now. And for Global Flow would inflate, we did the same thing. We late to the necessary basis, we took the necessary decisions, and now it's developing very well under Mr. Sharp and we want to do the same thing Well, the quarterly development, we only have a slight improvement, but the effects were year over year. And Mrs.
Clive showed a picture on this. So the sum of the price measures were only started in the third quarter. You cannot see the effect. We can already see effects in the indirect costs, but the third water is also characterized by the fact that we only started initiated measures and it will take some effect sometime until the effects are shown. You will see more effect in the first quarter, but I see the details already, and this is why I'm so confident, but we cannot give you any detailed figures here.
Pre retirement, how many people have accepted the offer? I do not know yet. I think it's in the lower 100 areas, but we already booked all the provisions we made the offer. And then in the public, it was reported that not many people wanted to take it up, but this is not true. And we will fully utilize the program.
So this is the main message here. Now it's a process we have to go through We have to find out whether the job will then be totally lost or not. It will take some time until we see an increase in the figures, but of people wanting to take free retirement. So we want we will achieve this So all the speculations that the program is not going well is absolutely wrong, otherwise we would not have booked the figures for the third quarter. Okay.
Thank you very much. The next question by Mr. Kowalewski.
I have several questions. First of all, how many parcels are you expecting for Christmas. And secondly, do you think you'll be able to really finalize the group restructuring in Germany? And thirdly, you will split up the pet division And, you have sold or downsized a lot of the businesses that used to be managed by Mr. Gardes, So my question is, what does that mean for your strategy abroad?
Will you continue to expand your business abroad or not? Well, we are expecting around SEK 11,000,000,000. I was about to say SEK 1,000,000,000 parcels. That'd be nice. Actually meant to say million parcels on peak times during the Christmas season.
And yes, our planning is very detailed and I look into that myself because I'm responsible and I'm very impressed by what is being planted and I'm confident that we'll be able to get the job done The weather always means a lot of uncertainty. Nobody knows what the weather will look like in December. If there's a lot of snow, then that will of course impact on the quality of our service. And I'm monitoring what we are doing myself. I'm looking at customer complaints.
I'm looking at the positive trends. And we can see that our quality is developing very positively. And I've been saying right from the start that we need to focus on the right quality, which is also reflected in our figures, which look very good, both in terms of Mail and parcel business. And in our operations, in the production units, we are also getting a lot of positive feedback from our employees as well, all of which shows that despite the overall situation being difficult, people are highly motivated, and that's why I am convinced that we'll be able to do a job during Christmas and I myself and also the divisional board members are monitoring very closely what we are doing there. E commerce, we believe that e commerce will continue to be a major growth segment both within and outside of Europe.
I don't want to go into detail here. Ken Allen will look into this specifically. And of course, we wouldn't set up a new board department if we didn't believe that this is a growth segment. And, it goes without saying that we want to positively further develop this segment in the long run, and we've given, canal enough time to get things off the ground and we'll have to figure out whether the current structures are right or whether some changes need to be made and when the time comes, we will give you an update on that, of course. The next question comes from Mr.
Invaradi. Just a brief follow-up on the street scooter. Mr. Apple When you were asked, what options you are pursuing for the future, for instance, a possible co as financial investors that you will sort this out sometime in the future. Does that mean that you are no longer considering the cooperation with a big carmaker?
No, I didn't say that. At the moment, we are, in fact, in talks with various parties, and it remains to be seeing what the outcome will be. I'm not ruling out anything, any type of cooperation. I have a follow-up question on the early retirement scheme. You said that you've received enough applications, but how long does it take to actually process these applications?
How long does it take for the colleagues to learn whether their application was approved or not. Kept up in cases where you had to reject any such applications because the jobs were still needed. And I also have a question on the joint operations I understand the word that there have been some delays because of legal issues still pending. What's the current situation there? Well, I'm afraid I can't answer your question on early retirement.
Actually, that's not our responsibility. This is handled by federal agency for post and telecommunications because this is all handled under German civil servant law. I would have to say something here off the cuff and I, I don't want to do that, but I think it's a very it's a standardized procedure. And I don't know how many applications have been rejected. I'm pretty sure that some applications have been rejected, but I don't know how many.
I really don't. Because this is not my responsibility anyway. As for the joint operations, yes, there are some legal proceedings, it's an arbitration proceeding as a matter of fact, and we believe that, we'll be able to set up a joint operation between the parent company and the subsidiary before long to sort things out there. Now there are two questions from the web before Mr. Schlotman and Mr.
David will ask questions. Mr. Becca from Dorsen Cyjunk, hello to you. He's asking the following questions. First of all, Can you comment on parcel prices?
What sort of price increases are you expecting specifically and is Deutsche Post planning to set up additional partnerships along the lines of the strategic partnership set up, in the supply chain segment in China. Answer: Mr. Becca. I'm afraid we can't give you any details. And we haven't announced any price increases, obviously, and we haven't announced a specific range that we are expecting, but we believe that the price, the postage price increase will be higher than in the past.
That is still work in progress, and we can see capacities are becoming scarce, but I can't give you any specific ranges here. As for China, we've prepared and negotiated the deal in China for a long time, and we are not disclosing any details the general public here. You always have to bear in mind the general market situation and in China, we are facing a very sea. Our supply chain business in China so far, was not very successful in terms of our cooperation with local providers. And here, the partnership with SF will help us move on because they are working together with a lot of Chinese companies, needless to say.
But there are differences in the various countries, and therefore, I cannot announce any other plans, in the same direction. We always need to ask ourselves what was the right strategy. In this case, the long term strategy for China. That's the question from Mr. Romberg.
And he is asking whether it's true will no longer be responsible for the Mail And Parcel business? Well, we never comment on any speculation surrounding staff matters. If any decision is made in terms of our staff, then we will make an announcement. So I'm not saying yes or no. I'll just decline any comment on that.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:]
Let's go back here into the room, Mr. Schloudner. Yes. Thank you. I also have a brief question about 6 months ago.
There was the news by the DVU contract union, which criticized that your Testing period would or the trial period would only be ended for new employees. So once they show that they are not sick for too long. And then people said that they want to talk to you personally in order to make sure that the working conditions improve and also the conditions when the trial period or a term period will be changed into a permanent job. Has there been any discussions with you? Has there been any progress?
General discussions that the supervisory board has with your management board, we can't comment on this, but I can tell you that we can explain very clearly that we've got excellent working conditions, that we've got a growing number of job contracts, which are no longer term contracts but permanent. And I can also explain what this we knew, but we would still have some criteria to establish when a trial period will be ended, but we, of course, never share any information that we discuss with the share with the supervisory board all the shareholders, and I can't do this today. Mr. Davids, I would like to come back to the topic of the booming parcel business that in spite of the booming business, you still do not really seem to make a lot of progress here. One problem from my point of view was that major accounts, for example, For example, Amazon are offered lower prices but the margin of course is suffering.
Do you want to ask for higher prices of these major accounts as well in the future? And if so, is this really feasible in view of the market power that the big players have in the market? Of course, we are not excluding any company from the price discussions. We never did in the past either or the companies had price increases. The only question is by how much the prices were increased and we are supported by the competitive decision in Germany.
We've got almost full employment and transport costs are increasing for our customers as well. And against this background, I think it's logical that all the customers will contribute to the higher costs. And this is the fund that you have as a manager. You'll test out certain things and we'll see whether it works or not. If you could predict everything, it would be boring.
The exciting thing is if you tackle difficult things and we are doing this, but this is also the charm of chairing a company So yes, we will continue to talk about increasing prices, and we are discussing with all our customers. Okay. Mr. Needham, he came late. Nevertheless, welcome to you.
Yes, I come from Tap Research, and I have 2 questions. I'm not quite sure whether the topics were already covered. Again, about divestment of companies abroad in China, as you had a divestment of the supply chain business, you handed it over and China is a big growth market, and you said that you rather want to sell it. So the question is, what are the criteria as you use If you check or review your companies abroad, what is success what is lack of success? How long will you keep a loss making business?
And then, new division e commerce solutions is still writing red figures. When do we expect it to write black figures? And our a standard question around the Brexit. It's still very uncertain what the development will be. How much have you prepared for the various scenarios?
Divestments or acquisitions are always based on our sustainable long term strategy. And I already explained, I don't know whether you were there already. In China, we said if you want to grow quickly, we have to increase our customer base going beyond international customers. And we said that this is too difficult without a Chinese partner, and this is why it was a strategic decision. And you could see that this was a very attractive business for us based on the purchasing price because we saw the profitable business at a good price.
And this is something that we would do again. The financial criteria are criteria that we use during losses for a longer period of time if we are convinced of the strategic importance of a business. And this is also true for e commerce solutions. We always said, and you also saw this during the profit warning, we said that we will still expecting losses in 2020 in e commerce or now e commerce solutions. And this is what we stick to loss between 1,000,001,000,000, but we will report more detailed information if we have more news.
For the Brexit, of course, we are also taking our preparations. It's still unpredictable a little bit, but as entrepreneur, you, of course, have to get prepared to more difficult times coming. All the divisions are working on this and have set up a set of measures, which what we would do if there is a hard or a soft Brexit, we don't spectre Heart Brexit right now, it wouldn't be good neither for the United Kingdom nor for the EU. We can already see some customers taking their decisions to shift their warehouses from the UK to Europe to Continental Heroes. Another follow-up for parcel business, you're mainly talking about the major customers, or do you also think about increasing the prices for the smaller, for the normal customers.
And secondly, for the normal customers, they order something and then they do you think that e commerce costs will increase or not? So far, we are only We have only decided price measures for the big corporate customers, but we'll also discuss this for private customers as of the 1st January. So we don't have any major plans right now. But for the corporate customers, it's not only major accounts, but also the smaller customers. Corporate customers have a contract with us because they are normally paying prices, which are lower than the prices you would pay in the normal post office.
Now I forgot your second question. Basic question where the e commerce will become more expensive for the final customer. Well, this is a question then. You would have to put to the e commerce companies. I don't think that we will see that the companies, the e commerce companies would burden their customers with higher service fees.
Whether there might be some masked price increases within the products. I don't know. This is something that you would have to ask the suppliers or the customers. We kept inference this, but the e commerce wave had 1 beneficiary in the market. And this is a private customer.
They had very good prices and they had very good product with easy returns. You will probably use this as I do. It's very comfortable to send merchandise back And in how far our corporate customers pass on price increases to their customers, we don't know. They haven't told us but I don't think that Okay. I can't see any further questions any longer.
Yes, there is another question, Mrs. Bauer, please.
Apart from UK, supply chain has developed positively. So you said, so what are you doing there? Oh, I also wanted to ask about the sales price of all you need and fresh. Can you get back to that? And as for Brexit, do you think It depends on the industry that you're in, what sort of additional warehouse capacities you need, or is that not industry specific?
Well, we have a large business in the UK, and we probably did a lot of things that were not really visible, experienced manager to the UK who looks into things. And yes, there's still room for improvement, but outside of the UK, this business is developing very favorably. And this is a very important market, so we'll definitely come to grips with that. All you need in fresh, we are not disclosing any details here. Missus Kays knows more about that than I do, but after this strategic decision is made, a basic decision, a basic announcement can be made, but not specifically.
And as for Brexit, I always discuss this with my colleagues and you asked about warehouse capacities in various industries I'm afraid I can't answer that question in detail. I'm not aware of any additional questions, not here, not online. If you have more questions, then you might want to stay for lunch here. And discuss things with the board members directly. They'll still be here.
Our colleagues are also here to support you. And as always, we also have workstations prepared for the journalists right here. Before I close the press conference, I would like to say something else. I started out, at my first press conference on 11th March 2009, And now almost 10 years later, I would like to bid farewell to you because as we've communicated before, I will take on a new professional challenge as of January 2019. I would like to thank you very much for the very positive and fruitful cooperation I can only do a good job if we can talk to each other, discuss things properly.
I hope that you will continue to support this company, the company and its staff in particular really deserve that support. I hope that you appreciated my work, but if you did, then that was only down to my team, Mizkupa and Mrs. Clausen. And if you were not happy with the job I did, then that was only my fault. I think it's quite a tough job.
Probably you're doing a good job here if both sides are not entirely successful. And I think I managed just that. I would like to thank you very much once again. I wish you all the best, and it would be nice to meet again. And with that, I wish you a very pleasant day.
Thank you.
My phone.