Thank you very much and ladies and gentlemen, very good morning and a very warm welcome from my side to you here in London. As to what I heard just now, about 500 listeners from far away. Welcome to all of you and thank you very much for your interest in our company in Kuehne + Nagel. My name is Joerg Wolle and I'm an engineer by training. I started my career in sales and distribution of European high tech products in the late 1980s in China and India. As you can imagine, I have witnessed and to a certain extent through our business, enabled huge transformations over the last 35 years.
During my 18 years as CEO of DKSH, a market expansion and capillary distribution company which we took public in 2012, I have been in charge of restructuring, building, merging and leading companies in the field of logistics and distribution. Logistics is fascinating. Logistics is the lifeblood of the global business. More recently, with the shocking times of Coronavirus causing havoc and disruption, not only our customers and investors, but the public at large realized the systemic importance of reliable supply chains enabled by trusted providers like Kuehne + Nagel. Why am I here today? Some background. As most of you know, according to Swiss corporate governance, the board of directors doesn't only supervise the management team, but also has full responsibility of determining the strategy of the company. On behalf of the board I will give an insight into the group's strategy.
We however, all know that strategy only becomes real at implementation. Therefore, my colleagues from the management team will present to you in detail how the strategy will be successfully implemented in their respective fields of responsibility. When I joined Kuehne + Nagel 's Board of directors in 2010, the company counted 57,000 employees and an EBIT of 765 million Swiss francs. Kuehne + Nagel back then was with a proud history of 120 years, was dominant in Germany, great in Europe, aspiring in the U.S. and quite under the radar in Asia. Over the past decade we developed Kuehne + Nage l into the leading global logistics provider. By now, with more than 80,000 colleagues and the majority of our EBIT coming from the Americas, Asia.
Asia being the fastest growing region for us, we developed from transporting products from A to B into a really strategic partner for our key customers, advising them, just for one example, on supply chain optionality. Here our customers embark more and more on a China plus one strategy. Countries like Vietnam, India and Thailand are experiencing particularly strong growth. In Thailand, we recently announced the opening of a new sea container freight station in Laem Chabang, Thailand's largest port. Nevertheless, and to put things into perspective, China will remain the biggest player in global trade for a long time to come because it has by far the best infrastructure. Just the Port of Shanghai alone has an annual container capacity of 50 million containers. Compare this with India's largest port, Nhava Sheva, which handles around six million containers. What actually is our winning formula? Our secret sauce?
Or you may say our strategy? Most importantly, we aim at attracting, keeping and developing the best management team in the industry. We leverage the special ingrained Kuehne + Nagel culture very close to the customer, entrepreneurial drive and cost efficiency. We have a proven asset light business model. We focus clearly on organic growth. We don't have to buy critical mass. We have developed that since many many years. Organic growth supported by bolt on acquisitions. If there is a cultural fit and if it is immediately earnings accretive, we are open for partnerships like Apex, IMC. You will hear more about that later on from my colleagues from the management team. And we have a very strong focus on digitalization. We are convinced that the incumbent will win. And lastly, we are proud of our speed in decision making and efficient execution.
One example here, we disengaged from our time honored regional management structure not only just for the cost savings, but mainly for higher efficiency. My personal motto is stay hungry even if the fridge is full. We were and are able to convince our customers and our business partners of this sustainable winning strategy. We also realize that we need some more explaining to do in terms of the capital market perception. Because after all, perception is reality. Trying to create a better understanding, let me start with addressing a few myths about our market where we dare to differ. The first one is huge acquisitions will create a market consolidator. Even since Kuehne + Nagel is presently the number one in sea and air freight, we only have a low single digit world market share.
Our big competition is not just the big four, soon to be three, but particularly when it comes to higher margin small and medium sized customers. The 400,000 smaller freight forwarders globally. These are our competition. And here we are gradually winning because they can't keep up the speed with digitalization and the investments necessary for that. They can't provide regional or global reach. And at the same time we are getting step by step even closer to our customers. The next myth is that trade barriers and customs, the newspapers are full of that every day, are bad for our business. This is not necessarily the case as complexity is actually generally very good for our business. Why? Complexity creates opportunities to charge higher margins for value added services.
One example is our recent acquisition of Faro, a Canadian customs clearance provider, which you will hear more about from Mr. Rodi later in his presentation. And lastly, one plus one is much more than two in a big acquisition. We are not so sure. We didn't bid for Pyropina and certainly not for Shanker for a very good reason. There would be a huge customer overlay and customers always like options. We have in the past benefited and will do so again from those changes in our competition. We will get new customers and also additional expert know how on board going forward. And while we all accept that there is no crystal ball predicting the future, we learned that we need to provide you with a regular financial outlook. And here we start today building on our achievements.
Kuhn Nagel is well positioned to enter the next stage of its strategy and capitalize on its strong market position. Our commitment is clear. We deliver especially we aim for growth at 1.5 times the global GDP growth. We work on organic growth, focus on organic growth, plus as I mentioned already, the bolt on acquisitions if they make sense, such as with Apex and IMC. Third a dividend payout ratio of 80% and a combined conversion rate for sea and Air Logistics of 35%. And most importantly, I guess we aim to provide you with regular financial outlooks going forward. These ambitious targets reflect our confidence in our ability to outperform the market and deliver consistent value to our shareholders. Our CEO and our CFO are going to provide you with more details on our strategic priorities and will elaborate on our outlook.
We will also take a closer look at what has happened since the last capital market day two years ago, areas where we have excelled and areas where we need to make improvements. The business unit leaders will share insights into our key growth drivers, market trends and how we plan to achieve our ambitious targets. They will also discuss the specific initiatives we are taking to strengthen our market position and drive sustainable growth. But let me say this already our focus remains on delivering the best solution for our customers and for our shareholders. We are very confident that Kuehne + Nagel will maintain the leading position in our industry.
We are a global leader in one of the most exciting sectors to invest in a sector logistics at the pulse of the global trade and we are committed to to driving long term growth and delivering value to our stakeholders. Thank you very much for your attention.
Good morning ladies and gentlemen. Warm welcome as well from my side and good day. A good afternoon to all the participants via Webex. Thank you. Joerg Wolle I'm excited to be back here in London and update you on what we have achieved since the last Capital markets day in 2023. I will talk about where we fell short and why and also what we have successfully achieved. And I will explain what specific measures we are implemented to shift to sustainable, profitable market share expansion. The implementation of our roadmap 2026 strategy is progressing well. Just to remind you these are the four cornerstones the Kuehne + Nagel Experience Initiative aim at increasing customer satisfaction while our employee experience is driving a high performance mindset that strengthens our customer service through the digital ecosystem, we are making better use of data and are further automating processes to make our organization more efficient and scalable. Living ESG comprises more than our tangible solutions to support our customers in reducing their carbon emissions.
It also provides purpose and enablement for our employees and supports sound corporate governance. And finally, while we have made good progress on our market potential initiatives, we have not yet fully capitalized on these opportunities that has affected our growth and our financial performance and I will explain on the next slide we made mixed progress against the targets we have communicated to you at the Capital markets day in 23 and we are now resetting expectations. This reset is necessary because of the average EBIT growth rate between 19 and 26. At the Capital Markets Day in 23 we set a target growth rate of 17 to 19%. However, from 19 to 24 our average growth rate was 11%. While this makes a clear improvement versus the pre Covid growth rates, it means we are clearly tracking below our expectations. What are the reasons for the gap?
First and foremost, our assumption for how markets would develop post Covid were too optimistic. In addition, it took time to get back on growth path after major restructuring last year and our active customer portfolio and yield management led to some drag on our top line growth. Finally, it took time to add additional distinctive services our offering which are now available for further drive in profitable growth. However, we made good progress on a number of other targets we presented in 2023. For example, our Sea Logistics conversion rate stood at 41% in 2024 which is already in line with the initial target 2026. In 23 we set the 26 conversion rate targets for sea and Air Logistics to over 40%.
The Air Logistics conversion rate in 24 is below this initial target, but I would like to point out that the productivity and unit cost performance are on track. Lastly, while the headline free cash flow conversion in 24 was below the target level, we finished the year with a much more normal seasonal rate of 94%. Now I would like to show you how we are reframing and updating our growth assumptions to in 2030. First, we assume that the overall market will grow in line with global GDP growth or slightly above in case of Contract Logistics . Second, we are committed to long term sustainable profitable growth at 1.5 x the market growth rate.
To put that target in context, in the decade prior to COVID pandemic, we achieved already at least two times the market growth rate in both sea and Air Logistics , but have in meantime significantly increased our earnings quality. For sea and Air Logistics , our reference metric is volume growth for road and Contract Logistics is net turnover growth. Market growth for the business units may deviate from global GDP growth for certain periods or markets, but even in these situations we expect all business units to expand their market share. Achieving these growth rates over time will ultimately create long term shareholder value. On the next slide, I will give you more specifics on how we plan to accomplish that. We create long term shareholder value through our diversified business portfolio, our resilient business model with disciplined financial management and focus on sustainable profitable growth.
This combination delivers growth with a low risk profile. As our chairman mentioned, I will start by highlighting the benefits of our large customer base which covers a wide spectrum of industries from health care and perishables with more stable business cycles to consumer and high tech with more dynamic ones. Our integrated business model is also an advantage. The relatively stable Contract Logistics business reduces overall earnings volatility. The same is true for our proven asset light business model, strong balance sheet focus on organic growth as well as constant and disciplined attention to cost. These advantages strengthen the resilience that helped us navigate many difficult market situations. As a 135-year-old company, we understand the value of sustainable profitable growth. We understand that such growth demands a consistent focus on delivering value to our customers through a strong service offering.
Finally, we choose evolution, not revolution to grow which includes a selective use of M & A. Now let me explain the role of M& A in our growth ambitions. Also, our primary focus is organic growth. We heard it a couple of times already. We also pursue selected bolt on acquisitions to accelerate growth in existing markets or to enter new attractive ones or to acquire additional market know how. However, we are quite selective. As you all know, we only consider acquisitions that provide a clear operational and strategic added value are a good fit for our existing business as well as have an appropriate valuation and risk profile. We look for acquisitions that we can integrate while maintaining our customer service focus. Recent examples show that we can successfully execute these kind of acquisitions.
Joerg Wolle has already mentioned Apex Logistics, which expanded our network and market share on core trades. The acquisition of Faro in 2024 expanded our footprint and enhanced our customers brokerage capabilities, especially in North America. Hansjoerg Rodi will speak about Faro as mentioned in his presentation and just recently we closed the acquisition of IMC Logistics in the us. This is a prime example of value chain expansion. We are now able to provide critical landsite logistics services to our Sea Logistics customers. You will hear more about IMC from Michael Aldwell . We will repeat these successful cases in t he future.
And based on the feedback from the investment committee, including many of you here in the room, we acknowledged that our investor communication needed to evolve. Joerg Wolle has as well alluded to that that means providing capital markets with more transparency, timely information and guidance. We have listened to your feedback and are making the following improvements. First, in addition to the updated long term growth aspiration, our aspiration for the combined sea and Air Logistics conversion rate is approximately 35%. Second, we are clarifying our capital allocation policy. As mentioned, we prioritize investments in organic growth with selected bolt on acquisition. We also target a dividend payout ratio of 80%. Markus provide you with more details than his presentation. Third, we are introducing annual earning guidance for group EBIT and will update the guidance quarterly. Again, Markus will provide you with more details in his presentation.
Personally, I would like to thank the investment community for the clear and direct feedback. I hope this evolution in our market communication will make our ambitions and our future progress clearer. Now let me address the core assumption on trends that support our growth ambition. First, we assume continuing long term growth, global economic growth despite near shoring and other trends driven by geopolitic trade barriers and short term fluctuations. This economic growth will continue to translate into growth of the logistics market. Second, we also assume that supply chain complexity will continue to increase due to various factors such as geopolitics, trade barriers and other volatility caused by disruptions on the demand or supply side. This increased complexity and volatility creates opportunities for flexible and resilient logistics partners like Kuehne + Nagel . Third, we believe the ongoing market consolidation will continue because scale matters.
Kuehne + Nagel will actively contribute to the consolidation through organic market share expansion and bolt on acquisitions. For us, leading market positions matter especially in sea and Air Logistics . Fourth, the rise of new potential disruptive technologies will accelerate. Kuehne + Nagel continues to invest in technology to to maintain our edge and enable profitable growth. And fifth, supply chain decarbonization is a global trend even if some countries and customers may pursue a different path we will continue to serve customers who ask for tangible solutions to reduce carbon emissions in their supply chains. You may remember this picture from our last Capital Market day showing the four cornerstones of our roadmap 2026 to achieve sustainable profitable market share growth. We will focus primarily on the market potential cornerstone. The other cornerstones will act as enablers.
I've already touched upon kind experience, Digital Ecosystem and Living ESG at the beginning of my speech. Now let me elaborate on Market Potential Cornerstone and explain what we have accomplished around sales excellence and product offering. As mentioned at the beginning of my presentation, we completed a major reorganization last year. As part of this, we also restructured our salesforce and customer segments. You see that here on the slide. I would like to describe how this reorganization will support growth as we once again focus our full energy and attention on our customers. We aligned our sales force with customer segments and defined clear segment specific growth strategies. First, for our approximately 400 large global accounts, we continue with our global key account structure which is aligned along customer verticals.
We serve these customers with industry specific offerings across all business units and we focus on customer retention and share of wallet expansion. Second, now we have a global consistent approach to serving our large national accounts. This is the middle layer which requires services from multiple business units. Our dedicated sales force focuses on winning new customers, many of which are so called national champions or in the middlestand. These customers will benefit from our large global network as well as from our broad and deep service offering. And finally, the large number of local SME customers, the smaller and mid sized ones that trade only with one of our business units will continue to be served by dedicated BU sales forces. Customer proximity and digital sales are key to serving this segment well.
This is an important growth segment for our Sea Logistics in particular and Michael Aldwell will talk about our progress and what to expect in the future. Finally, we seek to expand our network in attractive markets such as the U.S. and high growth markets in Asia. In parallel to sharpening our growth strategies by customer segment, we have expanded our space specialized and value added services. These services typically have higher margins and support our ambition of profitable market share expansion. Building these services requires expertise and resources that not many logistics service providers have that makes these services difficult to copy and they differentiate us from from the vast majority of competitors. Here I'd like to give only a brief overview and share some examples. My business unit colleagues will further elaborate in their presentations.
One source of differentiation is our specialized end to end offering that are tailored to industry specific customer needs. In addition to our well established health care offering. We have introduced new offerings around semicon and data center services. We have also strengthened our ability to serve customers in the consumer industry, especially with Omni channel fulfillment capabilities. Our service offering also extends beyond core logistics services. It enables us to capture more value across the value chain. Here you see a selection of services we have introduced in recent years. We used a combination of in house development and acquisitions to build these offerings. You will hear more about this from my colleagues. To develop these services, it is crucial for us to understand the specific needs of our customers and their end customers.
Many of our product leaders come from these industries and bring deep customer expertise to Kuehne + Nagel. As an example, let's listen to Nico Sacco, our new global head of healthcare strategy who recently joined us from Johnson & Johnson where he was responsible including worldwide supply chain planning. He was essentially our customer. Nico will describe the success factors in our patient centric service offering.
My name is Nico Sacco and I joined Kuehne + Nagel in January to lead the strategy and development for healthcare logistics. With 25 years of experience holding senior supply chain positions at Johnson & Johnson , one of the largest healthcare companies in the world, I bring to this role a customer perspective and a deep understanding of the challenge faced in this sector. From my vantage point, Kuehne + Nagel is uniquely positioned to provide resilience across the entire supply chain. As the global healthcare industry is expected to grow significantly over the next few years, we will continue to strengthen our logistics solution. Accordingly, we are Kuehne + Nagel are in the best position to help our customers throughout their entire product life cycle from discovery and development to testing and commercialization. To accelerate our strategy for over the market growth, we are committed to delivering comprehensive healthcare solutions across the entire product lifecycle.
A critical success factor is our ability to speak the language and of our healthcare customers and continue investing in understanding the complex and regulated healthcare business. We see ourselves as the invaluable and strategic extension of our healthcare customers supply chain. We deliver added value across the industry and ultimately we positively impact the lives of millions of patients are waiting for treatments and medical solutions and this ultimately also has a positive impact on our profitable growth.
As you have just heard from Nico at Kuehne + Nagel , we build our offering by not only addressing our customer needs but also the needs of their customers. In summary, we have made great progress in our ability to better serve our customers with an expanded, relevant and differentiated service offering. We are improving customer satisfaction and we are continuously increasing the efficiency and scalability of our organization. These themes are reflected in the growth positioning statements of our business units that you see here on this slide, they have all one message in common. We have done our homework and are ready for growth. In the upcoming presentations, my business unit colleagues will tell you exactly how they will drive sustainable, profitable market share expansion. Before I hand over to Markus, let me conclude with the key messages I'd like you to remember.
First, our strategy is confirmed and we have reset our growth ambition. Second, our ambition is growth 1.5 times the global GDP growth rate through 2030. Third, our conversion rate ambition for sea and Air Logistics is approximately 35% through 2030. Fourth, we focus on organic growth with selected bolt on acquisitions. Fifth, our dividend payout going forward will be 80%. Last, we are adopting an annual EBIT guidance. Ladies and gentlemen, thank you for attention and for listening. And now I will hand over to Markus who will give you more insights into the financials. Thank you very much.
Thank you Stefan. And a very warm welcome also from my side. Thank you for having taken the time today to attend our Capital Markets Day 2025. I'm truthfully delighted that we meet again after our last Capital Markets Day also here in London 2023. I hope we can offer you greater depth about our equity story, our short term and medium term ambitions. Personally, I would also like to thank you for the feedback about how we present ourselves and how we communicate with you the capital market. We have taken your feedback on board and as Stefan has already outlined, we will try to ensure this capital market stays a moment when we reset to provide more and better clarity in the future.
To build on what Stefan said, One aspect of this endeavor is to provide the first time a near term annual earnings guidance for 2025 at the level of recurring earnings before interest and tax. In addition, we provide guidance on the tax rate and a reduced but more meaningful set of key performance indicators which we will update on a quarterly basis. Having said that, and I know you all know that, but I want to remind everyone that our business remains subject to seasonality as well as influences from global macroeconomics and geopolitical developments. I want to emphasize that our quarterly results may exhibit a degree of variability on the path towards our annual earnings guidance. Furthermore, my presentation will address several topics of interest in relation to past performance and well as structural features of our business model.
With this additional information and context, we hope that our short term guidance as well as our longer term ambitions through 2030 will be clear. Let me start by saying that we are now looking at a business that is qualitatively better than in 2019. We have met or exceeded a number of financially key performance indicators that seemed unreachable before 2019. The business has focused on optimizing yield and hence has changed its customer portfolio. This directly contributed to increased conversion rates in the recent years, but we fell short on delivering our growth aspirations. This is the reason why we are now emphasizing on opportunities for accelerated growth and how we want to capitalize on them. This is important to us because we now want to regain trust and credibility with you, the investment community.
We are fully committed to our path to stronger growth with a focus on return on capital employed and strong cash generation. We support this strategy with a very disciplined allocation of capital and a focus on total shareholder returns, a key element of which is an attractive dividend with a history of continuity. We now aim to bolster that confidence in this approach with the adoption of an explicit dividend policy. We have achieved other successes in our roadmap 2026 beyond the ones that Stefan mentioned. One central element of our culture is the continuous improvement of efficiency and most of you know it already. At the core of this culture stands E-touch, our digitalization and automation program. The E-touch methodology addresses all aspects of operational processes and we have focused here on a few workflow areas for CNA logistics in recent years to demonstrate its relevance and progress.
Air Logistics was the initial test for our E-touch automation efforts and we can see significant staff hour savings that resulted in a positive conversion rate impact of 370 base points representing a value of approximately 3 Swiss franc operating cost per 100 kilo. Just for reference, this was our 2026 target we set ourselves in the Capital Markets Day 2023 so we have clearly progressed faster than anticipated and this amongst others bodes well for our ongoing efforts in Sea Logistics where the initiation of E-touch began much more recently in Sea Logistics .
E touch staff hour savings continue to accelerate as we expand through the efficiency gains and all the operational processes. This has resulted in a positive conversion rate already of 130 base points to date, which represents more than 6SMF operating cost per TU. Let me now talk about growth aspirations and opportunities. Our business is largely driven by the development of global GDP and I would like to give you historical overview of the relationship between our growth and GDP growth. We show on this slide a timeline from 2009 until 2024 for the Sea Logistics market just to illustrate the nature of growth patterns and just as a reminder, prior to the financial crisis in 2008, the transport market enjoyed growth rates that were multiple of GDP. But between 2009 and 2019 the multiplier of trade volume relative to the GDP has diminished.
The transport market grew largely in line with GDP, whereas we succeeded in gaining market share and outgrowed the market by a factor of two.
Leaving aside the pandemic years, a look at our post pandemic performance clearly reveals that our focus on optimizing yield and adjusting the customer portfolio led to several years of growth that was below that of both GDP and the market. This was a consequence for our strict focus on increasing returns, so we now have generated the basis for accelerated growth and we are, as I said previously, committed to take market share. At the same time, we understand and expect that there will be periods where the market grows slower than GDP. In such situations we will also aim to gain market share. So irrespective of the economic cycle, our business is structurally highly cash generative. The free cash flow conversion stood at 94% in our most recently reported fourth quarter 2024.
One major influence comes from the net working capital and in the absence of very large freight rate spikes or unforeseen demand, we maintain the confidence in an annual free cash conversion rate of approximately 90%. Recent changes in seasonal quarterly patterns of free cash flow that some of you have picked up rightfully reflect to a large extent the increase of air freight charter activities in our Apex subsidiary. So let me now spend a minute on working capital. Whilst we have recently seen a moderate increase in net working capital, we remain comfortable with our structural net working capital intensity. Between 3.5 to 4.5% days of sales outstanding have been stable over a long period of time and we expect no significant extension. In terms of supplier payment terms, we see a heavy influence from the air freight charter business that is subject to high seasonality and volatility.
Going forward, we expect that this would also have a visible impact on net working capital levels in certain periods. After confirming our high free cash flow conversion expectations and continuous tight management of working capital, let's talk about return on capital employed. Please have a look at the graphs for which we have blanked out the pandemic years due to the extraordinary commercial situations on that time. Based on the current business mix and structure of the balance sheet, we feel comfortable with a return on capital employed on an annual basis of approximately 80%. Whilst sea and Air Logistics contribute approximately 100% returns or greater, we can report a continuous and you see that on the bottom of the slide, a continuous and successful improvement of this KPI. Also for Contract Logistics which currently stands at a respectable level of 28%.
All these elements and what I said about them leads me now to share sharing our thoughts around the capital allocation policy. Dividends are the largest item on the board and will continue to remain so. Our capital investments are largely at the same level every year with around 280 to 320 million Swiss franc and represent mostly leasehold improvement, automation and material and handling equipment. Occasional acquisitions complement the growth strategy. They are highly targeted and vary in size. Lately and to round up the picture, purchases of treasury shares have been used to complete the Apex acquisition. Now, given the significance of of dividends in relation to our total shareholder return, let me reflect on the characteristics of our business model that we have discussed so far.
We have highly cash generative business model with a proven discipline on working capital management and I'd say moderate complementary acquisition activities. We keep a disciplined eye on the solidity of our balance sheet and prefer keeping a small net cash position whereby we do accept a temporary net debt for reasons of growing the business. Our ambition of an 80% dividend payout ratio has a strong historical basis. On the left side of the slide you can see the historic development of payout ratios and the total value of the dividends. And as a note, we make use of the opportunity, as per the Swiss legislation, to repay capital whenever it's available in addition to ordinary dividends. The right hand side shows the relevance of dividends distribution when we compare total cumulative shareholder returns since December 31st, 2019 through the present day, all of these values in Swiss franc.
We compare the total returns of our shares relative to the SMI and the basket of our sector peers. And it's noteworthy that until just recently, the cumulative total shareholder returns of our stock since 2019 has been superior to that of any of the depicted shareholders comparatives. So after this review of our business characteristics, let's have a look at our medium term guidance relevant for the period 2026- 2030. For the conversion rate, which is, as you all know, our key performance indicator, we aim for a combined CNA logistics conversion rate of approximately 35%. In Road Logistics and Contract Logistics , we foresee stable conversion rates at current levels. Please be aware our main assumptions, especially around our market demand growth to roughly mirror that of GDP and our clear commitment to gain market share in all business units.
These targets are based on organic growth, excluding considerations of impacts from sizable acquisitions. We expect our gross CapEx to remain stable and working capital intensity to remain within that well known and unchanged corridor of 3 and a half to 4.5% let me now come to the short term outlook for the year 2025 and clearly in response to your feedback and in an effort to adopt a practice which is common amongst our peers, we provide you now for the first time a formalized financial earnings outlook for the year 2025. We expect recurring earnings before interest and taxes within the range of 1.5- 1.75 billion Swiss franc. Furthermore, we provide 2025 guidance on effective tax rate of approximately 25% for the Group.
This earning guidance is subject to the assumptions that are listed underneath the schedule, including an uncertain macroeconomic outlook in addition to the nature and conditions of the supply chain. Clearly, the lower end of our guidance reflects an increased level of uncertainty at this relatively early stage of the year 2025. We will affirm or revise our corridor on a quarterly basis together with reporting our actual financial results. And with this, I'm already at the end of our financial overview, medium term ambitions and the outlook for 2025. I'd now like to quickly summarize some of the highlights and takeaways of our presentations. First, we provide an earnings outlook on an annual basis with quarterly updates. Second, we provide a medium term guidance on commercial rates, specify our growth aspirations and communicate dividend policy.
With these few takeaways of our equity story, I trust we have addressed in a very pragmatic and transparent way how we see our future growth based on a very solid financial governance and clear targets. We remain convinced that that with this package of strategic initiatives and our commercial mindset, our shares remain an attractive investment offering continuous high level shareholder returns. This concludes the first part of our capital markets day and I would now ask Chris to manage and open our Q and A session and I would like questions to be addressed to the presenters thus so far, which is Joerg Wolle , Stefan Paul and myself. Thank you for your attention and very big thank you for your interest. Thank you.
Thank you Markus and good morning to all. Since we do have a full room, I'd only ask that you try to limit yourself to a single question and Then we'll get back in the queue. And hopefully have a couple of rounds. So with that, Alexia.
Good morning. This is Alexia Dogani from JP Morgan. My one question is from the Chairman. Has the management incentive scheme been aligned to this new roadmap strategy announcement? Thank you.
Yes, it's the answer. So the management incentive scheme is basically threefold as a relatively low annual room fix, fixed pay if you like, relative high profit sharing scheme which is dependent on the profit after tax which the company achieves and then we share what we call the share matching plan.
Muneeba.
Muneeba Kayani from Bank of America so thank you for setting out the annual targets and maybe that's where I'll start a bit more color on how you've thought about the low and the high end of your guide. You did say you take into account the uncertainty at the low end, but you know, we've got situations around the red sea trade tariffs coming up. So have you framed it around that and is IMC in that guide, to be clear?
Thank you for the question. So I think twofold answer to that. Firstly, I think we made a relatively comprehensive set of assumptions around this guidance, first of all. Secondly, it's the first time we do it, so give us a bit of credit that we are probably in the range a bit wider than others that that do that for a longer period of time already. And I think our lower end is really the expression of very early in the day for 2025. We are a bit adapting something that we need to learn and at the same time there are so many moving parts on a daily basis, more or less that we try to keep ourselves a bit of room, let's say, to adjust over the next quarters to come.
Andy,
Good morning. It's Andy Chu from Deutsche Bank. My one question is around the 35%. Conversion ratio which you're achieving at this point in time. I just wondered whether again, it's a continuation of a theme where you might.
See that as a kind of fairly conservative piece of guidance and maybe a bit of feedback. It's around sort of ambition going forward, maybe the balance there between targets and ambitions and conservatism. Thank you.
Thank you, Andy. I think it's an expression to talk about the approximately 35% that we communicate to you that at a point in time conversion rates between sea and air freight may vary because sometimes businesses develop In a different way.
We have seen it now recently when supply chain disruption in Sea Freight has happened, air freight has benefited and sometimes. The other way around.
So it's an expression that these businesses are not disconnected, but they are very largely depending and connected to each other. So I think that is the first message. The second message is we have a very committed, aggressive growth plan and we know there will be periods where margins or yields maybe come for a short period of time under pressure. And this is factored into a target that looks for us achievable in its totality, whereby some of the elements of that target may vary in a quarterly view.
Thank you, Alex.
Morning, Alex. Irving from Bernstein. My question is on the reset of the targets. Now it's clear that from a volume. Perspective, the market hasn't recovered as quickly as hoped. Yet even with that, recent volumes have looked somewhat soft relative to your larger peers. Understand, Markus, you talked about efforts to manage mix. Nevertheless, the yields in both air and sea are below the targets we had at the 2023 Capital Markets Day two years ago. Is it fair to say that we're getting neither volume nor the unit economics that we'd hoped for? If so, why is that? What gives you the confidence that you can turn the ship around?
Maybe I'll talk about the confidence first. Right. Alex, thanks. Confidence. As you know, we have done a major restructuring. We have dismantled the regional layer and the business units have direct control now into the country organizations and we have reset ourselves as well in terms of we want to gain market share. That is the mainframe of our discussions in the management board, in the board of director interaction and with our people, with our leadership team, with our salesforce. You have seen on my presentation how we have restructured as well sales in these three categories. The larger ones, the 400, the mid sized ones, the national champions and then the SME. We have seen, as we have communicated already a couple of times, very good traction in the SME piece in particular in Sea Freight.
Michael will allude to that this afternoon or a little bit later on. The confidence level that we can grow and take market share based on the homework we have executed and we have done in 2024 is rather high. The confidence level that we can now demonstrate market share gains and growth is higher than before. I would say if your question was around yield as well. I think in Sea Logistics we are somehow close to our initial idea, not completely, and in Air Logistics we overestimated certain parameters in the market and here we have a certain gap, but I was alluding as well to other KPIs which we have met. The confidence level based on what we have done, our homework in 2024, is there and large in terms of we are confident to deliver market share gains and growth.
Thank you, Michael.
Thank you. Michael Foeth, Vontobel . One question on your market assumptions, you're assuming trade or market growth of 1 times GDP. That has been the case already for the past 10 years.
It implies that you're assuming that there is no structural change going forward. You know, in a more polarized world in terms of the trade dynamics. Can you comment on that?
No, I think it's mainly around near shoring. Right. So do we believe there is a trend to nearshore significantly and a shift from, from Asia maybe to the, to the West? Basically and I said it a couple of times, we will not see that T- shirts and, and the cheap style Charlie stuff will be produced in, in the western economies. Right.
So neither in Europe nor in the U.S. So we don't see a clear shift or a massive shift in terms of near shoring certain verticals of course, but the majority still is in Asia and there is a clear trend which we already see now since two years from China into Southeast Asia. You mentioned that Vietnam, Malaysia, India now is participating. But the global trade pattern will maybe on a short term basis vary a little bit and you will see changes on certain trade lines. But overall we don't see that there is a massive near share inflation and that's the reason why we believe it's appropriate. What we have communicated,
if I may. Add to this, as I briefly alluded in my speech as well, there is this myth about people leaving China that is simply not true. There is no evidence of that. What we see is that suppliers or customers, manufacturers are going for this China plus one. And this is not only because this basically originated from Corona virus much more than from any geopolitical issues. So there's a big disconnect between what the media is presenting in certain areas to what the reality is. And, and also we have alluded briefly on the infrastructure in the different countries. Yes, India is growing rapidly but in comparison to the infrastructure which is built up in China, there's many years to come before we are seeing a real, I would say dent or a real competition to what has been built in China.
So I think we keep this in mind and since we are very well aware of trade flows and have a deep insight into this, we thought it's worth to mention. Thank you.
Thanks Michael for the question.
Morning Peter. Morgan Stanley. I just wanted to ask if you could give a bit more color around growing the customer wallet share particularly as I think you mentioned earlier in your presentation, customers want choice so maybe just some color around.
I just wanted to ask if you could give a bit more color around growing the customer wallet share particularly as I think you mentioned earlier in your presentation, customers want choice so maybe just some color around.
Conversion ratio because it may be higher than normal due to disruption. What the type of headwind you expect there as that excess GDP per unit comes down. Thank you.
I think a couple of elements to that. I think today for us Is more the day to talk about a long term development strategy, how we want to position ourselves. I think we have secondly provided.
Helping us at the cross border business between Canada and the U.S. and on the south border on a short term basis. This is helping us because there is a huge. And this is what we have done the last decade or decades already.
Thank you Stefan. Any other questions in the room?
Sathish?
Thanks Chris. This is Sathish Sivakumar . If you look at your customer segment so you classified into global accounts, national accounts and SME accounts within that can you give us the split between value add and non value add like that is maybe how does the conversion ratio looks among those three customer segment today? And where do you think that would evolve by 2030? Thank you.
I think our aim clearly is. Or let me start why we actually focus on the SME. Right?
Because the SME is the customer where we have a full package that we can provide like a carefree package. We take care of your logistics and the SME customer typically gives us more opportunities by developing their own business or his own business gives us opportunities to walk alongside with them. Now you could argue well, large customers do the same, you know, kind of when you do an onshoring or a China plus one what Stefan and Joerg has alluded to. But that is a different, different commercial way of doing it and it's very competitive at the end. Whereas on an SME side competition is less fierce because the length of services that a typical SME customer would require cannot be provided by everybody on a global scale. So this is why we're interested in it.
So without giving you numbers but you can always assume there is a much larger part of the gross profit that is solidly connected to value added services on an SME part.
Thank you, Markus. Marc.
Hey, it's Marc Zeck from Kepler Cheuvreux . Just one question on the mix of the conversion rate targets for 2030. To me it feels like that for S ea Freight we've got the SME targets. We've got potentially additional upside for VTouch. But less so for afraid. Does it imply that afreight conversion rates are going down from here? Sea Freight going up? Given that right now we are already at 35% in a mixed rate. Thank you.
Yeah, I think that's a crystal ball question for for many, many quarters now. I think we will see certain swings between the mix. I think that is what I tried to mention also beforehand. We will have sometimes developments that are very favorable on the Sea Freight side, sometimes that are very favorable on the air Freight side, you will hear in a short while, you will hear how fast reacting an air freight market can be between rather dull situation and a very good situation. So that's why we have adopted the way of using a combined rate. Exactly. To avoid a situation where we say, oh, now this quarter is a bit higher, next quarter is a bit lower. These are a lot of influences that are out of our control.
But what we can feel comfortable about is that the connection of these two will result into a certain economic return.
Thank you. Thanks to Marc.
Yeah, thank you. Johannes Braun Stifel. There's a statement in your annual report basically says that you gained a large number of customers in Q4 as a result of developments at the individual competitor. I guess we all know who that is, right? And I think you also alluded to it already when you talked about share of wallet. But can you be a little bit more concrete what DSV Shanker means for you and also to what extent it's already included in your growth targets until 2030.
Thank you for the question. So first of all, there is no guarantee, right? So there is no guarantee that we get all the customers which are coming to the marketplace. If you look at the statistics and the experience we made in this market and in our industry that it is evident that 20, 25% maybe of the business is coming to new providers, right? And from four to three, there is a certain chance that we will take over certain amount of businesses and of course talents and people. So what we have seen in the fourth quarter that was particular in air freight, we picked up on certain businesses already. We see that, right?
So that the share of wallet on certain customers started to grow in the fourth quarter, but the majority will only come after the closing. So in the second half of this year then when, when people or when, when companies need to take their decision based on what I have said before my statement, procurement policies and governance in terms of how much business can I allocate to one provider? And that has nothing to do with the quality stamp or with the execution capability. That has as well to do with how companies have to divert their risk position.
Just to follow up here, taking a sneak peek in your presentation here, I. Don't know is there any commercial value in being number one?
Because you there are slides further down where you aim for that position and Dzhanker probably will challenge you in sea, maybe even exceed you in air. So is there any commercial value in being number one? And why do you make that claim or have that target?
So we See the challenges more coming into the air freight business unit and rather than in sea. I think in order to So It has two elements basically, I think from a procurement perspective. And your question was pretty much focused on procurement, whether you're number one or number two. That is not a big difference. Right. But I think it's the pride factor and this as well as an employee to attract the right talents and the people. It is important, important that you have a leading market position. Right. And we take it sportive and we are energized. Right. So in order to fight. Right. So we want to maintain a leading position and that's why we do it. Right. Because it makes fun as well. Yeah.
Michael,
Thanks. I'm Michael Aspinall from Jefferies here. Just one on your personal growth to Support your volume growth ambitions. Do you see kind of your volume growth ambitions as achievable with your current level of personnel or would we expect kind of personnel to grow in line with your volume growth assumptions?
So from an operational perspective, and maybe Markus want to add. But from an operational perspective, we have a certain buffer, basically we can add up to a certain percentage in terms of volume is concerned in both in air and sea in particular. It might be that we need a little bit more on the commercial side. We were talking about that a couple of minutes ago in terms of how many salespeople do we have. And it might be that we need to onboard a few more. But from an operational standpoint of view, we are rather confident that we can add more volume towards the current setup.
Alexia.
Thank you, it Alexia . Again, first of all, great to see that the plan is aligned with the management incentive scheme. Clearly we cannot kind of assess it on our own because the details are not available. But I'm going to take your word for it. I guess when you look at the 35% conversion ratio, and I appreciate the market is very volatile at the moment, you are at that level with kind of a significant improvement in yields. You're suggesting in sea that ETAJ can kind of drive further cost improvements perhaps to offset that yield decline that as you suggest, might come when disruptions ease. But obviously the magnitude is difficult even for us to assess.
What other tools do you have in your toolkit to get you to that 35% conversion ratio if the backdrop weakens and it's harder to keep some of that yield that you've gained over the past five years.
So I think, if I may take that question, I think there are these elements that you're talking About, I mean it's yield, it is volume growth, our ambitions to it and obviously how we increase efficiency. So clearly. And we have done that through various situations in economic cycles. If things really become, let's say, difficult, then we do what we always have done. We reduce cost and come back to a new operating base. But I think this is a target where we feel comfortable under, let's say largely over the next couple of years that with the three elements, yield, volume and operational efficiency, we can get there.
Alex, follow up.
Thank you. Alex Irving from Bernstein. Another follow up here. Thinking about 2023's Capital Markets Day, once Again we heard a lot about trust A lot about the Net Promoter score. We haven't talked about those two elements this morning so far. For Casa mine back, I think it was trust up, service quality up, NPS up, churn down, volumes higher. What happened? Did NPS, excuse me, did NPS not go up? Did churn not go down? Has the challenge been in winning new customers and how does that experience reflect in the plan presented this morning?
Yes, right. We haven't talked about it. We have talked about that quite in details during the last capital markets day. So let me allude a little bit on the Carnex side. So the customer experience. We started to measure Net Promoter score the first time for the group in 2023 and then in 2024 it's considerably up. Right?
It's not at the benchmark level, but it's considerably up and the churn is going down. That was one topic and the the other topic was the employee experience. Right. So we have measured now two times as well in the road ENPS and great place to work. And this is official data. We have been certified in 64 countries out of the 90 countries. So 12 countries more in 2024 versus 2023. So I would say a very good story. So we see in both KPIs that there is a certain improvement and we will continue of course by measuring our net promoter score and our basically great place to work trust factor.
So we see there is a correlation and we get a lot of feedback and positive feedback sometimes as well, areas of improvements from our customers, individual feedback between 20 and 25,000 customers give us on an alien lifespaces. Where do they believe we are good at? Where we have areas of improvement. So we continue with that as we have started in 2023.
Thank you. Stefan, follow up from Michael.
Yes, thank you Michael Foeth , Vontobel Just following up on the same question. I think last time you talked about churn of 25% and that you need to re win that bit business every year. And by reducing that churn you could significantly accelerate growth. I think that was one of the propositions. So what happened there and where is the churn now?
So I think again, what we started in 2023 also with our ambitions for 26, were very much focused and centered around that customer service part. And customer service doesn't come overnight. I mean, I think we have invested time, money and people and slowly we see that needle to move. But maybe that's one of the things where we also thought we can move a bit faster than what we did actually in reality. So it's a valid point. Churn rate is improving the speed that we were anticipating. That was probably also one of the parts where we fell short in our growth ambitions because we thought the churn rate goes backwards much, much faster than what it really did. And hence our growth was not as supported by the closing of the backdoor, if you like. So it's there, it's the right thing to do. It's happening.
It's just taking a bit more time than what we thought it would.
Michael will expand upon this a bit later as well.
Yeah, I think there is a lot of information coming at a later stage.
Great. We have a few minutes left. Any more questions? Cristian,
Thank you for allowing me to follow up Looking at the salesforce and middle management. Can you tell us a bit about the key performance indicators they have in their remuneration? Is it growth, is it GDP per unit or And has this changed over the last Year as you reorganize the salesforce? Thank you.
So you have asked two questions, the salesforce and the middle management. So let me tackle first the middle management. So in the past, middle management was purely incentivized on profitability. Now it's a combination of customer orientation and how do I manage my customer force, the large national customers in my portfolio moving forward, because that is supporting the growth aspiration of 1.5 times. So it's a combination of how do I manage my customers, my people in my area of responsibility and how can I support that growth target versus a certain part on the financial targets. So we have added this component to it. And secondly, the sales force is. Is. In the past decades we were extremely conservative in terms of the base salary.
And then the bonus scheme is concerned now, especially with SMEs, we have, I would call it a hunting incentive scheme. It's based on a certain figure per acquired new unit, whether it's sea freight Whether it's road or whether it's the container business and LCL in the Sea freight business unit. So it's. They are paid per customer and per new acquisition. New customers coming in and on the larger one as well. We have removed the cap. So we are much more aggressive in terms of how are we paying our sales force in order to support that growth. And that has happened in the end of 2020 when we have installed or while we have installed our new setup in terms of the commercial force is concerned. So we paid by performance. Yeah.
Thank you, Stefan. With that we're right up on schedule. 10:30. Thank you all for your very good questions. And we'll convene again in 15 minutes after the break. Thank you.
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And then we'll have our our next break after that. So with that I hand over to Michael.
Thanks, Chris. Good morning ladies and gentlemen. My name is Michael Aldwell . It's my pleasure to be with you here today. It's my first time at one of these Capital Markets Day events. So it's a pleasure to get introduced to you all. To briefly introduce myself. I spent the vast majority of my career within different positions in the Kuehne + Nagel Group. Over the last 17 and a half years, I've been fortunate to spend time in Oceania, North America, the Middle east and Africa. And for the last couple of years being based in Europe almost all of this time I've been focused either on business development, general management, Sea Logistics management. And as such, I have a grassroots knowledge of the inner workings of the industry, our organization and a strong drive to develop the business.
Today I'll update you on how we've done our homework and made progress towards our financial goals. I'll then provide you with a clear outlook on why we're in a robust position. Position more agile than ever with our new organizational footprint and ready to accelerate on a profitable growth path. Over the last two years, we've driven material changes to our customer portfolio resulting in substantial improvements to long run group yields. And we've done this by expanding our network footprint to be closer to more small and medium sized customers. Actively managing our cargo mix and pricing strategies and taking a critical approach to low margin, low contribution volumes and deselecting those which simply do not add enough value to the group in the long run. We've built lean structures that drive speed to market pricing discipline.
And we've differentiated our service offering through land side logistics services and leading service offering in the market. We have made progress with customer facing technology and we continually strive to improve the customer experience. We've undertaken these efforts to establish a robust agile platform for growth so that we can now accelerate on a consistent trajectory. Let's take a look at our KPIs from the last CMD starting with volume our assessment of the market two years ago was simply too optimistic. As the pandemic conditions quickly faded into 2023, we needed to deal with several things. First, right sizing the organization. Second, a sluggish market making progress on our mix efforts and we simply did not meet the volume growth goals that we set for ourselves. We've now stopped this trend and we're returning to growth on a strong foundation with confidence in our ability to execute.
However, when looking through the extreme years of the pandemic, we have successfully increased EBIT by 87% or 395 million Swiss francs from 2019 to 2024, a healthy five year compound annual earnings growth rate of 13.5% a year. As I look forward, I see an organization that is growing in confidence in the market and is fully focused on taking share. We delivered 2% underlying growth in 3Q24. 4% in the fourth quarter and I'm optimistic for the future that regardless of the conditions, we will take market share. Looking to mix, We've completed in 2024 the deselection of 240 plus thousand TUs from the scrap and commodity segments and looking forward between Q1 and Q3 25 volumes from these decisions will have a remaining negative overhang of 84,000 TUs as of Q4 2025. We will no longer be publishing an underlying growth figure.
Secondly, on mix, we've now reached a roughly half half mix of SMEs to large customers and we expect a bias towards higher small and medium sized customer share as a solid basis for future growth expectations. Moving to Yield We've met our expectations and thanks to the team's substantial efforts to drive performance on a constant currency basis, the outcome is even better given the steady appreciation of the Swiss franc over the last several years. As we look forward, you can expect to see a positive contribution from our IMC acquisition to yields as well of around 50 to 60 Swiss francs per TU on a group basis. We've also made progress on the cost side, an area of constant focus in our organization. You know it's a skinny business. You have to be laser focused on your cost structure. Since the end of 2022, 16% down.
We're proud of that and we will have in the future. Growth we're going to gain from operating leverage from the decisions that we've made in cleaning up the cost base and cleaning up the customer base. And that excludes the impact from a cost growth perspective. From the IMC acquisition finishing with unit economics, the conversion rate in Sea Logistics has been excellent with an average of 43% for 23 and 24, well ahead of our revised long run outlook for of 35% for sea and air and significantly above the pre pandemic averages of 30%. If we look forward, what does the market hold for us? Market volatility persists in a repetitively disruptive industry as is clear to all in this room. We live and operate in turbulent times, especially the current frictions around globalization and trade, and our outlook for the sector is consistent with the industries.
That long run growth will be similar to the rate of GDP, a broadly one to one relationship and at the same time we see production economies accelerating, some sorry, some production economies accelerating faster than others. In this environment with our global footprint, we are well positioned to capture market share as these production shifts take place. We don't need to establish new markets to scale up footprint, it's more around scaling what we have in those markets to make sure we're positioned well and we already have that base infrastructure in place. The uncertainty and volatility create opportunities for us to perform for both customers and shareholders alike, with trade barriers leading to complexity and diversification in the supply chain.
Despite consolidation amongst the largest in the industry players, the competitive landscape remains highly fragmented with we compete against hundreds and thousands of small local forwarders all over the world. And as this technology based consolidation and market based consolidation continues, we're well positioned to benefit from that trend. Overall capacity in our industry will increase faster than the market in the coming years which we expect to keep pressure on the ocean freight market. However, even with the cyclical impacts of of rate volatility on ocean freight trading margins, we see exciting opportunities to support customers in this environment where reliance on a trusted logistics partner with skilled people advanced technology is fundamental to navigating successfully in this increasingly complex landscape. We look forward. The outlook for supply and demand conditions is one of a market under pressure.
It is also nuanced and if we take the example of 2024, almost all of the newly delivered capacity was absorbed either by rising port congestion or Red Sea diversions, keeping supply and demand in balance roughly over the majority of the year with periods of deltas between them I think it's important to emphasize that first, we live in extraordinary times geopolitically relative to the pre pandemic years. We've witnessed recently a series of successive Black Swan events. Second, volatility itself in terms of the absolute movements and the speed of movements around pricing in our industry is far greater based on the last years of consolidation and the severity of events. And third, we expect swift material moves to manage available capacity, be it blankings, redeployments, slow steaming, scrappings, deletions, et cetera.
That we believe will result in continued volatility and challenges that drive the needs for a trusted logistics provider. And in markets like this, scale offers benefits. We can and we will maintain our number one position. In doing so, we ensure that we can offer the benefits of that scale to our customers and shareholders and carrier partners alike. And whilst the supply demand driven cycle and freight rates will continue to be a prominent factor in earnings on a quarter to quarter basis, we are well positioned to navigate the cycles over the long run as we take share in the most attractive trade lanes. Now I would like to talk about how we will maintain a matter of pride and consequence for our group, our number one position in sea freight forwarding as we take share from both small and large competitors alike.
We have three core drivers in Sea Logistics . First, we will continue our strategy of small and medium sized customer development and customer proximity as we develop our network. Second, we will ensure that that growth play takes place in markets which are most attractive and the segments which are most attractive to us. And third, we will continue to expand our value proposition. So I will talk about our unique case in the U.S with IMC which is also an opportunity for further markets in the future. Starting with network expansion. We hold a deep conviction that customer proximity, physical proximity, is a material differentiator in a retrenching and disrupted industry. With customer proximity we're able to build meaningful relationships to become the trusted advisor to our small and medium sized customers.
They constantly face a lack of reliability from the global supply chain and we take the time to understand their needs, help them carefully design solutions to their problems step by step. And we also offer them a unique customer experience via localized service to help them navigate the global network. We will expand our network in smaller markets where we find attractive growth potential and the ability to serve new customers with more service. So far we are now serving 41 new markets since the beginning of 2023 out of the initial goal of 50 by 2026. So we're ahead of our plan and we plan at least 20 more new locations as we get towards the future moments of our strategy in the next couple of years. And we opened another couple in the last couple of months.
And for us it's something that's a matter of pride also for our team. It's something that our company loves doing, is expanding the network and driving that forward. We see the emerging results of these openings and we expect to harvest progressively greater gains as we go forward into the future. Second, there was a question that came to Stefan before. Where are we at with our SME? The low point for us in our small and medium sized customer sales force was in 2022. And since then we've increased the number of people we have in business unit sales out in the markets by 40%. And we continue to drive this initiative forward in the years to come, supporting an improved cargo mix and quality. At the same time, we're delivering substantial improvement in the productivity of that sales channel.
So our field salespeople, business unit salespeople are actually selling more product person progressively year after year and further penetrating that market. It's also important to note we're closely with my colleague Yngve running our Air Logistics business, that this is also a productive sales channel for airfreight. Our small and medium sized customers really have a planned air freight supply chain. So instead of complex RFQ situations, it becomes more an order handling activity and there it offers us attractive margins for our air freight business. Third, we continue to advance our service culture. You know, we really care about our customers. The customer has to be at the center of what we do. We are a service industry. I think people oftentimes in this industry talk about products.
We're a service based industry and we have, we're implementing at the moment customer case management via our customer relationship management tool. And we're now live in more than 40 countries with the remaining countries are on schedule to be fully implemented this year. And we continually improve our customer experience and retention which is important to our growth ambitions via this initiative. As of today, more than half of our global customer service team are active users and the technology is working well, including artificial intelligence that is beginning to support the daily work of our customer service people. With first use cases now deployed into the markets. I think this is an important part for me as well. We cannot and we do not want to be everywhere at once. Someone once told me, you can't throw a stone at every barking dog.
It's critical for us that we have clear focus and understanding in our organization where, where we want to grow why we want to grow there and why those trades are attractive. But we do not want to grow in all trades and verticals, but rather with those that are most attractive on a long run basis within the forwarding industry. We are already the market leader in some trades and we have the clear ambition to become the clear market leader in the trades in which we focus. We have a unique strategy defined for each of these markets that make sure we address the most attractive segments of those markets. And we have dedicated teams segregated working specifically with key KPIs where we measure their performance. We report on it on a monthly. Basis to ensure we're able to specifically.
Drive performance in those core focus markets. And these markets are attractive for multiple reasons. I'll highlight just a few. First, the scale and rate volatility for the large Asia outbound trades is a attractive for us. Second, the continued growth of manufacturing in Asia. Dr. Wolle and Stefan referred to it earlier. We do not observe any wholesale move to reshore production. We actually observe a diversification and fragmentation of the supply chain in Asia which drives more need for logistics services in the future. And third, technology, renewable energy healthcare products continue to grow faster than the market, all of which provide attractive growth opportunities for us in the years ahead. Moving forward, we seek to continue expanding the value chain. We see this as a unique opportunity to work with our customers, especially in markets where we have a certain critical mass.
This brings me to IMC, our latest acquisition in the U.S. IMC is a clear example of our bolt on acquisition strategy where we've taken the time building a relationship, finding a DNA match with a family business and are able to partner together with the existing shareholders to bring on a new capability that is complementary to our business with clear customer value and operational revenue synergies. We also continue here our co branding strategy like we've done with the acquisition of Apex, which Ingrid will speak to. We see a benefit to continuing with IMC's strong independent brand in the marketplace. And before I elaborate further I'd like to show you a brief video to give you an overview of what the IMC network offers to our customers who trade in the United States which for us is the largest market with the largest amount of control business.
A little bit of fun music there. Thank you for your attention. So how will IMCs leading market position in land side logistics in the U.S. drive growth differentiation with an attractive contribution to the group? Here are a few things to consider about our rationale and approach when we took the first approach to making that deal, I think the first main question is why would we as a freight forwarder want to invest in landslide logistics? Well, it helps us address the main challenges in the container supply chain, which if you know our industry are all on the land side, actually pushing steel through water is not the most difficult part. It's what happens when containers get stuck in terminals. They get congested, you have to move boxes out, get them through yard operations.
And so port congestion, equipment management and availability, detention and demurrage are all major challenges for our customers. Whether you're a small, medium sized customer or a large customer, perhaps even more so at times in the U.S. with the large customers you need to move high volumes through congested terminals and yards. And we saw it very clearly during the pandemic and we've seen it other times since. This is a crisis and it's also an opportunity. But those that are able to control capacity and manage it well are really well positioned to help customers and also benefit in that market condition. Technology in the space is also not well advanced and the markets are generally very fragmented. So in many cases with hundreds or even thousands of local marketplaces participants in a local port market, the financial opportunity is also attractive.
There is less fluctuation in rates and margins in this space, especially versus the sharp volatility that we always experience in ocean freight markets which are very clear to everybody that observes our industry. In many cases the inland costs though are actually similar to cost level or higher than the actual ocean freight leg itself. It can also bring us closer together with our carrier partners. We can support some of their operational needs, be a more attractive customer, supporting empty return programs and many other activities that happen on the land side with the container supply chain. As a second main question, why should we invest in the U.S. and why IMC? Start with the U.S. is the first part. Well, 25% of all container moves either start or terminate in the us.
We are the market leading NVOCC or freight forwarder in the U.S. and and this gives us operational scale combined with IMC's market leading position in landslide logistics. The distances are the longest in the world and the cost is generally the highest in the world. Another notable factor is that in the U.S. there are very few national players and as I mentioned before, IMC is the largest. Which brings me to question is why do we target IMC specifically? First and most important for us, there's a very strong cultural fit between both companies. We can learn a lot from IMC and IMC can learn a lot from us. The scale and the synergy case make A very attractive opportunity. Likewise, IMC has great technology and a strong commercial offering backed by their well known independent brand.
All combined we can solve real tangible container logistics products problems for customers in a unique way such as our being able to offer a rail network ourselves in a non asset based fashion, being able to operate yard operations in a very different way than other market participants in the industry. And we can do this for all customer segments and verticals realizing the benefits for customers and shareholders alike. Finally, this acquisition has broader implications for the group. We see an opportunity to deploy that technology also internationally where we have other markets, where we have scale and density to take advantage of that opportunity that presents itself and differentiate our offering and drive performance and yields. The integration of IMC is underway and we're excited about the future that this holds for our group and for the customer base that are going to benefit from that support.
Now I'd like to summarize. We have clear goals in Sea Logistics . First, we focus on absolute EBIT growth. This means volume, quality and discipline to focus on the markets which provide the best returns and to leverage scale when volatility strikes. Second, we deliver market share expansion. This means capitalizing on our leading position technology network and ability to partner with clients to be the problem solver of the global supply chain whilst delivering A growth outlook 1 1/2 times GDP over the long run. Third, we continue to strengthen our value proposition. This means leveraging our leading position to benefit our customers. It also means differentiating our service offering such as with our compelling new landslide logistics offering in the world's biggest economy. So I'd like to finish there and thank you very much for your time and I look forward to taking taking some questions.
Thank you Michael. We have a few minutes Emily, Microphone is on the way. There we go.
Thank you very much Emily from Barclays, I just had a question on GP yields which still sit aroun d 40 to 50% above pre pandemic levels. Could you give some more color on how much is driven? How much of that is driven by better mix or better volumes or inflation? Or how much of that is driven. By better disruption, higher profits and disruption. Please
so I can talk about backward looking today? We're not going to talk too much.
About forward looking as we're going to do pre close in the next weeks. Couple of couple days. If you look at our overall group yield, it's increased pretty substantially by some of the deselection that we've done. We did that very intentionally. We had and I know Chris has been quite explicit about that. It's several commodity based pieces of business that we did not see value in from a long run perspective. So that's helped support group yield. And of course you have cyclicality and freight cycle which is at times a headwind and at times a tailwind. And during parts of last year it was actually both. So it's a mix in terms of how much impact Red Sea had on the business. And as we get ready to, we'll talk a bit more about what that looks like for the current year.
Alex,
Thanks. Alex Irving from Bernstein My question is around IMC. Sounds like you're integrating this into into the Sea Logistics business and actually changing. The way it's run to realize some.
Of those revenue synergies. Russell, is that accurate? Apex and their businesses clearly run at arm's length. Inspiration is something that Kuehne + Nagel has normally done with acquired businesses. What do you see as the biggest risks in that integration process and how are you mitigating them, please?
So first of all, we're going to keep IMC as a separate entity, but there will be a door very quickly between the walls that we are able to walk through very easily between Kuehne + Nagel and IMC, but they stay an independent organization. I think what you look at our business and when we kind of thought about that case is we spend a lot of money in the dredge space in the U.S. we are moving a lot of volume through that, in and out of that market and the opportunity is to look at their organization, our organization, as one combined entity from our business portfolio perspective creates the attractive synergy case. Right?
So instead of paying away that margin to hundreds of third party providers, we can actually consolidate that inside the IMC business, deliver both a different customer opportunity and a different return profile inside that organization.
Great, Lars,
Thank you A question on the yield side as well. If I look at the yields in Absolute numbers and compare with some of your competitors that also disclose these things. There's a tendency that during the pandemic. You've seen a very, very significant increase, more than most of the rest and also on the way down, a decline.
So the question goes is how do you source your capacity? Are you back to back, are you long, are you short? And how would that affect the yields if you look a little bit ahead?
Look, I mean, I think you have to kind of separate the two things, right? So during the pandemic it's clear, I think you'll know the numbers, right. We bled off a certain amount of market share against profitability for a couple years, right? That's no Secret from a long, short perspective, the answer is it depends. And it depends on what's going on in a market cycle. We have some of the best trade managers in this industry working for us and they are constantly looking at what the capacity cycle looks like, what the demand cycle looks like, whether or not there's going to be changes in service offerings to understand how much of our capacity we want to have long and short. And that moves all the time. We have also, I think, a different customer book and some different ways of managing that profile. Right.
And we did a lot of business during the pandemic with big customers and I think what you've seen from us is an acknowledgement that we have done less with small and medium sized customer than we had done previously pre, pre pandemic. And now we're getting back into that space as we still want to see normalized conditions going forward.
Thanks, Lars. Alexia first,
Thanks. It's Alexia Dogani from JP Morgan. So I'm going to ask two if I'm allowed. Firstly, you talked about attractive trade lanes. Can you expand as to which are the trade lanes you see attractive at the moment? And then secondly, can you explain a little bit of the gaining market share with SMEs, do you actually have to work harder to gain market share and grow above GDP? That is, you need to win a lot of SMEs to move the dial on your market share ambition. Thanks.
So firstly, you have to work harder to get close to small and medium sized customers. You have to build trust and to do that you have to be close to them and you have to pay them attention on the other side. They stay a lot longer. Right.
And you're not going through constantly these false formalized RFQ processes where somebody invites 20 providers into an RFQ and it's a spreadsheet exercise. You're helping someone deal with the marketplace and you're helping them deal with what's going on in their supply chain. And that's also one of the most fun things for our people to do is not to end up getting in there, sticking numbers into a spreadsheet all day. I think.
From an expanding market share perspective, a lot of the heavy lifting to build out that small, medium sized customer sales force has taken place. We are 85, 90% from a population perspective, where we want to be. And now we're very focused on driving productivity within that sales force and that's making good progress for us.
Thanks for the question. I can see there's more demand, but to stay on track, we're not going. To see shifts you Air Logistics and. Perhaps during the break you can address more of those questions. So thank you Michael and we hand over now to Yngve.
Thanks a lot Chris. Michael, thank you for keeping me in the number two spot for the presentations. Sea of Freight is still ahead. Well done. Good morning. Yes, it's still good morning. My name is Yngve Ruud. I'm here today to provide you an overview of our progress in logistics and share my confidence in our positioning for the future. I will begin my presentation with a retrospect overview of our performance and a brief update on the projected air freight market for the coming years. In my main segment of the presentation, I will provide insight into some key drivers expected to facilitate our growth moving forward. I've been head of Air Logistics and part of the management board since 2016. We had a lot of years in Kuehne + Nagel before. I think it's close to 20 years and I'm happy to share my findings with you today.
As you can see here, we deliver strong, consistent growth. Our ongoing focus on profitable growth has allowed us to achieve a yield level that is higher than pre Covid and at the same time gained market share on the yield on conversion rate. We communicated in the last capital markets day in 2023 our ambition to be and to maintain our market leading position with a clear focus on vertical leadership, efficiency gain, yield optimization and ideal economics. Due to market developments in specific verticals such as automotive, our cargo mix has been only 67% hard cargo in 2024. As mentioned in 2023 our optimal mix is 70% hard cargo and 30% perishable. Hence our yield is still short of the 100 Swiss francs per 100 kilo communicated for 2026 and our conversion rate is slightly below our ambition. Since 2016 we have consistently increased our market share.
Our volume due to our strategic investments has driven a compound annual growth rate of 6.1%. We have significantly outperformed the market which had the CAGR of only 1% for the same period and I know there is some commentary about growth in 2024 versus market and peers. I want to put this in recent perspective. In 2024 we added more than 100,000 tonnes. This is a market leading growth compared to anyone in absolute tonnage. Our EBIT CAGR has been 6.1% as well. This demonstrates that we can gain market share and grow our profitability at the same speed. Let me give you a brief overview.
Of the air freight market and why we believe this is a very attractive market. For years to come. The air freight sector is expected to grow by 3% from 2025 to 2028, excluding E commerce, with demand continuing to outpace supply. This growth will be supported by several trends that indicate increased long term demand, particularly in our focus verticals and industry trends such as a growing world population is expected to drive demand for perishable goods. The aerospace sector anticipates continued growth due to the further development of travel and tourism. Investment in semiconductor equipment is projected to grow at a compound annual growth rate of 8 to 9% between 2025 and 2028.
The logistics sector for data and service centers, which we announced our new products in 2024, is also poised for growth with spending on public cloud services projected to increase by 22% of only in 2025, largely of course driven by investment in AI technology. Given the anticipated volatility that everybody has been talking about today in trade patterns, the need for reliable airframe services will remain crucial to maintain a resilient supply chain. There are also significant trends on the supply side. The utilizations of freighter capacity remains high as airlines optimize their fleet to meet growing demands by quickly shifting capacity between freight lanes. The phase out or aging widebody freighters will create a gap in the large widebody segment. In recent years, approximately 4% of the fleet in service has been phased out.
We anticipate this rate will increase to 5 to 6% over the next few years due to the rise of average age of the global fleet. And just to give you a number on this, in 2019 8% of the worldwide fleet was older than 30 years and by 2025 this figure is expected to reach 17%. In addition, we have supply constraints in new deliveries as a consequence of the global widebody freighter fleet is projected to grow only by 1% annually through 2028. A Matter of Pride we heard a Couple of times today and as you.
Also heard from Stefan and Michael, scale matters. You will understand that later in my presentation. Our historical growth and investments led us to number one position in 2021. We have successfully defended that position through today. If we are surpassed, maybe for a brief period of time in the near future, we firmly believe we will regain that leading position. I will now give you some more insights into three key design elements for future growth. First, we will continue to invest in industry leading solutions for growing sectors such as aerospace, semiconductors, healthcare and perishable. Secondly, and this is a point I will elaborate a bit more during my presentation, we have developed a scalable asset light network and our gateway model will enable us to adapt to trading patterns and change in customer requirements.
The gateway setup support growth, creating procurement synergies and increase profitability across various commodity production cycle and pricing dynamics and finally, our investments in technology over the years and with the high adoption of Ether's capabilities, our redesigned organization now has the foundation to be much more commercially focused. With our continuing investments, we are already market leaders in aerospace, healthcare and perishable in the aerospace vertical. We recently relaunched our AOG product so aircraft on ground product. With the most.
Comprehensive service offering including our premium offering with Sterling which is one of our dedicated go to market setups. And just to highlight, in 2024 we shipped more than 2000 aircraft engines for our customers with Nico Sacco which you just saw in the video earlier today, we are refreshing our full product lifecycle and expect an improved commercial offering starting with our specialized clinical trials and gene cell therapy solutions which is all operated by Quick Stat, a separate go to market for position and Only last year 2024 we delivered more than 95 million vaccines for our customers. For perishable we are further expanding the different segments. We have achieved significant success the last few years with our new designed for fresh salmon solution. For 2024 we transported almost 700,000 tons of various products including flowers, seafood, produce and other food stuff.
We talked about SEMICON in 2023 we are well on track to reach our 2026 ambition of 500 million Swiss Francian turnover for the semicolon industry and we only launched that service offering in 2023. We have further expanded our capabilities in high tech sectors with dedicated solutions for server and and data centers where we expect accelerated growth over the medium and long term. Innovation in products and solutions is key to maintain and grow our leading positions. We have new launches planned for later this year and in 2026 such as an end to end cool corridor in healthcare and real time monitoring in aerospace. For Semicon, we will further expand our portfolio to support this very attractive industry. The development of verticals is the backbone of the creation of a global network which I will explain a bit more in details in a couple of minutes.
And lastly we will continue our successful targeted acquisition strategy as explained in the Capital markets day in 2023 we are targeting three forms of value creation with our acquisition approaches all aimed at top line synergies.
1.
We want to create a unique positioning with the acquisition of Apex, we have a partnership with the partners group and the Apex Management. This combination together with KN's global capabilities create that unique value proposition.
2.
Dual brand strategy by Maintaining distinct brands such as Apex, we can enhance top line synergies, we can support accelerated growth and we create a different go to market strategy and last three strengthen our focus verticals and perishable networks with bolt on acquisition. This to enhance our leading position and to support our network and gateway expansion which is an important driver that I will touch upon a bit later. So let's talk about network and gateway expansion. Our unique positioning within the industry allows us to scale and adapt our network in response to demand variations. This network has 30 gateways serving more than 90 origins and it's supported by 100 charters and 35,000 commercial capacity every week. Scale matters. It is the backbone for growth not only for our focus verticals but also general tower.
The gateway strategy includes acting as an internal carrier, centralizing procurement and carrier management, creating an asset light capacity network with control charters and the commercial allocation. This support growth by driving opportunities to penetrate new markets, new customer segments and creating synergies in our procurements. Here you see the global coverage of our gateways is located throughout the world. We rapidly expanded in 2024 and further expansion planned for this year and 2026. All our gateways will be running on proprietary software which is uniquely designed for these specific needs. Let's have a look at our gateway, our network expansion to give you a better view. You see here 2019 and we want to show you how our service offering has increased over the last few years. 2019 we had 13 weekly charters serving perishables Transatlantic and Trans Pacific.
Here you see 2025 frequency and capacity has greatly improved including Latin America, Mexico and Inter Asia. Talking about Inter Asia, I would like to emphasize our rebalancing capabilities which enable us to swiftly adjust capacity across our gateways in Asia in response to disruption, rapid changes in macroeconomic conditions or fluctuation in demand. Our customers they ask for global coverage with a dense weekly frequency to cover everything from planned air freight to emergency freight such as aircraft engines. With this setup we are very flexible regarding trade changes, tariff implications and other disruption with a global coverage of gateways with an agile network configuration. But without people and technology, our growth ambition would not be possible. Stefan mentioned that our refocused organization is designed for growth. By removing layers, we have transformed our organization for quick and empowered decision making.
The improved global transparency we have today and the alignment without regional influence are major improvements. The execution speed and global consistency are game changers for our growth agenda. This new organization can only work with advanced technology. We have moved our GMS and other applications to the cloud which enable us to accelerate innovation and improve our capabilities and capacity both locally and at the corporate level. To give you an example.
One of High priority initiatives is AI driven pricing. In late 2024 we successfully piloted this global application on 24 lanes out of the U.K.. Just a few months later we expanded to more than hundred lanes and in 2025 we are rolling out this application to all our significant countries. So what does it mean? The AI pricing application uses a digital twin to simulate pricing dynamics in logistics. It combines several models into a comprehensive simulation allowing for a seamless graphical presentation of past and future quotes. At the individual customer level. The application measures price recommendation and optimizes the quote as underlying parameter changes. With this application we expect to improve speed to market pricing accuracy and yields.
We are super excited about this.
To maximize our growth potential, we have fully aligned our commercial strategy with a new focus sales organization. As Stefan explained well before, both globally and locally, on a global scale we are concentrating on developing trade lanes and optimizing network utilization and expansion. Locally, we have empowered our teams to attract national accounts. Additionally, we have broadened our customer segmentation versus what we discussed in 2023 to engage with local medium sized account more effectively. We achieved this with close collaboration with Sea Logistics as Michael mentioned. So in conclusion, we have worked diligently over the past few years to develop our solution for our customer and to enhance the resilience in their global supply chain. We have maintained our number one position, we have increased our yield to a sustainable level and we've built capabilities to support future growth and gain market share.
We are committed to investing in solution for our targeted growth industries. We have established an industry leading asset light control network and gateway structure. Our organization is now leaner, more agile and empowered with a clear customer focus. We're well prepared to address the challenges and opportunities in the airfare sectors. We are confident we will continue to deliver strong performance and value to our customers and stakeholders. Thank you for attention.
Thank you Yngve. We now have a few moments for q uestions on your logistics.
Muneeba Kayani from Bank of America so wanted to hear your thoughts on E-commerce within Air Logistics . I noticed that was not as one of the verticals on your slide. So how do you think about E-commerce within your business and kind of related to that? Lots of talk about removal of the de minimis exemption in the U.S. and even in Europe. Like how do you see that impacting the air cargo market?
Good. So thank you for the question. I just wanted to bet that was going to be the first questions of the day. So as Stefan has told before, E- Com is a very small part of our business. Less. It's a single digit percentage. We have seen and we saw that in February that suddenly the E- Com stopped for three days because of decision taken in us. E- Com is here to stay. For sure E- Com will find its ways. Will we see different trade patterns for E- Coms? Yes.
Will probably us be less of an important market and maybe South America which you already see a bigger part Middle east and Southeast Asia. Clearly the minimas. There will be changes if it goes from T86 to T1. It will be major disruptions if it's going to be kept under T86. So the custom clearance procedure with a custom clearance fee and a tariff.
You Look at the Chinese players versus American players, there is still going to be between 25 and 30% discount or cheaper for the consumer even with the custom clearance fee and the tariffs.
So It will stay and it will change. For the industry perspective, you will see as I already said in my presentation, the carriers are shifting capacity quickly to different trade lanes when a shift like this is happening. But the output from South China, which Hong Kong will continue, but it might go to different destinations.
Thanks for the question Alexia.
It's Alexia from JP Morgan. Just back on the volume outlook for airfreight more from the markets perspective. You also show in your presentation then since 2016 volumes have grown at 1% per annum. That's well below GDP if you assess it differently. If we had assumed a relationship to one, actually volumes in 24 are 15% between below the normalized level. What gives you confidence that actually air freight volumes can regain disparity to GDP ? And do you observe any structural changes in the kind of vertical use of air freight more broadly to explain what has happened in the past five, six years? Thanks.
Thank you for the question. If you look at 2024 versus 2019 we are on a lower base because we had a huge drop in 23 and it hasn't really picked up again from normal commercial air freights in 2024. So historically if you go back to 2019 and look at the projected growth in a normalized environment, we believe what the market believe and it's not from NASA. It's also external sources that believe around 3%. Will the normal growth be and is driven? As I said, perishable business will grow 3 to 4% every year semicon with the expansion of data centers around the world, you will see a growth and all healthcare products is clearly something which is will continue to Be from an airfare perspective and very important and attractive industry.
So unless there is any dramatic changes in the future, we believe the airfreight market will start to pick up.
Thanks for the question. We can sneak in one more quick one, Alex.
Thanks. Alex Irving from Bernstein. My question is around the outturn on the unit gross profit and the conversion ratio. You mentioned the start of your presentation that in 2024 you had 67% hard cargo and you'd like that to be 70 with the other 30 perishables. And that was keeping some pressure on the unit gross profit. And the conversion ratio went back two years. You were looking for 100 francs of Gross profit per 100 kg, 40% conversion.
If you were at that 7030 split that you were targeting, where would we be in relation to those targets and what explains the rest of the gap?
So if you would take 2024 and you would apply the 70 30, you would come to yield around 1990 something 91. If you look at exchange rates differences in 2024 that was a 3 Swiss franc, which is lowering the yield. So you would be on a 93.94 with the 7030 split. The difference is clearly the market pressure when 2023 came down and the volume went down and 2024, where you saw the pressure from the E comms that is explained the rest. So it's not 100, but if you apply and would come to the 70 30, I think we would be reasonably close.
Thanks for the question, Alex. We will now take a break for 15 minutes and then we have the last and final segment of the day with road and Contract Logistics . Thank you.
Sa. Sa. Sam. Sa. Sa. Sam. Sa. Sam.
Sa.
Sam. Sa.
We will now shift over to Road Logistics and I will hand it directly.
Over to Hansjoerg Rodi . Thanks very much.
Thank you Chris. So warm welcome also from my side to the Kuehne + Nagel Capital Market Day. My name is Hansjoerg Rodi . I'm sin 30 months board member of Kuehne + Nagel , responsible for Road Logistics . I'm serving customers as part of logistics service providers since 30 years. Let us start with a brief review of the key initiatives I presented at the capital market days. Two years ago when we drafted our roadmap 2026 we had expected relevant markets to grow with an even higher growth rate for Kuehne + Nagel . This assumption we have based on superior solutions, an expansion of our product offering into more profitable geographies like Middle East, Africa and Asia and on high yielding service offerings like customs brokerage.
But we could not achieve these growth ambitions as we are facing strong headwinds with respect to market growth in our core markets of Germany, France and the us. I will come back to these market conditions on the next chart, but let's first have a look at what we have achieved during the last two years of roadmap 2026 effect implementation in Road logistics We have accelerated the rollout of our proprietary transport management system Roadlock, self developed in 51 countries and across all four continents where we are active as Road Logistics. We believe we are still the only Road Logistics provider worldwide that serves customers with one unique TMS and this is a key foundation of a consistent cross regional product offering. We have built our own road carrier solution that seamlessly connects more than 38,000 carriers to Cayenne systems.
These carriers are part of the Cayenne road ecosystem based on both the unified TMS landscape and the road carrier solution. We are now offering real time visibility solutions to our customers, be it on truck level what we call the advanced visibility or on item level. Stefan was referring to it already. We call it MATS visibility offering. We are developing these solutions together with our partner Koros, part of Alphabet's X factory. We have positioned Road Logistics as market leading when it comes to sustainability solutions. For example, we are the first land logistics program provider offering Bokken claim solutions for battery electric trucks on our own fleet and we are rolling it out now with our carriers as well for their fleets. We have successfully expanded our offering especially related to Cross Bora border corridor solutions in Middle east and Africa and North America.
This came through internal growth and in Asia Pacific through the acquisition of ZDZone Export, a leading FTL LTL provider in Southeast Asia and finally in a world where everybody talks about tariffs right now, customs. We have grown organically in Europe and North America and we have also significantly increased our footprint in North America via the acquisition of Faro, a leading Canadian Canadian customer broker. Let us come back to the market conditions in Road Logistics and start with a quick reminder on Road Logistics markets. The global road market does not exist. Our markets are local and market conditions vary greatly across the regions. We have managed to maintain our turnover on pre Covid level but have not seen successful growing our business. Why?
Because we faced strong headwinds on the demand side in Europe and the U.S.. Last year a sharp decline of carrier capacity in Europe resulted in high pressure on our gross profit margin which came on top of the flat demand and additionally inflationary tendencies and increasing regulations and administration put high pressure on our costs. On a positive side, we have experienced Growing demand of our cross border corridor solutions in Middle East, Africa as well as in Asia, especially driven by our global accounts and also customs brokerage and trade consultancy offer solid growth potential in a world where the complexity of global trade is significantly increasing. We do not anticipate the market conditions in the U.S. and and in Europe.
To change short term.
Consequently we will focus on following actions as a prerequisite for future growth. We will not compromise on increasing our prices to generate increases in the contractual part of our business which is predominantly our mortgage network. And we will continue to adjust our adjust quickly to fluctuations in the very volatile spot price environment that especially we are facing on the LTL and FTL piece to continue offering solid solutions to our customers. We will continue to develop our road carrier solution as a platform which will position Kuehne + Nagel as the first trip choice to our carriers. And of course we will continue to manage our costs with high level of discipline.
This means reducing IT costs by continuing to consolidate our TMS landscape, shifting standardized processes into global services wherever possible and continuing cost management Based on granular KPIs at every level of the organization which will lead to the fact that we adopt our direct costs to volume development that we see. These measures will ensure that we protect our top line and our achieved conversion rate and based on these action we will grow our business. What is our driver for growth? The big advantage for KN road compared to competition is that we have access to Kuehne + Nagel global accounts for whom we are increasingly a service provider across the regions. Through our high performance network and specialized solution we can also enable Sea Logistics and Air Logistics to deliver seamless end to end supply chain solutions. Let me tell you in more detail how this works.
Standard Services, groupage, FTL, LTL are a prerequisite for cellular solid service design delivery for all our customer segments for our global accounts. It is becoming increasingly important that we can offer these solutions cross regionally which we can do in Europe, North America, Asia Pacific and Middle east and Africa as a clear differentiating factor of Kuehne + Nagel . But a standard offering is not enough for many of our global accounts. That's why we have the tailored and scalable solutions that serve the specific needs of targeted customers. I give you just some examples. Delivering of server racks often transported by Air Logistics to data centers, complex last mile spare part delivery to wind park or solar farms as part of the renewable energy vertical that Michael Aldwell was referring to.
Already GDP conform FTL and LTL shipments in pharma as part of the healthcare vertical you have seen Nico Sacco presenting here what we can do across all business units in pharma healthcare and in Feb moves for semiconductors as part of the semiconverticle that Yngve Ruud was referring to. All these requirements are complex and customers have high demand for real time visibility. This is where all our visibility solutions come into play and the same applies for our sustainability offers. This is how Road Logistics contributes to true end to end solutions that fulfill complex customer demands globally. And then we have defined another growth driver which is customs brokerage. I was already alluding and presenting on that on the last capital market days. So the market for customer brokerage has been growing in volumes and complexity for decades.
We do not expect complexity in world trade to decline and consequently we see interesting growth opportunities for Kuehne + Nagel . We complemented our service offering in North America by acquiring Faro this year. Last year, which has proven competence at the Canadian and the Mexican borders to the us we have increased our business development resources in North America, Europe, Asia, PAC and Middle east and Africa significantly. Our customs orders volume has grown organically at a CAGR of 18.8% between 2020. This is when we launched the product to 2024 and by 53% including Ferro. We are continuing our rollout of modern customs platforms to ensure high efficiency and superior visibility to our customers.
And we have defined an operating model based on a shared server center, a shared service center set up in Cebu mostly for the European part of the business that is fully scalable and support growth. Let me conclude Kuehne + Nagel Road has laid the technological foundation to manage market dynamics consistently. We are differentiated through visibility, sustainability, tailored solutions and global presence. And we are the first and last link for true Kuehne + Nagel end to end solution. Because please do never forget every transport starts and ends on wheels. Thank you very much.
So for our last segment of the. Day we're going to combine the Q and A. So we will go immediately into the.
Sa.
It.
Sa. This video represents just a quick view of our latest generation of fulfillment center where you see human and robots coexist in an harmonic and orchestrated environment to generate throughput and quality our unthinkable few years ago. Just imagine that this operation runs at a production level of 18,000 parcels per hour. So that is impressive for all of us. Ladies and gentlemen, a very good day for from me and a warm welcome also to those that are here of course and those that are connected online.
In the next 20 minutes I would like first of all to take a look at the trajectory of success that we have achieved over the last few years to clarify why the contract logistic business model is a fundamental and complementary component of the Cayenne Group business business model and finally, to illustrate the growth and value drivers that will underpin our development in the coming years. My name is Gianfranco Sgro . I have the pleasure and the honor to serve the Kuehne + Nagel Management Board as Executive Vice President responsible for Contract Logistics for more than 10 years. Before that I served at Blue Chip Industrial Company as chief operating Officer. We have delivered we are very satisfied with the results we have achieved in Contract Logistics in recent years. First, we have met our target to grow slightly above the market.
Our top line grew by 7% in 2024 before FX with particularly positive dynamics in in many countries such as Japan, India, Turkey, Germany, Italy, the Netherlands, Mexico, us, Canada and Brazil over proportional growth in the healthcare vertical contribute to both top and bottom line. Second, even more noteworthy is the growth in profit. In 2024 we reached a record EBIT performance of 227 million Swiss francs and our superior compound annual growth rate of 13% since 2021 reflects our ability to execute at a premium level. Our conversion rate as well has grown by 170 DPS since 2021 and 80 basis points only from 2023 to 2024 representing therefore a leading market reference despite lower economy of scale towards some of our peers. At the heart of our financial performance is the continuous improvement of our operation.
Under the guidance of more than 500 engineers who work on our production system, processes and automation system, we return a portion of this productivity and throughput improvement to our customer as part of the retention plan, but they are also the backbone of our EBIT improvement. Our customers are at the core of our success and the constant focus on all what we do. We are obsessed by improving our customer engagement and ultimately improving the experience on their end customer and we constantly listen to them was a question before. Every year through increasingly sophisticated customer engagement platform we monitor how our customer satisfaction is improving. We do not only have a steadily improving net promoter score, but we also receive thousands pieces of feedback which constitute a vital input for developing new products and improving our services.
Contract Logistics has a very intimate customer engagement model that clearly rewards long term strategic positioning. In 2024 our new contract surpassed an average duration of 6 years with peak of 10 years and top renewal rates. Just in 2024 alone we signed new engagement with total contract value of 1.8 billion Swiss francs. Our loyalty or what we call retention rate measure Our ability to renew a contract at this natural expiration and we have a very high success rate, close to 95%. And last but not least, we have managed to significantly improve our mix. For example, we have more than doubled the healthcare share of business and we transformed the traditional consumer business into Omni channel. In both cases, the new mix is favorable to our profit generation.
That said, the next couple of slides will touch on the characteristic of the Contract Logistics market and how this model contributes to the group profile. The market as said before by Stefan as well, is growing slightly above GDP . And what makes it especially attractive are factors such as the growth of outsourcing, the growth of multichannel logistics, and we spoke about the recent re engineering of supply chain that are generating additional volume in the domestic market. The market obviously as it speaks related to specific sales campaign of our customers, but the overall volatility is low, which allows for better planning and consequently reduce the risk. Strategic services in Contract Logistics refers mainly to the design and implementation of full center as you saw before, and delivery services to the various customer sales channels.
The footprint of these operations are not easily interchangeable and require sophisticated engineering and medium to long term setup. So you can easily understand why interaction with customers is strategic and highly complex. These allow us to interact with our customers and at the highest level of the organization. The combination of increasing barriers to entry, linked mainly to an exponential use of new technology and automation and a still high level of fragmentation, create very favorable conditions for a company with our position to grow. And we serve this growing and strategic market with a business model that lowers the risk profile for the group. How did we manage to develop a successful model? So in Contract Logistics , the fundamental of business execution must be very strong and ingrained at every level of the organization. This is what we have managed to achieve with a high level of discipline.
Start with pricing and flawless implementation of new contracts that is now close to 100%. We have approximately 100 new implementation per year and they need to generate positive cash flow from day one and a very high level of customer satisfaction. Implementation is by far the most sensitive part of the customer engagement. And this is where our performance has improved the most in the last years. At the next level of interaction, our research and development department focus on our cost competitiveness and on introduction of new technologies. These are keys for the improvement of profitability of our contracts year on year. The combination of repricing, cross selling, upselling productivity improvement versus our contractual obligation generate increased cash flow throughout the life of the contract. We have also worked extensively on our contractual framework and have created a model with low risk exposure on CapEx and financial commitments.
So a contract signed and managed according to the criteria GAF generate increasing cash flow for long periods and at the same time a very high loyalty rate reflects our obsession with premium delivery and our constant attention to our client feedbacks. Well, we talk about our achievements in the recent years and the characteristic of this market and how we have managed to create a successful model for the group. Now I would like to move on to the last part of my presentation where I will outline the growth and value generation factors that we will deploy in the coming years to build on a solid foundation of operational and financial excellence. We will not stop here. Complacency is by far not an option.
Our ability to grow at a higher rate than GDP and gain market share depends on our ability to continue to look critically at three who we serve what and where we serve how we serve who we serve we plan to increase our share of wallet with blue chip companies and to support the growth of selected early champions. What and where we serve we will continue to develop industry specific services where customer trends intersect with our in depth knowledge of market dynamics and then how we serve. We plan to widen the technological gap between ourselves and our competitors, especially those with less firepower on new technologies. Let me explain a little bit more these three points. Who we serve we will continue on the path of organic growth that that we have already mapped out.
We are confident that our cross selling and upselling opportunity with existing customers will continue to be the backbone of the contract logistic development. We will continue to target large customer with long term contracts and with a very high coverage on our commitments. But a new area that we start to where we have started to achieve very interesting results and we will continue to do so is our engagement with medium sized companies with international growth ambitions in this sector. Of course we must be first very careful in the selection and be ready to become an agile partner that can support double digit growth rates of our clients. So far I must confess that we have achieved excellent results and please allow me to share just this highlight.
With just three successful mid sized brands we achieved a new sales stream of 200 million Swisses in less than three years. We can aspire to become a true growth engine for this kind of customer because we give them access to global capabilities that would otherwise be difficult if not impossible for them to find. And also allow me to say the power of saying no to clients type that do not fit with our strategic development. Now let's talk about what and where to Serve fueling our growth rate will be a differentiated from focus on the 44 domestic markets that we serve today. We will be making specific investment on some of the markets with high strategic potential. But not only that, it's not only where. Let me spend a minute on another concept that is a fundamental piece in order to continue our success.
Being a powerful and big logistic operator is no longer enough. Our customers want strategic partners who speak their language, who invest in the dynamics of their market and who they can rely on for their future strategies. We are constantly adapting our operating model to this direction, increasing year by year our intimacy with our customers. And one of the most remarkable results is when we can anticipate and not only react to specific market trends with the aim of becoming the first to serve. Let me give you a recent leading example again in Elker. You heard a lot about that today. This is a vertical where the Kuehne + Nagel group and the individual business units continue to maintain global leadership.
We are expanding the number of certified centers with extremely high and critical value added services, leveraging our integrated logistics services that are now adopted by six out of the ten global pharma companies. And we constantly look at bolt on acquisition that can complement our offering from a geographic or capabilities standpoint. Together with the two market leading pharma companies, we anticipate the high growth trend in anti obesity drugs. And we create a new logistic network for specific market and customers. The results are clear and in this specific segment, our sales will multiply by five in the next two years. A key part of our development will always be how we serve our customer. And here as mentioning the technology component helps to raise the already very high barrier to entry. The realization of complex automation system, coordination of digital platform, exchanging millions of messages per minute.
The revolutionary technology using robotics and process innovation, AI agents and application. These are all transforming human process profoundly. We have a one of a kind base of automated operation. We are assembled an ecosystem of companies and partners around us that allow us to respond to any customer demand, no matter the technology involved. We have 3,000 robots in operation and this, allow me also to explain is not only related to what we call the digital design fulfillment center. So the new one coming into the market. An area of growing interest is the introduction of automation system in existing and traditional operation. This is what we call retrofitting. It's a very complex project when you are intervening on an ongoing and existing operation with a major introduction of automation.
But it generates very important reduction of manpower, increase of throughput, medium term paybacks with Less and less dependency on labor. That is one of the critical factors. This project will continue. We are introducing the first no touch warehouse where for the first time the entire floor from the receipt to shipments. We require no human touch. And this year also we will introduce the first artificial intelligence application that will allow us to manage our operation with greater efficiency and speed. We have talked a lot and we saw also the Adidas fulfillment project in Italy which is now in full operation. But as we speak we are implementing similar operations in different countries around the world with a high rate of scalability and efficiency. In conclusion, I would like to go back for a moment to our title, Scaling up a successful Model.
I hope I have illustrated both the aspect that makes us particularly proud of the achievements, but also the relentless effort that we will put into continuing continuing to grow this model. We will grow with discipline and stay vigilant about all our key financial indicators. We have a return on capital employed. Markus presented exceeding 25% and a stable capital intensity between 3 and 3.5%. These represent a well managed business model and we will continue in this direction. Direction.
We will maintain our business with low risk profile on our financial commitments. But it's not only that we are creating capabilities to set Contract Logistics up for continued success. And this means a comprehensive agenda of commercial and operational innovation, further differentiation in the market and the state of the art team, A portfolio of customers who will continue to trust us as agents of their commercial success and the constantly evolving portfolio of products and services supported by our solid reputation in operational excellence. Scaling up a successful model. Thank you very much for your attention.
Thank you Jim Franco. We invite back to the stage as well Hansjoerg Rodi . And we'll now do our joint Q And A for both business units. Alex.
Thanks very much. Alex, serving from Bernstein, my question is for Gianfranco. So you talked here about we were n ot going to stop here.
Industry specific services, cross selling, upselling, higher entry barriers, deployment of tech. Yet the conversion margin is stable for the next six years. Help me understand why, please.
Okay, that was the first question. As Inge, you were expecting the first one. So the message is, I believe the following. We made an extraordinary journey in the last year. I mentioned from 2021. 170 basis points improvement, 80 basis points in the last 12 months. This is a journey that is unique. Sometimes in a company, as I said, complacency is not an option and this is not part of our DNA. But I mean in the future also if you compare our conversion rate versus peers that have have a Much higher economy of scale. This is still quite a benchmark. So that is the message that we want to convey.
Thank you. Alex. Andy.
Andy Chu from Deutsche Bank. Just a question on Contract Logistics . In terms of the landscape Contract Logistics , there are many different owners of Contract Logistics assets.
The freight forwarders increasingly containership as private equity. Could you maybe just elaborate why you I guess you believe that the best.
Owners of these assets are potentially the freight forwarders.
So who is the best owner for assets? Right, and I think there's a split answer to that. Generally assets that are providing capacity in a more standardized way. I think we're not the right owners for certain assets where differentiation becomes a unique selling opportunity. Like on the pharma side or on the robotics even to a certain extent that are usually specialized. I think there is an option that we might become owners. But also here from a financial engineering point of view, straight ownership is not necessarily required to get the benefit out of it. So I think it's a cascading decision making process that goes from generic asset utilization to specialization and afterwards towards what is the best way of financing solutions.
Michael.
Thank you. I guess asset utilization is quite important in that business. And my question is how do you m anage the risk for the 20% which are not backed by contracts?
Yeah, so one of the, you know perfectly that one of the asset utilization is reflected in what we call idle space as well. That is a commitment and we trade at 97 plus percent and this is a number that we also disclose. So it's a very high utilization also in the industry versus our peers. So that is in all honesty the 20% are also part of the companies that provide more agility. So we keep that part dedicated to this company that have a very interesting dynamic of growth. So it's never, as you see at the end, this is not a problem that we are facing. This is something that we have to of course look carefully and is part of our continuous analysis of our engineers.
Thanks for the question, Michael. Alexia.
Hi. I have two questions, one for Contract Logistics and one for road. I'll start with Contract Logistics. yeah. Gianfranco, can you talk a little bit about the outsourcing trends you're seeing? Because it would be good to get an update there. And can I just clarify, the CapEx expectations for the roadmap are higher than what we discussed three years ago or two years ago? Is the incremental CapEx going into Contract Logistics and why isn't growth faster than what we saw two years ago? Shall I give the road as well?
Yeah. Oh wait
okay, so I start with the CapEx. The CapEx is not growing versus the previous. You saw also quite a stable representation of our CapEx made by Markus. So we will continue and this is what we said also our CapEx intensity, we continue to fluctuate between 3 and 3.5%. Outsourcing of course is heterogeneous across the various markets. We see in general a positive trend from that perspective because as I mentioned and probably by the video you can. This kind of complexity is difficult to handle for operators and also from customer perspective they do not have these competencies anymore. So it's natural that using and leveraging players like Kuehne + Nagel becomes more and more interesting. So it's a positive trend from my perspective. And then if you do it in two different geographies, there is enough space to grow.
So on Rodi, can you just remind us what your focus is between groupedge, LTL and FTL and whether you see different trends there and if you see more optimism emerging in either part of the network in Europe from the recent kind of investments that European economies are looking to do. Thanks.
Thank you for the question. We serve customers and the production mode can be groupage, FTL or ltl. So that is why we don't look into FTL groupage or LTL markets as a customer need. And we can operate always in combination of either it is a groupage, LTL, FTL shipment depending on the size that is the flexibility we can offer on that market where we are not active is big asset based FTL business because our business model in Road Logistics in Europe is asset light. So we don't go into heavy investment into own fleet which is required if you are in what we call the big FTL market. And then of course, I mean the market in Europe will consolidate in the next couple of weeks. We should even say with what is happening and you can be sure Kuehne + Nagel will play a very active role in t hat consolidation process as well.
Thank you Rexia. Cristian .
Thank you. Cristian from UBS. Could you please tell us what's the exposure to Germany in each of the divisions? And Chris, if you can also for Eren's and if you allow me the second quick one for Contract Logistics , could you give us a rough idea? Open book versus closed book contracts was the split in big lines. Thank you.
So on Germany I think we don't give any. I leave it because the question was for the old bu. So I leave this question to Markus.
It's a simple answer. I mean you know that historically Obviously we grew out of the German market historically, right? So it's still a very relevant piece of business. It is certainly stronger in the road business and followed by the Contract Logistics business and air freight business. You always know, you know where sits the customer. The customer sits where the importer is or where the exporter sits. So it's very hard to. But I would say from a country ranking perspective and you can also see that I think from our annual reports from a country ranking perspective, it's within.
The top three and on the open and closed book. We are a big fan of closed book because this allows and is a stimulus for to continue to look at increased productivity and move part of that into into our profit. So I would say roughly that we have a 20% of business in open book and 80% in closed book.
Lars.
Lars Heindorff from Nordea Just to follow up on the road business question on the split between groupage LCL and which.
Is do you have any desire to grow one of those three segments more.
Than the other ones also in light of your ambitions of keeping the conversion ratio flat? After all, I think the group carries. Probably need a more tight and dense.
Network compared to the two others typically. Also carries higher gross profit and hence lower conversion ratios.
So our guesstimate is that approximately of the FTL and LTL business we are doing 70% is related to the fact that we offer groupage as well. This is why our typical conversion rate that we would see in FTL LTL is high but it's dependent on what we offer on the rupage system. So this is again why we don't differentiate now on growth areas into being groupage. FTL and LTL is what is required in order to serve a pan European customer properly and that is very much always based on our groupage network that needs density. Of course we have the density required and needed in order to be a significant player on that marketplace.
In groupers there might be the one or the other geographical area where we can still then expand enter, but the base and the foundation is given and that is feeding then a good conversion rate. FTL and LTL businesses.
We have time for one or two more. Andy has a follow up.
Andy From Deutsche bank question on road in terms of the European peace which is under pressure, do you have a strong view of what German fiscal stimulus and also a peace solution Ukraine might do for the road business going forward in terms of capacity, driver capacity?
Do we have a clear view today on something that was announced a couple of weeks ago and still ongoing and in the discussion, especially when we talk about the German stimulus program, clear view, I wouldn't say it's definitely giving growth potential for Road Logistics in Europe. That is crystal clear. If now the spend goes where it is planned to go as well into economic growth investment. And that relates for the infrastructure piece of the stimulus program as well as for the defense and military piece of it. And Ukraine, I mean is a key strategic pillar for us as well. The moment it opens up again. We are still active with more than 350 colleagues in Ukraine. So we are prepared the moment it opens up to play our role as well as logistics provider into rebuilding Ukraine.
And of course, I mean more Eastern Europe then opens up again, it will bring trucking capacity as well back into Western Europe. So that is what we see on a very positive side on the European, on the European development on, on Germany, I wouldn't be that skeptical neither because still within Europe Germany is by far the biggest logistics market. So it's good that we have a good presence in Germany as well.
Great. We're going to finish up with Michael a.n.d then Sathish,
Thanks. Just one On Rodi you highlighted kind of increasing bankruptcies in road in Europe. And that's kind of something we've seen in the U.S. as something that brings kind of supply and demand of road freight into balance. Are you seeing that kind of the market come more into balance now even with weak demand with more bankruptcies in Europe.
So we see difficult situation economically on both sides our demand and our supplier which is a direct consequence and on the demand situation, situation. So trucking market has to become again more attractive than in order to people come. .back. This happens fast as we know historically because the barriers to entry are not.
Are not very high.
So when demand stabilizes or picks up trucking capacity will come back. And this is our strategy is we were the first then to benefit from it because we already a superior solution to our, to our trucking partners. In the U.S. the situation is a little bit, is a little bit different. So we haven't seen the supply going down the last year. That is what caused the Fed recession in the U.S. the last two and a half years. So fairly high supply and the demand that is a little bit under distress.
Thank you and last question.
Thanks Chris. This is Sathish Sivakumar . Firstly on the Road Logistics you talked about the unique TMS platform that you have. Can you like help us understand how does that position versus the market in terms of the TMS platform and what does it mean in terms of E-t ouch which we talked about more in depth on RNC. Where does the Road Logistics fits in in that E- touch transformation?
So first of all the TMS is the core. It's like the operating system, it's the OS, right that we can connect then to all our surrounding Kuehne + Nagel systems as well. So that is offering the possibility to process globally in a very similar manner and that is driving then productivity and is allowing as well. All E-t ouch initiatives that we enrolled of course are driving as well. So connection to our MyKM and booking platform to the consortation platform, consistent and easy API and EDI connection with customers globally because it's always the same standard that we can serve so is a prerequisite to drive consistently efficiency and effectiveness in road.
And with that thank you Hansj oerg thank you Gianfranco. We'll now hand over to Stefan for some closing remarks.
Thank you very much, Chris. Hans joerg, Gianfranco, thank you very much. Thank you very much as well to my other two business unit colleagues. You have heard now from them directly what they are going to do with their business units in order to deliver on our ambition to deliver profitable growth in the next years to come. I hope that gives you the same confidence as we have in our ability to deliver as promised. Before we conclude and we close, you will find a postcard in your bags outside where we have basically summarized the key takeaways just in case you have not taken enough notes during the couple of last couple of hours with this as well. To the WebEx colleagues, thank you very much for listening for your good questions.
Stay tuned and we are very happy to continue the dialogue in the next weeks and quarters to come. Thank you very much for listening in today and goodbye.