Earnings Call: Q4 2017

Mar 7, 2018

Welcome to anyone out there. Welcome to our Q4 full year 2017 call. As invited, I have got here with me, Frank Appel, our CEO, and Melanie Kreis, our CFO. Both are going to take you through the presentation, which I take you have in front of you. After that, there should, as always, be sufficient time for Q&A, and still leave some time for you to prepare for the next call this afternoon. We are aware of that. Over to you, Frank. Yeah. Good afternoon. Good morning from my side as well. I am happy to go straight away to page three of the presentation, where we summarize how 2017 has been for us. We are well on our track to deliver our targets for 2020. We come to that later on again, because we made them more concrete than before. It is driven by strong top-line growth, very good development of the EBIT, strong cash flow generation, and therefore, we are very pleased with the progress we have made. If you look forward, we are well-positioned in all divisions to capture the potential of e-commerce. We still can improve our margins, particularly in DGFF, as we believe. And of course, to support that, we will continue to invest. We also propose today, increase by EUR 0.10 in our dividend to EUR 1.15, and Melanie will later on talk about the IFRS 16 effect. As I said, we are now committed to deliver more than EUR 5 billion EBIT by 2020. On the next page, you can see as well that not only the top line grew nicely and the EBIT, but also OCF and the free cash flow have developed in the right direction. There are impact from UK Mail acquisition and the disposal of DMC Tech, but overall, I think we see a healthy development of our cash flow lines as well. And that leads to the dividend on page five. In continuation of our policy, where we always said 40%-60% of our net profit should be distributed to shareholders, we increase our dividend, as I said, to EUR 1.15. It is equalized at 52 percentage point. Overall, I think that is a strong signal that we are very confident on midterm development. If I now look into the divisional reviews on page seven, I think there are several good things to be mentioned. May I start on the top right. We are well on our journey to convert that business from a mail operation into a parcel and mail operation. And I think in the future, we also will see that parcel become even a larger part of our operations than the mail part. And that is in line what we said since 2008, after we lost the monopoly. We have to convert that and have to find new growth areas, and I think we have done pretty well. In addition, what you can see on the top left, we had a pretty strong quarter with revenue development in mail and even stronger in dialogue marketing, 7.9% up. That is in a quarter where the election was already over. So that is really strong growth. You see that also on the bottom right, the numbers of letters per working day does continue to decline in mail communication. But dialogue marketing is up quite nicely. Overall, the letter volume, overall, if you take the working day level, we are slightly up, even if the absolute amount is slightly down in 2017. Finally, parcel revenue and volume, very well development as well, top line growth and volume growth. If you can go to the next page, you see as well, that is again, a year above our expectations of the market growth and our experience of the market growth. That has led, based on our great service quality, that we gained market share in the last years. In 2017, if we look into our preliminary assessment of the market, has not been different, and we believe we gained another time, market share in Germany. The reason is because we have the broadest portfolio of services. We have the best product overall. We have invested into our sorting capacity, and the result is that we are continuing to grow above market. If you then go to page 9, this is just to demonstrate that our investments in parcel Europe and e-commerce are getting traction and that there is a flow that operations are going first into the negatives, of course. We can't walk on water either. But after a certain time period, the countries are turning into the black numbers, and we see already the first countries which are in a range between 5% and 8% return on sales, with a pretty healthy margin, and we believe other countries will follow. So overall, our footprint has enlarged in Europe now to 26 countries. We also continue to invest into the e-commerce, the outside Europe activities, not only in delivery but also in fulfillment. We have no doubt that we will see more successes in these parts of the world as well. Next page shows the continuation of our great success at Express. A very nice continuation of revenue growth, but also volume growth. It is all over the place. We see very nice growth rates and therefore we are very happy. The recipe of investing into employees to generate great service quality drives financial results. I think in our company, Express is definitely a role model and shows the power of our triple bottom line approach and the opportunity we still have in the other divisions. Next page is a highlight of Express, how much progress we have made since the base year of our 2020 strategy. Significant growth in TDI shipments, significant growth in EBIT. The margin is nicely up, and the return on capital employed is even more up than the margin. So all this is, I think, demonstrating how successful we have been here. Next page is on Global Forwarding. Still a mixed picture, although we got traction in the second half, in the fourth quarter in particular. You see in Air Freight, we really are back on a good growth rate. Gross profit improvement. In Ocean Freight, yes, we grow, but we have not turned a corner with regard to gross profit per TEU yet. That is still work in progress. I see really that we see the first signs of the impact Tim Scharwath had on our operations, and that is the reason why the improvement you have seen in the fourth quarter has materialized, and that makes me very confident for 2018. On page 13, you see as well, we cannot be satisfied with the gross profit conversion, but if you see on the bottom the development in DGF over the quarters, I think we gained momentum and, as I said, we are confident that we can make even bigger steps in 2018 based on a good volume development, margin improvement. Our IT systems, we are getting more and more traction in rolling the core system out for Ocean, but also our systems, we are making good progress. As I already said, I am confident that we hired a great person to lead that division. Finally, Supply Chain. We had another year of good signings. It looks like it was flattish, but we had included last year the Williams Lea, which are already excluded in 2017 numbers. If you take that out, we have had an increase year-over-year. We will see impact from the deconsolidation of Williams Lea Tag by about EUR 1 billion revenue this year, and also low mid-double-digit million EBIT impact, which I think is important if you assess that. The other nice dimension is that Supply Chain gets more and more traction on introducing new technologies, which definitely will help us to improve productivity and consequentially then, the profitability. To summarize from my perspective before I hand over to Melanie, I think it was a very successful year, 2017. We are on a growth path, strong cash generation, and we are in a good position to strengthen our footprint even further and our market share, particularly in e-commerce. The long-term strategy goals are intact. We have no doubt that we can make the numbers, that we can grow in e-commerce and the emerging markets. There is still margin improvement potential in the divisions, particularly in DGFF. I think we have a very solid balance sheet and have increased cash flow already and will continue to do so. Now I hand over to Melanie. Thank you very much for listening, and Melanie will give you now more insights in the detailed numbers. Thank you. Yeah, thank you very much, Frank. Also from my side, good morning, good afternoon, and thank you very much for joining us on this call. I think Frank has already talked about the relevant business trends, and I am going to complement this picture with some more numbers. Starting on page 17, with the overview of our group P&L for the full year 2017. As Frank already mentioned, our group revenue increased by 5.4% to more than EUR 60 billion in 2017. If you take out the adverse currency effects, which we saw again in the year, our organic growth was actually 6.8%. We were able to convert this revenue growth into a 7.2% EBIT increase, which was in line with our full-year guidance. Looking at PEP, and I will come to that in a bit more detail when we talk about the fourth quarter, we see overall that the structural trends are confirmed. Good parcel growth continues to more than offset letter decline. Although we have to say that 2017 was actually also a pretty good year for postal volumes, supported by the multiple elections we had in Germany in the course of 2017. When you look at the DHL divisions, clearly the strongest contribution in 2017 came again from Express, with a 12% EBIT increase. Global Forwarding Freight continued to progress, particularly in the second half of the year, with EBIT overall up 3% for the year. On the Supply Chain side, the profit improvement was held back by a non-cash one-off in the fourth quarter, which I will talk about in more detail in a couple of minutes. The financial result was affected by write-downs in the second half of the year. This quarter, we had a write-down on a financial holding in an emerging market. Now we come to a very interesting line, the tax development. You will recall that when we talked about our nine-month figures in the beginning of November, we actually guided for a tax rate of around 13% because at that point in time, the overall assumption was that U.S. tax reform would no longer come in the course of 2017. As you all know, it actually happened just at the end of 2017, and unfiltered, that would have had adverse effect of round about EUR 150 million on our taxes line in the P&L. However, at the same time, our trading improved in a couple of countries, and we were able to activate a couple of further tax assets, so that the overall impact of what happened in the fourth quarter amounted to a full-year tax rate of 14.3%, slightly higher than the 13%, but clearly, the 1.3% increase is not just the U.S. tax effect. I think going forward, you will see our guidance for the tax rate for 2018 in a second. With regard to the U.S. tax reform, this one-time hit at the end of 2017 was really the most relevant impact from the U.S. tax reform. When you look at the consolidated net profit, due to the higher financial costs and the increase in taxes, our EBIT growth did not fully translate to the net income development. Consolidated net profit is up 3%. But I think the important point here for our shareholders is, as Frank already said, in our finance policy, we have a sufficiently large headroom in our payout ratio. On that basis, we have proposed an increase in our dividend of 9.5%, up to EUR 1.15, so more in line with our operational progress in the course of 2017. That takes me to a slide on page 18, which we have already seen a couple of times. I think the important thing here is you see the continued development in the right direction. When you look at our two more asset-intensive businesses, on the Express side, we saw a continued improvement in the operating margin to 11.5% for the full year. Actually, in the fourth quarter, it was up to 12.3%. PEP, despite the growth on the international side, which gives us, at this point in time, more additional revenue than EBIT, we have held the EBIT margin solidly stable. Then you look at the right side of the page. Supply Chain was impacted by the one-time effect in the fourth quarter, which I will talk about in a second, but it is directionally moving in the upward territory. On Global Forwarding Freight, obviously, we are not where we want to be, and that is why overall for Global Forwarding Freight, but also for the other divisions, continuous margin improvement remains top priority on the divisional agendas also going into 2018. That takes me on page 19 to the fourth quarter results. The first number I want to point out is on the revenue side. You can see that the reported revenue growth was 4.5%, so a bit less than what we had seen for the full year. But the organic revenue increase was actually 8.4%. I think there are two important messages here. The underlying growth remains very, very solid and strong, and the currency headwind, which we had seen throughout the year, was actually a bit stronger in the fourth quarter. The EBIT growth was healthy despite the currency headwinds, and although it was held back by the one-off at Supply Chain that I will get to in a minute. The financial result in the fourth quarter looks pretty flat, but that is because we had the effect of the write-down from an emerging market financial asset, and that offset higher effects from currency translations, which we had in 2016. Finally, when you look at the tax line, obviously, we had to adjust with the fourth quarter tax rate for the full year, which is why in the fourth quarter itself, the tax rate was at 17.2%. On page 20, we have put together the free cash flow numbers for the fourth quarter, where the first thing I have to point out is the pension funding in Great Britain, which we did in the fourth quarter. That was close to half a billion, EUR 495 million. That is, of course, included in our first line here, the OCF before changes in working capital. When you adjust for this U.K. pension funding, you see that we actually had an increase of 23% versus previous year, so we saw our usual strong fourth quarter cash flow. Change in working capital was a bit lower than in 2016 as we had a more balanced steering of our year-end cash management. Turning to the group CapEx. For the full year, we had guided from the start of the year for a gross CapEx of EUR 2.3 billion. I know that after nine months, it didn't look likely that we would actually go to that number, which is why we had always talked about timing effects, and we had, and I think I mentioned that also in November, already planned a couple of sizable acquisitions of aircraft in Express, and those took place in the fourth quarter as planned. On this base, we had the gross CapEx of EUR 2.3 billion for the full year, and you can, of course, also see this effect here on the net CapEx in the fourth quarter. You see a big swing in the M&A line. Last, in 2016, we actually purchased UK Mail in December, whilst in December of 2017, we had the closure of our Williams Lea Tag sale. From a cash outflow in the fourth quarter of 2016, we went to a cash inflow in the fourth quarter of 2017. When you put all these four effects together, you get to the free cash flow line, where you can see that the higher operating cash generation underlying up, plus 22%, and the positive swing in M&A spending were in the fourth quarter offset by higher CapEx, as well as a EUR 495 million pension funding. We have also put together EBIT to free cash flow bridge for the full year, and you can see that on page 21. That's a page you could talk about for a long time. I'll just try to explain the main movements here, starting with our EBIT increase. From 2016 to 2017, in the top line, you can see that we actually had an increase of EUR 250 million. Then depreciation, pretty unspectacular. Now changes in provisions. First of all, the changes in provisions line last year was heavily impacted by the pension funding, the EUR 1 billion, but also because of some of the restructuring elements we did in our German pension plan, which also impacted the other line. In 2017, the big special number in the changes in provisions line is the U.K. pension funding. When you take out this U.K. pension funding, you are actually, for the change in provisions line, in the 400-500 range, which was what we had guided for. I think we are more in normal territory here. On the others line, as I already mentioned, 2017 is more normal. The 2016 number is unusually low, because that was where we had offsetting effect from the German pension structure change in 2016. Changes in working capital number is a bit up in 2017, due to the business growth. If you take all that together and you look at our OCF after changes in working capital, and you take out the pension funding, in 2016, the EUR 1 billion and the EUR 495 million in 2017, it is actually up by roughly EUR 350 million. We were able to translate the good EBIT growth into an even better OCF growth. Net CapEx, we already talked about. I think the biggest element here in the year-end were the aforementioned fleet investments at Express for the acquisition of some aircraft, which had been planned for some time just in terms of phasing, ended more towards the end of the year than what we had originally assumed. Net M&A, we talked about. When we look at the bottom line, our free cash flow of EUR 1.432 billion is slightly higher than our official reported guidance of a minimum of EUR 1.4 billion. But when you correct for the pension funding, it actually significantly exceeds the expectations. That takes me to another cash flow page, on page 22. What we have tried to compare here is the free cash flow generated in the different years with what was paid out as a dividend in each of the years. I think the simple important message here is the yellow bars are higher than the gray bars. So actually, we generated more free cash flow than we paid out in dividends. Of course, in the free cash flow, our CapEx is already included. So we were able to do that whilst significantly investing into our future growth. Obviously, free cash flow is a very important element and the basis for shareholder returns. That chart shows that we were able to generate excess liquidity on top of our yearly ordinary dividend payments, and we have actually done this since 2013. As already mentioned, the proposal to the AGM is to now increase the regular dividend by 9.5% up to EUR 1.15. When we turn to page 23, you can see the CapEx development in the different divisions, where we have now added the full year 2017 figure. With the arrow, we are giving you an indication of what the expectation is for the full year 2018, where our overall gross CapEx budget is around EUR 2.5 billion. That is in the old definition, i.e., excluding leasing, to keep things comparable. Final slide on, I think I have two more slides on the group overview before we come to what is happening in the divisions on page 24. Let's take a look at the pension funding situation. We were in a solid position, already before doing the U.K. investment of EUR 495 million. I think when you look at the numbers now, we are in a very comfortable position. For Germany, where we have no regulatory funding requirements, the funding ratio is up to 60%. For the U.K., after the injection in the fourth quarter, the funding ratio is actually up to 98%, and you can see that in the increase of our plan assets, which have gone up. Interest rates haven't changed materially, so the overall defined benefit obligation has been comparatively stable compared to where we were at the end of the third quarter, but due to the funding in the U.K., the net pension provision has decreased. So I would say that we have successfully utilized the low interest environment in 2017 to further increase our pension asset base, and with that, we feel very comfortable with the pension funding situation as it stands. Final page on the group overview, the net debt development. For me, the key takeaway from this page is that, in 2017, our cash flow was strong enough to drive net debt further down, despite the just mentioned debt finance pension funding, as well as our increased dividend. I think that's a very positive development. That takes me from the group to the divisional fourth quarter results, starting with PEP on page 26. The revenue growth reported for PEP was 7.3%. Throughout the year 2017, we saw the effects of the UK Mail revenue coming in, which is now going to be on a like-for-like basis with the first quarter of 2018 onwards. So without this acquisition effect, and corrected for currency, organic growth was 4.9%. That growth translated into a similar EBIT increase. German EBIT only progressed slightly in the fourth quarter. As in every year, the peak season requires extra effort and extra costs. When you look at the international EBIT, we did see improvement in the international results, but I would also not over-interpret these numbers. Our international activities continue to progress as planned. As mentioned several times before, they remain in a startup phase, and we do not expect them to start contributing in a meaningful way to our EBIT growth in PEP for the time being. In the first quarter, it was positive, in the second and third quarter, it was a bit negative. Now it's positive. I think so we are living up to what we had said before. It's hovering around the zero line. We don't expect it to contribute materially yet, but we also don't expect it to be a drain. I think that has worked very well in the course of 2017. OCF in PEP was supported by positive working capital management and timing effects, and the CapEx for PEP increased in line with plan. With the German parcel infrastructure still absorbing the bulk of the CapEx spend. With that, I come to Express, where I can only say that the fourth quarter was an excellent quarter at the end of an excellent year. Here as well, we see the negative currency effects on the top line. Reported top-line growth is 8%, organic top-line growth is 15.2%. This top-line growth actually translated into a parallel EBIT growth of 15%, where we saw again that our focus on yield as well as on efficiencies in our network operations continue to drive gradual margin improvement. The fourth quarter margin was up to 12.3%, and the full-year EBIT margin rose by 30 basis points to 11.5%. Operating cash flow in the fourth quarter for Express doesn't look that spectacular. Essentially flat year-over-year, but that was due to timing effects. When you look at the divisional cash flow for the full year, it was up actually almost 15% for the full year. So I think really overall, great top-line growth driven by TDI volume growth translated into the EBIT development and into a roughly 15% OCF increase for Express throughout the year. CapEx, we already talked about. Obviously, in the fourth quarter, CapEx, you see the effects, particularly of the planned aircraft purchases. That brings me to Global Forwarding Freight. There, in the fourth quarter, we showed some improvement after a difficult first nine months. As we have all seen, trade volumes are picking up and were reflected in our good revenue growth, which was 9.1% on an organic basis. You saw that in the numbers Frank presented earlier, air freight did particularly well, and we were able to post an increase in absolute GP as well as in GP per ton. On the ocean freight side, we are still facing GP pressure, also in part because the year-over-year ocean freight comparison base was tougher than for air freight. Nevertheless, I would say, also when we look at the first half of the year and the second half of the year, I would say that we managed the peak season well, and that is reflected in the EBIT increase and improvement in EBIT margin, which we saw in the fourth quarter. With regard to operating cash flow, we experienced an increase in working capital in DGFF, and that held back the OCF development. Finally, CapEx, I think you see again that DGFF is clearly our least CapEx-intense division. Which finally takes me, last but not least, to Supply Chain. Obviously, the reported numbers here deserve some explaining. That starts already on the top line. The reported revenue increase was a meager 0.3%. We have, as you probably know, a lot of business in Supply Chain in Great Britain, in the U.S., countries where obviously the appreciation of the EUR led to headwind on the currency side. When you look at the organic increase in Supply Chain, it was actually up 7.8% in the fourth quarter. So a really good growth development. In this organic increase, the main driver is FX, but we also have the first time the effect from the Williams Lea Tag sale in here, which is going to be a big factor also in the revenue development of Supply Chain throughout 2018. Frank already mentioned the number. We are talking about EUR 1.1 billion in revenue, which are going to distort the reported figures also in 2018. EBIT in the fourth quarter, when you look at the reported numbers, was nearly 11% below the previous year. But this EBIT number includes a negative one-time effect of EUR 32 million. That is a non-cash effect, which came from a one-time write-down of customer relationship assets, which actually date back to the Exel acquisition in 2005. For me, the way to look at the Supply Chain numbers for the full year is we had this one-time non-cash effect in the fourth quarter, the EUR 32 million, and that is order of magnitude also what we had in EBIT contribution from Williams Lea Tag in the year 2017. So on a full year basis, both effects cancel each other out. When you think about going forward, what is a clean starting point for Supply Chain for 2017 going into 2018? It is actually the reported number. On the OCF line, we have the next big distortion in the Supply Chain numbers because the majority of the already mentioned U.K. pension funding was for the benefit of U.K. employees in our Supply Chain division. So this effect pretty much exclusively happened in our Supply Chain division. Finally, CapEx for Supply Chain is low overall and in line with new customer startups, as it is typical for this division. That takes me to a technical slide, IFRS 16. We had already touched upon that in November, and we will cover it throughout the year. Obviously, May will be interesting when we present our first quarter numbers and for the first time, the real final figures. At this point in time, we are still talking about estimate numbers, and there may be changes, but I think they are precise enough to help you gain an understanding of what to expect in 2018. When you look at our annual report, you can see that for operating leases in 2017, we had a material expense number of about EUR 2.7 billion. This number is going to change completely because the only thing which will stay in material expense will be low value and short-term leases. The majority of the leases will go on the balance sheet, that will add roughly EUR 9 billion to our balance sheet. Then those assets will be written down as depreciation and we will clearly see that effect in an increase in the depreciation line. Due to the fact that actually the biggest chunk goes from material expense to depreciation, our EBITDA will go up by round about EUR 2 billion. The OCF will do so as well. Then we have the increase in depreciation. On the EBIT line, we expect to see a benefit of round about EUR 150 million because there is a portion of the old material expense which goes as interest cost into the financial result. Here we have a timing effect because we assume that all leases start on January 1, 2018. The interest cost in the beginning is going to be higher than over the duration of the contract, and that leads to a higher increase in the interest cost than the benefit we see on the EBIT side. The increase in the interest cost is going to give us some benefit due to the reduced profit on the tax side. The current assumption is that EBIT will be positively impacted by around about EUR 150 million, while net profit will be negatively impacted in the first year by around about EUR 150 million. What does that all mean? I think the first important message is it's accounting, and that means that we will not make one euro more or one euro less because of an accounting change. Our free cash flow definition is also adjusted in a way that the free cash flow will really be the same like for like. The second important thing is, especially when you look at the technical reduction in our net profit number. Obviously, we will take that into consideration in all future dividend discussions, and that is why we have this flexibility, this range with a 40%-60% payout ratio. You shouldn't be concerned about accounting changes having an impact on the dividend policy going forward. That already takes me to the guidance on what to expect for 2018 and also our medium term outlook, for 2020. You can see that on page 32. For 2018, we have naturally included the EUR 150 million for the IFRS 16 effect, in our guidance number, which is 4.15 for the group. The breakdown of this is that for PEP, we expect an EBIT contribution of around about EUR 1.5 billion. For the DHL divisions, around EUR 3 billion and essentially flat corporate center costs leading to this group EBIT number of around EUR 4.15 billion. When you look at the PEP guidance particularly, that is obviously saying that we assume that the PEP EBIT will be flat year-over-year because we already had 1.5, in 2017. When you take in the PEP share of the IFRS 16 effect, which is around about one third of the 150, it could mean that there may be a little bit of a stepback. The reason why we are relatively cautious on the PEP number is not because of one negative effect. I think it's just taking into account that 2018 is going to be a demanding year for our PEP colleagues. We don't have the opportunity to do a stamp price increase in 2018, i.e. we have limited pricing flexibility on parts of our product portfolio. We have cost increases. We are working on the expansion. Putting all this together led to this slightly cautious guidance on the PEP side. Whilst on the DHL side, we clearly expect significant progress year-over-year as implied by the EUR 3 billion. Obviously, we expect, in some divisions, good continuation of what we have already seen in 2017, and in others, a significant step up, compared to the year-over-year progress they showed in 2017. Now looking at the 2020 guidance, we have essentially done three things. As you know, and we have also written it in the column on the far right, our original 2020 guidance was based on relative growth numbers. I know you have all taken your pocket calculators, and you translated 8% CAGR on the group numbers to a EUR 4.9 billion number. We have now also changed to absolute numbers for 2020. The second thing is, yes, of course, we have also factored in the IFRS 16 effect, which is why the group number is now more than EUR 5 billion. And we have made some small adjustments in the relative contribution between PEP and DHL, where we have taken into account also what has been achieved so far, where PEP has over-delivered on the 3% annual growth, whilst the DHL divisions, most notably held back by the forwarding development, have not quite met the 10%, and that has led to a relative adjustment between PEP and DHL. With regard to the other guidance elements for 2018, you can see them on the bottom of the page. We expect to generate a free cash flow of a minimum of EUR 1.5 billion. Tax rate at this point in time stands at 18%, and with regard to gross CapEx, I already mentioned that the expectation is around EUR 2.5 billion. And that takes me to my summary slide on page 33. I think overall, 2017 was another successful year for the group, where we experienced strong financial progress in all divisions and where we were particularly glad to see DGF beginning to recover with the help of our new divisional CEO in the second half of the year. Going forward, we continue to be well-positioned for further sustainable, profitable growth. And all the divisions know what they have to do, and we continue to innovate and invest to support future growth. One very important element for us this year was to translate the good top-line development into good EBIT development and into good cash flow generation. I think we succeeded in doing this, and on this basis, it was a natural step for us to also increase our regular dividend correspondingly. So finally, on page 34, we have updated our short-term summary investment profile, for the new 2020 guidance, and factoring in the increased dividends. Many thanks for listening, and I will now turn it back over to Martin to start the Q&A. Thank you, Melanie. Thank you, Frank and operator. I think we still have sufficient time for Q&A. Please initiate that, please. Of course. Ladies and gentlemen, if you would like to ask a question, please press 9, followed by the star key on your telephone keypad. If you wish to withdraw your question, please press 9 followed by the star key again. Please press 9 star now to state your question. Please press 9 star now to state your question. Our first question comes from Andy Chu, who is calling from Deutsche Bank. Good afternoon. Three questions if I could, please. In terms of the guidance from, say, if you look at the EBIT growth from 2018 to 2020. That is basically a 10% CAGR, 2018 to 2020. Is there any reason why we can't think about that sort of growth rate in a medium to longer-term post-2020? Secondly, could you just talk a little bit about the wage agreement that you have put in front of the unions and when you might expect to have that signed, sealed, and delivered? Then maybe the third question, just on the balance sheet. In the presentation you mentioned solid balance sheet, further excess liquidity. You have obviously had close to EUR 300 million in from the sale of Williams Lea Tag. How should investors please think about surplus liquidity? It does not feel like you have a lot of M&A to do. Thank you very much. Yeah, thank you. Andy, may I take the first and the second, and Melanie Kreis answers the third question. It's definitely too early to commit already numbers beyond 2020, but what I can say is the e-commerce transformation of most industry is still at the beginning, and we will see benefits beyond 2020. That's the reason why we are investing into new activities in that field, even if they contribute very little at the current stage. Secondly, I highlighted only the power of digitalization for Supply Chain. We believe really that can help a lot. I have just looked the other day with the GBS team into how you really easily can program bots in the meantime. I'm very confident that we will see tremendous productivity gains from these kind of activities because technology becomes so straightforward and user-friendly that I believe we can do significantly more as an operation on a global scale. It's too early to commit, but of course, the e-commerce and the digitalization definitely will drive our performance long term. From the tariff agreement, first of all, we felt that we offered a deal which is attractive to employees without being over the point which we can't accept. So we went, I think, up to the level to balance both the interest of the company and the shareholders on one end and the interest of all the employees. The timeline is not 100% fixed, but we assume it's probably to go four weeks around from now, maybe slightly more. But that's not in our hands, that's in the hands of the unions. I'm optimistic that employees will see the strength of the offer we've made for them, because it's not only the salary increase, but also other elements like that they can exchange the salary increase in exchange for free days, which definitely helps our elder people. So I'm confident that we will get that through, but we know that only about four weeks somehow. Maybe with that one element, which maybe I should mention, is that the employees have to refuse it by more than 75% to get not signed. And we think that's pretty unlikely that this will happen, but you never know. I expect acceptance because the offer is attractive and it's good for the company as well, because we didn't go too far with the offer, but we believe still that this is an attractive offer for our people. Yeah. Then, with regard to the balance sheet, that question doesn't come completely unexpectedly. Obviously, we have shown you the numbers ourselves, and we recognize that we have accumulated excess liquidity. Also, over the last one and a half years, since we did the last share buyback, we have now focused on doing a solid increase in our regular dividend. But of course, we feel further bound to our finance policy and will act upon it when we think the right time has come. Andy? Great. Thank you very much. Thank you. Thank you. Next caller, please. Thank you. Our next question comes from Daniel Roeska, calling from Sanford Bernstein. Hi. Good afternoon. Three from me as well, please, if I may. First on the EBIT and PEP, Melanie already commented on the flat development into 2017. Maybe looking out and also with the chart Frank shared earlier, what is the turning point here for the European ventures to, in total, really become profitable and take off? Would you, in the medium term, expect them to reach German levels as you have that curve kind of pointing upwards? Secondly, on DGF and the progress there, we have talked a lot about the IT in the past. Could you share some thoughts on how you are thinking about processes and staff capabilities into the future, and how that may also impact the freight mix you have within DGF? Then lastly, just some comments on the TDI-TDD shift within Express, where you are seeing, of course, TDI growing much stronger. Is there any message embedded into TDD? How is that performing in Europe, possibly also against the stronger parcel networks and the entry of UPS and FedEx? Thanks. I start with the PEP question. That's a tricky question in the following sense. The more successful we are to improve the performance of the existing countries, the more our appetite goes up to do more. Because that's proof of evidence that there's really a path going forward. I would not suggest that we should slow down the growth to just deliver significant contributions for our 2020 targets. We always said that the contribution to the bottom line will be relatively small. Whatever we gain there and see that it's working, I think we should accelerate the growth path going forward. That's the recipe, and therefore, I would not comment on that. Can we get to levels we see in certain markets like Germany? That's also tricky. We will see a pattern of margins in the countries because the competitive landscape is quite different from the customer side and also from the competitor side. That's very tricky. We have that in all our businesses. We have pretty high margins in some countries and only decent margin in others, and that has something to do with the competitive landscape, the inbound and outbound, and that plays a part here as well in Europe, that we have significant inbound and outbound that had impact. Therefore, I think it's better to look into that game on a regional base than a country base, because it will lead to misperception, either because the margin is too little or the margin is too high, and then you say, "Oh." Therefore, we will probably continue to say, we can talk about what we do on a regional basis, or at the moment, we are doing that on a global base because the contribution is still so little. On DGF, I think we are making good progress and of course, the skills the people need fit perfect. The system fits perfect to the skills our people have already. That's a strength of the software, so they don't have to change that much. Mei, I didn't understand fully if that was the question. I think we have a great product. We have surrounding systems which we used already in some markets and scale them out globally. That will work very well too, and therefore, we are very confident that we have a suite of IT systems without a fit for purpose, and our employees telling us as well that this is really what they need it for, and it's a significant step up against the legacy system. I'm not sure if that was really the question, but otherwise, please ask again, and I hand over for the last question to Melanie. Yeah. On the TDI-TDD question, our TDD volume is coming from a handful of countries. It includes some European countries like Germany, the U.K., Switzerland, Italy. Outside Europe, the really important country is Mexico. From my perspective, the growth we have seen with 6.2% for the full year has been a healthy growth. You can also see that we had a bit of yield management in here, with revenue being up slightly more with 7.5%. I wouldn't over-interpret that as the European countries being under pressure from competition. I think in those big countries in Europe, Germany, U.K., Switzerland, Italy, where we have sizable TDD businesses, we are actually very pleased with the performance. Thanks. Maybe I'll just follow up briefly on the DGF question. I think the thought is around, Frank, if you're at the 2.1% for DGF currently, and we've discussed several times how that will improve over time, and IT is one driver. But another driver has to be changing the mix of freight, so getting into more value-added services, because otherwise you won't be able to lift the GP probably. Here the question is: Is the IT really all that you need, or are there other elements to that transition that you still need to put in place? Yeah. I think what is important, and you see that already in the fourth quarter to a certain extent, what helps tremendously is, I think Tim's approach that we have to focus on GP conversion. He said that we need a better mix on the GP because that will drive the GP conversion. We also, at the same time, need a better management of our processes and structural changes he intends to do. That includes IT. I think he is very clear that we have to do both to get to higher absolute profitability, and he's very much committed to do so. He understands that kind of business very well. Where are the levers? Where we have to be firm with price increases and where you have to compromise. His 25 years experience is tremendous help, and he's very clear to his organization. That will help us to improve the GP and at the same time, the GP conversion. This is what he tells me all the time, we have to do both. He's very much committed, and I think he has already identified levers on both what we should do differently to improve the performance of both. Great. Okay. Fair enough. Thanks very much. You're welcome. Thanks, Daniel, and the next caller, please. The next question comes from Robert Joynson, calling from BNP Paribas. Good afternoon, everybody. A few questions from me, if I may. First of all, on the pension, where you paid off a large chunk of the U.K. deficit last year, could you talk about how you think about future large payments into the pension as opposed to, for example, returning cash to shareholders? My second question on the free cash flow guidance. When you guided for EUR 1.4 billion free cash flow at the end of last year, which, of course, was achieved in the end, did you anticipate that that would include the U.K. pension funding of almost half a billion, or was that only decided on more towards the end of last year? My final question on Express. Melanie Kreis, you mentioned that the Express revenue would have been up 15% in Q4 without the adverse FX effects, rather than the reported 8%. Could you just comment on what the EBIT growth in Q4 would have looked like without those adverse FX effects? Thank you. Okay. Starting with the U.K. pension. First of all, the way I think about this pension funding is not that we took excess liquidity away from what we can potentially distribute to shareholders, which is why in this one graph, we also adjusted for it. For me, it is more of a liability swap on the balance sheet, where we took advantage of the very positive refinancing conditions we saw again in 2017. We had mentioned repeatedly in the course of the year that in Germany, there is no regulatory pressure to come to a certain funding ratio, and also from the social partner, there is no pressure. The one plan where, as you all know, due to legal requirements, we had an underfunding situation was the U.K. There, the regular negotiation with the trustees is actually only in 2018, but we saw the opportunity in the course of 2017 that through a pre-funding with a lump sum amount cheaply refinanced, we could actually get that into a stable territory for some time now. So I feel very comfortable with the current funding situation, and at the moment, we don't have any further plans because the U.K. and Germany are our two big plans. With regard to free cash flow guidance, did we already plan for it concretely in March 2017 when we came out with the guidance? I think it was one of the factors we had on the moving parts list because we knew in 2018, there would be the discussion with the U.K. trustee on the pension funding. But in March 2017, that wasn't spelled out in any detail with regard to amount and how-to and timing of the whole thing. Then finally, with regards to currency effects, what did we see in the fourth quarter, and what do we expect going forward? We don't disclose the details of the currency impact on the EBIT because there are really quite a number of factors flowing in. I think the general message I would give here is, first of all, being active in 220 countries and territories and having been active there for quite some time now, currency movements are a part of our business. Which is why we have it every quarter. We only tend to talk about it when it's really profound, like what we have now seen in the course of 2017. I think the important element also going forward is our ability to deal with that, particularly on the EBIT side. Here, the different businesses have different headroom to adjust for currency developments. On the Express side, everybody, including the customers, understand that our Express network is an expensive network and a big chunk of that is denominated in hard currency because everybody understands that the currency used on the aviation side is U.S. dollar. So a customer in a small country where the currency has devaluated will understand that this will eventually lead to a price increase. We have consistently taken currency developments into our annual GPI numbers for Express. We have even, in extreme cases, done intra-year adjustments to recover from currency. At the other end of the spectrum is Supply Chain, where as positive as such, revenue and costs are actually much more in sync because they are in the same currency. So when you have a Supply Chain contract in the United States, the revenue is in dollar, the cost base is in dollar, the result is in dollar, and the only thing we have is a translational result. Of course, the downside of that is it's much more challenging to explain a customer in the U.S. that, hey, just because the U.S. dollar result is now worth less in our group books in euro, we have to do a price increase. That's a more challenging price increase discussion, which takes longer. So putting it all together on Express, I think we have ample of experience to adjust for currency effects over time, and on a much more rapid basis than we can, for example, do it on the Supply Chain side, where there is a more direct translation from the top line to what you see on the bottom line. That's very helpful. Thank you very much. Okay. Thanks, Rob, and we continue with the next caller, please. Okay. Our next caller is Damian Brewer, who's calling from the Royal Bank of Canada. Good afternoon. I guess three questions again. Can I come back to balance sheet issue and just sort of talk about the excess capital a little different way? Historically, there have been hints at times you would've explored things like interim extraordinary dividends. Can you talk a little bit more about if those would be back on the agenda? So it's a more sort of smoothing position of the balance sheet, or indeed, we're seeing sort of activity within the sector, both M&A and what look like might be failed attempts at IPOs. Given that and the e-commerce background, when you think about your potential returns on capital as you go down that priority list, would you still plan to think about them over the same timescale, or if there are significant strategic moves you can make, would you think of loosening some of the criteria if the risk reward is better? Second question, just on the IFRS 16 change. Could you just talk a little bit more about how that would impact the way the metrics are set for the long-term management compensation? Will those be rebased? If so, will they be rebased given the fact you get the depression of the short-term earnings with a, if you like, an elevation long-term? Then very finally, just one of 220 countries you operate in, but size one at the moment. What sort of contingency plannings you're making around the U.K. exit from the EU at the moment? There seems to be at least one of your competitors taking cost and time to look at whether they need to go for more paper-based customs clearance. Are you having to take the same cost, and if so, were any in 2017? Yeah. Damian, may I start with the second and third question? On IFRS 16, of course, we are not changing our incentive scheme for the management board. Our incentive scheme is very much long-term oriented based on the share price development anyway, as you might remember. Of course, we don't see any reason why we should change that because in the first moment, the company should have the same strength as before, and we think the right incentive is that our incentive scheme is very much tweaked into the direction of long-term and shareholder-oriented as we have it. That is our intention to keep it. The second, U.K. exit, of course, we are looking into that very intensively as well, and we are preparing that. We are not publicly talking about too much of the detail because I think, the situation is too fragile already anyway, and it's not good if we are now making more noise as business. But I can reassure you that we are, of course, preparing for that. The cynical thing is, if it gets raw, it is an upside for the short-term for companies like us because customers will look at us to get their complexity managed. But it's not good on the long run for Europe, neither U.K. nor Europe, because it will impact the economic growth. So we are preparing for that, still with the hope that they get to a conclusion which doesn't need any drastic action. The costs are related to that are not massive. I think it's more the preparation of systems and processes. But of course, we are looking in that, on management board level as well, because we think that might have an important impact on certain elements. But again, I repeat myself, short-term, it might even support our business more than it is negative for us. But that's a little bit cynical because, we have to do everything we can, and I say that publicly that we should get to an amicable divorce. If that's possible, I don't know. But, that is what I say publicly to journalists and politicians if I see them. But, there is a risk because there is actually not good traction at the moment in the negotiations, as we all know. So that, or maybe Melanie Kreis, you can talk about the first subject. Yeah. I will try to interpret your question a little bit. I think I sensed a little concern there that we may start doing a big M&A or spending the excess cash on maybe not so return-yielding investments. That is very clearly not the intention. With regard to M&A, what we said over the last quarter still holds true. We will consider a strategically sensible bolt-on acquisitions like what we have done with UK Mail and our Supply Chain acquisitions in the healthcare sector in Italy and Latin America. But, that's it. So M&A is still in the bolt-on category. I think with regard to other more normal investments, I think we try to give you comfort that on the gross CapEx, we are talking about EUR 2.5 billion. And what we do with the rest, I hope that with our free cash flow guidance for the year, it shows that we also want to continue generating reasonable free cash flow instead of spending the money in an unwise way. So as we said before, we are committed to our finance policy and on the other elements, nothing has changed. Okay, thank you. Just to be clear, no chance of a change in dividend approach to some form more smoothed or multi-year dividend? Yeah. So I think what we are now focused on is the increase in the regular dividend, which in six weeks' time, will be decided by the AGM. Then we will take the next decision at the right point in time. Okay. Clear as can be. Thank you. Thank you. The next question comes from Joel Spungin, calling from Berenberg. Yeah, good afternoon. I've got three as well, actually. So, if I could just start off, just a question on Express, and how you see the market developing there. Obviously, we've seen UPS announce an enormous CapEx program for the next few years, substantial investment in new aircraft and new capacity, a large amount of which they plan to deploy on international routes. I guess my question is: Do you think there is a risk of overcapacity developing in the Express industry and what steps can you take to mitigate that? That's my first question. My second is on the issue of the bridge to the 2020 guidance and just to understand specifically your thinking about Mail. Obviously, I understand this year is going to be a flattish year. But as we look into 2018, can you help us to understand why you think there's going to be a pickup again, especially in the light of further increases, probably in labor costs? Then my third question, just because I'm amazed no one's asked it, but this KFC chicken thing. Is it a significant risk? Is it something that's likely to weigh on the first quarter numbers? Okay. So, I will answer the two first questions and Melanie Kreis can then talk on the financial impact on KFC. So, of course, we see that as well, that UPS is doing that. But we have to be realistic. The industry is now much larger than it was a couple of years ago. Incremental capacity will not be creating overcapacity. We have seen in the last quarter as well, a significant increase in freighter costs, both in Express and in Air Freight, due to the shortage of the market. So there is a very remote risk and I think UPS, FedEx, and us have demonstrated in the past, we are not gambling on buying market share. We want to provide the best service and make a good margin, and I trust that this has not changed, and there is no need to change that. So I'm not concerned about that this will create overcapacity. Beyond 2018, and therefore the contract is also attractive for us, the tariff negotiations. That lasts, if it's signed, until mid of 2020. That gives us good planning certainty, and it gives us also good planning certainty for all the discussions we will have later this year with the regulator. Because we had a deal for three years, and it's now up again for 2019 and 2020. And we are looking into the numbers. There will be another negotiations, how much? But there will be another discussion about postage increase, and that's the reason why we think this year will be more flattish. We have planning certainty if a deal is signed by the unions until 2020, and we will get then planning certainty as well, how much lift we will get for the postage. I don't know yet what it will be, but this is somehow embedded into that we want to go, then again, in a growth momentum and want to deliver our 2020 numbers for PEP. So that's the logic behind that. And we don't have that in 2018, and that's the reason why we say, okay, that we will not have help from price increases, and that's the reason why we probably see a flattish year this year. Okay, then finally on the KFC topic. Of course, we have been foremost focused on making sure that the operations improve and stabilize, where we have seen significant progress, and where we continue to work hand-in-hand with KFC and QSL. So really, the energy has gone into making sure that all stores reopen, and that the breadth of the served menu increases. The whole thing started on February 14. By today, we are really in a significantly more stable situation again. With regard to financial impact, it is too early to talk about that. But we have just today given our guidance for the year, where of course, we factor in our best knowledge on all developments at the current point in time. Okay. Thank you very much. Thanks, Joel, and we have got more callers. Yes, we do. Our next caller is David Ross, who is calling from Stifel. Yes. Good afternoon. Just two quick questions on the forwarding division. First, how much of the $700 million 2018-2020 DHL EBIT improvement is expected to come from forwarding? Second, air is certainly doing better than ocean at the moment. Why do you think it is that ocean takes longer to turn or seems harder to turn? On the first one, let me say, we give, and we have done that for the last years, we gave all this guidance for PEP and the DHL divisions combined. Therefore, we will not now give sub-guidance on the subdivision, some of DHL. But of course, we see a significant opportunity to improve the performance of DGFF. This is a good question. I think the timeframe for certain contracts lasts longer in ocean freight, and that's a major driver. We will get out of that as well, I'm pretty sure. It takes a little bit more time, but we still see growth, and we are confident that we see progress in 2018. In air freight, we have achieved that earlier, but I think there is no doubt that this is also achievable in the ocean freight area. Okay, David, question answered? Yes. Thank you. Okay. The next question comes from Adrian Tayo, who is calling from Commerzbank. Yes. Hi, everybody. Good afternoon. Actually, two, three questions on Post, actually. Well, first of all, if you look at the fourth quarter, then you could see quite a positive momentum on the unit prices, both in mail and dialogue. Maybe you could add some flavor here why dialogue in particular was also strong on the volume side, while mail looked a bit weaker, or let's say, to get to the downside of the trajectory, and could you confirm the overall trajectory that you see for the mail decline? Or should we take something into account why this should accelerate? I am trying to figure out a little bit, are there any effects? Because you said pricing flexibility is not very strong, obviously, in 2018. We should nevertheless think of being sustainable, going forward from the good development in Q4. Then I might have a follow-up. Yeah. If I reflect on those, there is a certain trend happening that more and more customers realizing that advertising through dialogue marketing is more attractive than some of them thought. We have new products, which you can combine with your online advertising, and that helps. Then very cheap products are sent by mail as well, and then that might help as well. Is that a trend? I think that is too early to say, but we are confident that the underlying trend of -2% to -3% is not accelerating. We have no indication why it should happen. We might, as you have just said as well, we have seen in the fourth quarter, even in dialogue marketing, an opposite trend, but I would say that is too early to say that this is an overall trend. Therefore, I would prefer to reconfirm, we assume in our guidance for 2018 and 2020, that we have a decline of 2% to 3% of our combined communication and dialogue mails. Mm-hmm. On the other Post revenues, which I perceive is mostly the branches and shops, obviously, but nevertheless, pretty strong development in the fourth quarter. Also here, the question, were there any other effects we should take into account, or is something of the, let's say, turnaround Q3, Q4 momentum, at least giving some hopes for the development in 2018 then? I'm not aware. Melanie, are you aware of anything special with regard to other revenue? No. No. Definitely nothing which I would consider trend-changing going forward. No. We looked at it in preparation and- Yeah couldn't find anything that's worth hinting to. Okay for a better read. Okay. That's fair. Thank you. The good news is that we see elements which we didn't expect, as I explained when I presented the page as well. The bad news is we don't think that that's a moment where we say, "Okay, now we have turned the corner." I think it's prudent to say, you should assume, and our guidance is based on an assumption that we will see a continuation of the 2%-3% decline without having the postage change in 2018. That's one of the elements which leads to a flatter number in that division. All right. Thank you. Thank you, Adrian. We still have time for a few more callers. Our next caller is Dominic Edridge, who is calling from UBS. Hi there. Thanks so much. Just two questions from myself. Firstly, just on the PEP business again. I was just looking at the non-mail businesses in there, particularly the StreetScooter, obviously E-Postbrief in the past. Can you just maybe discuss some of the investments you are putting in there and whether there is anything else that may be going in there over the next couple of years? I suppose, I know you will not give the absolute numbers, but can you give us an idea, the investments you are putting into these new projects? Are they likely to go up in the short run over the next couple of years, or do you see them coming down over the next year, particularly going into 2020, and that target? The second question, maybe more for Melanie, is just on the cash flow. Obviously, the provisions look as though they are coming down again this year, looking at the balance sheet. I think about a couple of hundred million, looking at it. Given you were guiding to that EUR 400 million-EUR 500 million normalized last year, would you be suggesting that we will see a further improvement this year of maybe the EUR 200 million which we are seeing in the balance sheet? Thanks so much. May I comment on StreetScooter? This is a good question. We see pretty strong external demand now. There is always a lead time because this is B2B. People are taking some StreetScooters, testing them, assess a pilot, then do another pilot, and therefore, there is a delay. But at the moment, we have encouraging signs. Therefore, it might lead to further investment into that area, but that is backed then by sales, external sales, and not only internal usage, which I believe, or we believe, would drive value creation in the StreetScooter arena. The investments for production are not very high. We are talking more about changes in working capital because if we produce for external, we buy products, assemble the cars, and sell it, and there is a delay between the purchase of the different pieces and the sale of the car. But if that gets bigger, of course, we are aware that we need then more transparency for you because it is a slightly different type of business model than we usually operate. But at the moment, we have very strong external interest into that, and it will lead to external sales this year, without a doubt. If that happens, I think we really have something which has value creation potential. This is what we try to do with that after we start originally to be prepared for bans in cities. As you can easily see, we are getting closer to that in Germany and some other countries. We are the only one who has some preparation, not 100%, but we are significantly better prepared. That was the original idea. Now others are facing the same challenge, and that probably will even accelerate the external demand, which is for us an opportunity. But of course, if that gets larger, you need more transparency of what we are doing there as well. At the moment, we are very happy with the performance of our StreetScooters, and the first customers are very happy, too. That is the opportunity. The investments in manufacturing are not huge. It is mainly working capital because we have to buy the products and to assemble it. That is more what is changing, but the capital investment into the plant is not huge. Melanie, do we expect any major swings on the change in provision line? Yeah. Maybe just to add to the other stuff, I think the E-Postbrief, that is now more of a hybrid offering in the regular postal revenue and with regard to the international expansion projects. That is what you mainly see in the EBIT international line. I do not think there will be significant distortions here, and I think we have given clear indications what you can expect in that area. With regard to the changes in provisions line, what we said, I think last year in May when we talked about it at the Capital Markets Day, we said there is a range of EUR 400 million to EUR 500 million. We have stuff which is always circulating through these lines. For example, on the employee side, there are things which, yeah, as a part of a normal accounting process, will always flow through these lines. I would assume for now that it is going to be in 2018 also in that order of magnitude. Okay, thanks very much. Okay, thanks, Dominic, and one more caller, please. The next caller is Edward Stanford, who is calling from HSBC. Good afternoon. In fact, a follow-up question on StreetScooter. Could you please give some indication of what you think the output of the business will be in number of vehicles this year? Is it too early to start discussing where you think the output could get to in, let us say, five years' time, something like that? This is, of course, the ultimate question, but what we are doing is we are preparing ourselves to be able to produce 15,000 vehicles of different types. We definitely have an internal demand of 5,000 ourselves, and the rest will be driven by how much demand we will generate going forward. I think it is too early to say how many we really will produce this year. But there is an opportunity. We get interest not only from Germany, we get interest from Europe, and we get even interest from overseas. Because the vehicle is well-designed and pretty attractive from the economic terms, and that is an opportunity for us. When it will really go further up, we will see. As I said, we are in the B2B world, and the B2B world is moving much slower than consumers. Consumers are changing their mind rapidly and go away from Nokia to smartphones, as you might remember. The backbone of big corporate is still Microsoft. The reason is because it is an embedded platform. Therefore, the change from commercial vehicles from the current to the new ones takes more time, and therefore it is a little bit trial and error, and we will see in due course. But as I said, we have tremendous impact and we prepared for 15,000 production because it is not completely impossible to happen that. How likely that is, we will see in due course. We are doing prudent steps, I think, to leverage what we have created without overstretching our capabilities. Thank you. Okay. Thank you, Ed. Time is progressing, but I think we have got time for a caller or two. Okay. Next caller will be Tobias Sittig, who is calling from MainFirst Bank. Yes, good afternoon. Thanks for taking my questions. Firstly, on Global Forwarding Q4, in the details you provide there is a net other operating positive of EUR 8 million, usually that is a negative. Is there anything we should be aware of? Last year you had some real estate sale gains in there. Is there anything we should be aware of in that? I understand that the IFRS 16 impact in Global Forwarding and Supply Chain will be similar on the EBIT, and I am struggling to understand that given that the asset intensity of Global Forwarding is so low, why would the leasing impact be so substantial in Global Forwarding? On your free cash flow guidance, we appreciate that you do give a guidance, which was not always the case, but basically your EBIT is very precise, your CapEx is very precise, so the moving parts are just working capital and disposals. I am wondering why it cannot be more concise and commit to a higher free cash flow guidance because it does not really stack up with the profit progress you are making. The EUR 1.5 billion looks very low to us. Thank you. Okay, so starting with the first question on the net other operating. When you compare the fourth quarter of 2017 with the fourth quarter of 2016, in both quarters, we actually had a positive contribution from the net other operating, EUR 15 million in 2016 and EUR 8 million in 2017. In both cases, that was driven by real estate disposals. I think the important element when you want to understand the underlying progress is that the overall contribution in the fourth quarter of 2017 and the fourth quarter of 2016 was comparable. So the like-for-like progress underlying is for real. In the fourth quarter, it is Could you quantify these? The real estate gains? I think we haven't quantified them in the past, because in terms of order of magnitude, that is not high enough for external disclosure. But as I said, like for like, the two fourth quarters are actually quite comparable. I think the important thing here is in the fourth quarter, and that wasn't obviously the case in the first three quarters of 2017, we are also seeing progress on the DGF side. Because, and we discussed that, Tobias, also in the previous quarters. What we saw in the first half of the year, particularly, the progress came from freight. In the fourth quarter now, we also saw it from DGF, and there it was clearly driven by air freight. On ocean freight, we are lagging a little bit behind. That was on the first question. On the second question, IFRS 16. Yes, I see your point. I have to say, we have given you a very rough indication, because we didn't want to go into too much detail. We understand that you need a bit of a guidance for what to put into the model for the different divisions. We will give you the more precise numbers in May when we really have the final numbers. There will be a shift between Supply Chain and DGF, and it will be more on the Supply Chain side than on the DGF. But there's also another element, I think, which we can say already today. As we have said, real estate venturing is a significant part of the Supply Chain business because we are leveraging our core competencies, knowing where you have to build warehouses and bringing the tenants for that by adding our customers. Of course, that will be, from an accounting perspective, also different. So in the past, we had one-time gains, and that is offsetting than the gains we have now from IFRS 16. We don't have that anymore with forwarding. Therefore, you have a positive from IFRS 16, but you have a negative because the gains from our real estate venturing are not materialized in one year. They are materializing now over many years. That leads to a comparable number, maybe slightly higher in Supply Chain. That's an important part of that aspect, and that's the reason why we said for the time being, so early in the year, it's probably on similar levels somehow. It's just another one of those detailed complexities behind the whole IFRS 16, where we said, okay, we are going to really explain that in full detail when we have the real numbers in May based on the first quarter. That takes me to your last question, where I can only say, yes, I hear you and I understand what you're saying. I think we have made significant progress over the last years in getting more reliable, also in our free cash flow forecasting, and in delivering consistently and over-delivering consistently on our free cash flow guidance. I will hope that going forward, we can get even more precise also on that KPI. Thank you. Would be much appreciated. Yeah, that's understood. Good. Well, Tobias, thanks for that. Do we have more callers out there? We do have one more question on the line. The question comes from Mattia Gialanella, who is calling from Goldman Sachs. Yes, hello. Good afternoon to all. Three questions from my side. The first one is one more on the numbers, about the tax rate and the tax rate guidance for the year. I know in the past you have provided a guidance at the beginning of the year, but then you did have some lowering of that tax guidance during the year. How firm is this tax guidance for this year? Could there be some reduction during the year, assuming some conditions happen or not? This is the first question. Secondly, on Express, on volume. Volumes appear very strong. Do you see yourself gaining a lot of market share, or do you see that the volume growth in Express is effectively, say, harder than what it used to be in the past? Perhaps because of, say, B2C, which I think you hinted in the past is growing at 20% or so and is becoming a material part, I believe, of the business. Then lastly, there were already some comments about regulation, but if I just talk about regulation for next year, about price increase, do you think it would be fair to assume a price increase broadly similar to what you achieved, say, back in 2016, if I remember correctly? Is that how we should as analysts approach, say, the regulatory review into next year? Thank you. Matia, two answers to the second and third from myself and then Melanie on the tax rate. Express volume, we believe that we gain market share in B2B and in B2C. The focus on the global network, I think, has helped tremendously, and I think you know our recipe is the three bottom lines, employee engagement drives service quality that drives top-line growth. Without a doubt, Express is our role model in doing that, and therefore, we believe that we gain market share in both elements. The nice thing is that the e-commerce will help us going forward because we found also a way to make it margin accretive or at least margin neutral, as you have seen in the last numbers. I have seen many startup companies myself last year, and they say always the same, "Without DHL Express, we would not be in business because our home market is not large enough, and we have to ship to 140 countries, and you do that for us." Customers are willing to pay the price for shipping because that's the only way how they can get these products. That's what will continue, I'm very sure. The pricing, as much I appreciate your interest, as much you probably appreciate that I say, "No comment." My experience now over the last 10 years is don't push external pressure on politicians or regulators. That is counterproductive. That's the reason why I have to tell you, I don't say anything about that, because we delivered nice increases, and I don't want to endanger that we can do something which is good for the company by commenting already what is doable. Please accept that proof of evidence is that keeping our lips closed has been pretty good, and we will continue to do so. Okay, then finally, on the tax rate, the 18% guidance reflects our current understanding, and yes, you are right. In the past years, we have been able to reduce our tax rate in the course of the year. One important element there has been that due to our improving business performance, we were able to increase also the outlook going forward for tax planning purposes, which then helps us to utilize currently unutilized tax losses and activate them on the balance sheet. Depending on how the business develops, that may be an opportunity as well going forward, because we still have unutilized tax loss carry-forward. But at this point in time, the 18% really reflects our best understanding of what to expect for the tax rate in 2018. Thank you very much. Sorry, just a quick follow-up on Express B2C volumes. Do you track, say, the amount of, say, B2C within Express, and do you track, say, the growth rates approximately of the B2C components within the global Express business? Yes, we do. We see B2C as a kind of vertical within Express, and we also kind of shared some of that information with you when we talked about the increase of B2C in our network, where we saw that increase from 2013, 10% to 20% in 2016. I think that gives you an indication for the growth rate. The growth rate trend on the B2C side continues with the same dynamic. What we also showed you when we first presented that one and a half years ago was that whilst B2C is growing more strongly with solid double digit, then we also had B2B growth in the mid-single digit range, and that also continues. Okay. Very clear. Thank you very much. Well, thanks, Mattia. And operator? We don't have any further questions at this time. Okay. Thank you for your questions so far. Before I hand over to Frank for his closing remark on this call, let me point you to two things to look forward to. Our next reporting is going to be on Q1 2018. That is our first reporting then under IFRS 16. As I heard also now in this round, eagerly anticipated, and we will do our best to provide the necessary transparency to that. The other thing to look forward to is our upcoming Capital Markets Day, where the plan obviously is to address all the relevant and good questions that you have out there. The interesting thing is, both things are going to come on the same day, May 8. You have seen the save the date. After this, we are going to be on roadshow seeing not all, but some of you definitely, and we are looking forward to seeing you then on May 8 in London on the Capital Markets Day. With that advertising, over to you, Frank. Let me conclude in the following. I think we had a very good 2017. We are very confident that we have a clear plan to deliver our 2018 and 2020 goals. If you look backwards, we had the guts to tell you what we want to achieve until 2020 already in 2014. I think we are on a very good journey to deliver that. We are happy about and a little bit proud as well that we so far delivered as promised, and that is a long timeframe, as you know. What makes me confident as well is we have a very strong senior team, two additions, and both of them are getting traction, as you can see. One in the negotiations with the union, and the other one with improving the underlying performance. At the end of the day, that is important that we have a strong team at the top, and I think that is the case. Therefore, I am very happy with the progress, and I am confident that we will deliver, as in the last years, what we have promised for this year. Therefore, thank you very much for showing your interest and your trust, and talk to you soon, in person or on phone calls again. Thank you very much and goodbye for today. Bye-bye. Thank you. Bye-bye.