Ladies and gentlemen, welcome and thank you for joining Esriam Pass H1 twenty twenty one Results. Throughout today's recorded presentation, all participants will be in a listen only mode. The presentation will be followed by a question and answer session. I would now like to turn the conference over to Harald Hagenauer, Head of Investor Relations. Please go ahead.
Good afternoon, ladies and gentlemen. Welcome to this conference call of Austrian Post. Here with me in the room is Walter Oppen, our CFO, and he would love to discuss The second quarter and the half year figures of Austrian Post. So please Walter Goane and do the presentation, present our results. I guess we all cut our information sheet on time or live.
Good afternoon, ladies and gentlemen. It's a pleasure to have Mr. Munich We've been to our results for the 1st 6 months. I think as a summary upfront, strong growth in our parcel business Combined with the recovery of the difficulties this month last year have generated strong results and we already confirmed and upgraded Thank you for the outlook for the full year. Let me go right away into the presentation starting with H3.
Let's remind you of the 3 segments we operate and report. Our Austrian predominantly In the main segment, our National Partners and Logistics segment and our Retail and Bank segment, which I also showed you The revenue distribution for the 1st 6 months of this year, I think the message is we have a balanced portfolio With our revenue coming from different segments, different geographies. And this is the result of The strategic transformation, we're on page 4 to see that the pandemic has accelerated the strategic transformation from a Male dependent male dominant Austrian post group 10 years ago and still Pretty much in that position 3 years ago to a much more balanced business portfolio that we operate Today, with parcel Mr. Smiles 2021 seems the biggest revenue contributor in our group, A little bit bigger than mail and where as a result we are much less dependent on a structurally shrinking major segments and have a strong exposure towards the high growth e commerce and part of the business. Page 5 summarizes the highlights the key aspects of the 1st 6 months of this year.
In summary, the pandemic still influenced substantially our business. The first are still characterized by lockdowns and restrictions across the business portfolio, where as a result, Mail still We've made significant headwinds, but a recovery over the last months of the first half year. Partner and logistics with a lot of tailwinds across regions resulting in good volume development And also the potential one off revenue and earnings contributions from logistics services project In the Retail and Bank segment, of course, the key event of the last month was the signing of the transaction to take over the Retail business of 9 gs in Austria, a transaction where which in all view Brings a highly complementary business to our bank's 99 and thus will accelerate the strategic development of our bank. As a result of this predominantly positive season environment, We saw a very strong revenue growth of the full time consolidation of Aras Cargo that started over last year That's contributed substantially to this development. Group revenues up 28.4%.
Details I will provide later on. Earnings more than doubled compared to last year. And for the full year, we Upgraded our outlook and guide now a good EBIT, which should be up at least 20% in Q3. H6 gives more details on our revenue development. As already mentioned, group revenue up 28.4%.
Euros 100 €1,000,000 of revenue increase came from the first time consolidation of our cargo. Excluding that There was still organic growth of 12%, which I think is probably record growth in the Younger history of the company. This growth, of course, predominantly coming from our Parcel and Logistics segment, which was up 17.7 percent, so 7.0.17%, But also our Mail segment up 3%, which is a combination of recovery effects, Headwinds from lockdown and still a positive price impact compared to previous year in the Q1. Positive Development also in the recent same segment where revenues in our banks decreased as to the This from growth and a recovery in totally much 4th much more orderly business operational development Translated into an EBIT development where EBIT compares to the substantially depressed last This year of €38,200,000 more than doubled €203,400,000 positive that all business segments contributed to this recovery Almost €60,000,000,000 plus €39,500,000 of the Regional Bank Thank you for supporting strategic and operational development on using our For Austrian Mainland Partner Business, priority number 2 will be profitable growth in the market We are looking at both geographically in your markets as well as markets that are adjacent to our We did a digital opportunity for the company to reach a retail network, our online marketplace and other initiatives And the green arrow in the middle, a real upgraded strategic commitment to Strategy pillar number 1 for Austrian Business.
Let me provide you with a few more details on letter and direct mail in the Also business, letter mail of course continues to be a structurally defining business To prove I think a resilience of The mail business, I'm just reading that there is a lot of noise on the line and that's the difficulty hearing us, which We have to understand because it's a little bit quiet here in our room. So obviously, we have some technical problems.
So thanks. First of all, we tried this restart. I think we did have some technical problems here. And we started Page 9 when we discussed the trends in all of our operational divisions. So please go on Walter.
Yes. I hope you can hear me now better. Apologies for the technical difficulties we've been experiencing here. So I don't want to talk too much about Page 9. Page 9 summarizes our Strategic framework, the 3 business pillars and our strategic commitment to sustainability, diversity and customer orientation.
And I will use this framework now to I'll comment on a few important operational and strategic developments. Moving to Page 10, to our letter mail business in Austria. Of course, this is the business which is and continues to be in structural decline. At the same time, I think we look at it as a Quite resilient business. We have seen in Q2 that volumes have recovered even a slight improvement compared to last year.
If you look at the first half year numbers, we had minus 9% last year, minus 3% this year. If you take the average, we Over the last two years, with all the impact of the pandemic, we've seen a decline of around minus 6% This year, which in my view, given that the pandemic has been the biggest accelerator of digitization, Shows that our mail business is quite resilient. Page 11, direct mail, same picture, even more pronounced here. Of course, this was the business which was hit most severely and immediately last year By the pandemic, also the recovery is more pronounced, plus 14% in Q2. Still, we have not regained the volume we have lost in the pandemic.
And probably, to some extent, Some of the business will not come back. Still also here, our in particular, our unaddressed Volume is quite stable, whereas in the addressed volume, we are more under structural pressure Given the trend towards digital marketing. Moving to Page 12 to the growing part of our business. The Austrian Parcel Business, here I think the big message is that even compared to last year's record Volumes and record growth figures in Q2, substantial growth continued, plus 9%. 1st 6 months, we are up 20% compared to a strong previous year.
And we do expect Further single digit growth also for the full year for the 6 months still ahead of us. To Hope with that strong growth and to be able to offer capacity to our customers and continue to gain market share, We are substantially upgrading and expanding our capacity. You're aware that already since 2018, we are in a Very comprehensive capacity expansion program for our Austrian parcel business, where this year we will spend in the Group in total close to €200,000,000 Important big priorities right now include a new logistics center in the west of Austria in the region of TURAL And a doubling of capacity in our then biggest sorting So in Upper Austria, the main injection point from Germany, the Sterol center should be Operational still this year, whereas the logistics center in Upper Austria will Go into operation next year. The latest big project we started is An expansion of the historically biggest sorting center in Vienna, in the south of Vienna. This project will go into construction next year and go into operations in 'twenty three.
With those projects, moving to Page 15, we also continue to invest in Strategically important logistics real estate, we think that the Development over the last 24 months where logistics real estate proved to be a very rare and A very rare asset class and an asset class which strongly increased in value. We I think that this development confirms our strategy to own strategically important logistic centers and other real estate, In particular, in our core market Austria, this chart shows that group wide, we are Owning and operating 1,100,000 square meters of usable space, Most of that logistics, real estate, but of course, this also includes our branches and our headquarter and other Real Estate, we want to highlight with that chart that there is a substantial value Embedded in this real estate portfolio, not only value but also substantial hidden Research, we also continue to develop real estate, which is not used By operations anymore, 2 of our biggest development projects include a project in Linz, capital of Upper Austria and the big project in Vienna, where we are in the midst of Permit procedures with the authorities to grant a substantially upgraded construction on those pieces of land.
Moving to Page 16. Page Tim gives you an update of the development of our staff in our core Austrian business. For the first time in the recent history, a substantial increase in headcount. This is the result Of the strong growth in our parcel business, at the same time, the chart shows you that our transformation from expensive Civil Servant and all collective wage agreement contracts to new collective wage agreements is Continuing at high speed, and we'll continue also over the next years and Provide cost relief. Moving now to Page 17 and to our strategy pillar number 2, growth in near markets.
This chart Summarizes the 2 major thrusts in this strategy pillar. Thrust number 1 is to Grow in adjacent steps of the value chain and digital enhancement of our business model. This includes business services around mail in Austria, but also includes Ecommerce fulfillment, cash logistics and the and digital business models such as Digital marketing, digital advertising solutions or e commerce software solutions such as the operation and the development of online shops. 2nd big thrust is regional growth, in particular, Southeast of Austria. And I think the Business portfolio, which is predominantly a portfolio of parcel networks, proved over the last 18 months that we are strategically well positioned to capture future growth in e commerce, not only in Austria, but also internationally.
Page 18 highlights this exposure towards growth markets. Last year, strong volume increase, basically from 35,000,000 parcels Distributed in Eastern Europe to more than 2 or to around 250, including, of course, the inorganic addition of the Turkish parcel network of cargo, but also the organic growth that is happening both in Turkey as well as in Eastern Europe, Up from this very high levels, further growth this year, plus 21% in Eastern Europe, plus 24% in Turkey. And this was also the basis for a very good profit development in those markets. Page 9 gives you more details on ARAS Cargo. ARAS Cargo, According to our numbers, it's at least head on head with the number With the main competitor competing for place number 1 in the Turkish parcel market, We believe we have gained substantial market share over the last 24 months.
Revenue in the 1st 6 months has grown 54%. It's a combination of volume growth, But also strong price execution in a market which was supply constrained. And this has been the basis for a very good margin development also in Turkey. Let me now move to our Bank 99 and the probably most important strategic event of the last week, Which was the signing of a transaction where Bank 99 acquires the retail business of ING in Austria. ING has decided To exit the Austrian retail banking market, we are proud that we came out Being selected to take over the retail business, we I believe this is a highly complementary strategic addition to Bank 99.
In numbers, we're taking over a balance sheet roughly of about SEK 1,700,000,000 with An asset portfolio of mortgage loans of about SEK 1,000,000,000 and consumer loans of about SEK 400,000,000 also in asset management business. In terms of timing, closing is expected still this year. And the integration plan Plans for a technical integration by mid-twenty 2 and a more Stable operational environment then in the second half of next year. Why is this highly complementary? Page 21.
First, it adds customers it adds more than 100,000 customers without Almost any customer overlap, whereas Bank 99 was rather strong In the countryside, in the More senior age wise population, ING is strong in young urban Digitally savvy customer segment and there is high Complementarity, the acquisition is also highly complementary on the product side where Bank99 has good well performing payment services products, whereas ING has A strong sales engine in consumer and mortgage loans as well as investment products And also strategically, this transaction combines the branch Office strength of Bank 99 were with very little additional costs. We can offer physical services out of our post office network With the digital competence of ING and the strong talent that we are Welcome in the Austrian Post Group these days or formally then after closing. Yes. So very, very important strategic step in our view. Let me move on finishing the strategic update With an update on our self-service facilities, we continue to invest in these.
This is An important factor of strategic differentiation in the Austrian in the competitive Austrian parcel market, we have by far the most dense The most dense landscape of self-service facilities In the market, more than 50,000 pickup boxes, more than 90,000 compartments in pickup stations and more than 460 prop of boxes, and you see here that the usage rates are going up every month and every quarter.
Continuing
with our strategic focus on Sustainability, diversity and customer focus. As already communicated last time, we Committed to ambitious strategic targets in the area of sustainability As a result of a strategy update last year, from an economic perspective, We aspire to aspire to achieve a revenue of SEK 3,000,000,000 by 2,030, maybe also earlier In the area of sustainability, in the sense of on the environment and climate dimension, moving But with H24, please. We committed to further reduction in CO2 emissions by 40 Until 2,030, which means a 70% decrease in specific CO2 emissions. And we committed to 100% carbon free delivery in Austria. So specifically meaning that we We'll operate our delivery network without any combustion engines, which means that over the next 2 years, we have basically to Order the last combustion engine trucks as we are operating those for 6 to 8 years.
Also diversity, an important priority. Our target is to have 40% of leadership positions filled by women by 2,030. Page 25, two aspects in terms of Environmental Sustainability and Climate Protection, first, we believe that e commerce and our contribution With our logistics network, in principle, is favorable from a climate protection perspective. There are Various studies which confirm that online shopping has an advantage compared to stationary shopping With regard to the CO2 footprint, but we, of course, remain committed to reducing our CO2 footprint even further and the main element there is operating our Electric fleet, we are ready to operate by far the largest electric fleet in Austria, 2,500 May it close by the end of this year and as mentioned 100% by 2030. We also invest in sustainability outside Austria, Electric Mobility and other initiatives are currently being rolled out to Eastern Europe and Turkey.
Our Turkish management also signed up on an initiative to plant 68,000 trees in Turkey, Page 26. And we have similar initiatives ongoing and planned across the group portfolio. Yes. Let me now close with the group results and the outlook. Moving to Page 28, which summarizes the key financials.
I've already commented on the revenue. EBITDA and EBIT margins up substantially from last year with 14.6% and 8% for the group. I think Quite good. Margin levels, earnings per share, EUR 1.18 and cash flow of EUR 139,000,000 quite strong for the 1st 6 months. The group P and L statement on Page 29, of course, in all lines is influenced by the First time full consolidation of Aras Cargo, which adds revenues and costs to every line pretty much.
Overall, of course, you see here the impact of a strong growth in the parcel business, not only on the revenue side, but also on the cost side, But resulting difference with a strong EBITDA was CHF 184,500,000 For the 1st 6 months EBIT CHF103.4 million and a profit for the period of CHF 84.2 million. Let me now Briefly comment on the core business segments. Mail division, Page 30. Our Letter Mail and Business Solutions business up 2.8% in revenues. Here, we have positive effects, first from a Post rate adjustment effective April 1, 2020, and also special mailing, some of them pandemic related in the 1st 6 months, Which have compensated together with recovery effects, the structural mail decline.
Similar picture on the direct mail side with a revenue increase of 3.5%, 3%. Mail division P and L, segment P and L revenue of €600,000,000 With an EBIT margin of €82,000,000 our Mail division continues to be the most important Earnings pillar for the group and also our EBIT margin is on a quite solid level. Moving to our Parcel and Logistics segment on Page 32. Revenue up 17.70%, again, 70 0.7%. This includes €160,000,000 addition from the first Full consolidation of Aras Cargo as of August 25 last year, but So organically, the business across the geographies has showed strong growth.
Austria, +28.6 percent and Eastern Europe, Plus 20.6 percent. Group segment P and L for the Parcel and Logistics division on Page 33 With an EBIT of €59,700,000 almost €60,000,000 more than tripling And a strong 1st 6 months EBIT margin of 9.5%. I would ask you not to Overemphasize the quarterly profit margins as we have had both positive One off EBIT contributors in the 1st 6 months as well as in the 1st 3 months as well as negative ones In Q2, but I think the 9.5% is overall reflecting the Profitability, the operating profitability of the segment quite well. Retail and Bank division, revenue up around €5,000,000 Of course, here you see The impact from our bank now fully in operations still with headwinds from the pandemic. And Page 35 shows that The start up losses are still substantial, but our but the trajectory is positive.
Again, here we had in Q1, we had negative one offs from provision requirements in our retail network outside the bank. And excluding that the operative development was better compared to last year. Page 36, moving to our balance sheet. I think the summary is we continue to operate a conservative balance sheet with a strong equity Position of €620,000,000 shortly after paying out our dividend.
A
Surplus of cash of around €175,000,000 although, Of course, reducing surplus given our strong investment program. Of course, the The bank has expanded substantially the size of our balance sheet. We're trying to be transparent here. And I would say overall a rather conservative balance sheet with low level of Intangible assets, no pension obligations in the substantial provisioning level. Page 37, strong cash flow, still maintenance and growth CapEx Below the level that we expect for the full year.
So there is a strong second half of the year to come in terms of CapEx. So please don't multiply this operating free cash flow or the total free cash flow by 2, but we believe we are in a good way Also cash flow wise, so providing the base for another attractive dividend proposal for the full year. Let me now close on Page 39 with the outlook. We have communicated a slight upgrade to our Guidance already 3 weeks ago, this is unchanged from 3 weeks ago. We think that the Core business environment remains volatile, and there is a lot of uncertainty Coming from the uncertainty about the further development of the pandemic, but we are optimistic that Parcel growth will continue, although on a lower level.
Over the next months, we are optimistic that recovery of mail and RxMail, to some extent, continues, so will the structural decline, of course. On the CapEx side, I already summarized our guidance coming to the order of magnitude of around 180, Maybe a little bit more €1,000,000 And earnings wise, we target an increasing operating group EBIT of at least 20%. So we think the 20% is quite well It's a strong fundament, and there are also upsides possible depending on how the Next month's develop both on the partial side as well as on the piggy side. With that said, thank you for attention. Again, apologies For the technical difficulties that we have had in the first part of my presentation, I hope you could still hear at least the main points.
And I'm now looking forward to your
Ladies and gentlemen, at this time, we will begin the question and answer session. The first question is from the line of Eva Balsali Kelly from UBS. Please go ahead.
Good afternoon. If I start with the banking operations, what does the acquisition of ING's banking division mean in terms of future revenues and profit contribution? And how does it change your expectations of run rate towards breakeven and eventually profits? And linked to that, you mentioned Equity increasing by about $100,000,000 by the end of the year. Is that a cash capital injection that you need to make?
And if not, is that something that will Impacting net tech position by the end of the year. And secondly, if I touch on CapEx, you discussed the CapEx for this year. But if I look A comparison between this year's slide sorry, this quarter's slide and last quarter's, it looks like the CapEx expectations for outer years have increased as well. Can you please quantify what your expectations are over the coming years? And what's driving that increase?
Thank you very much.
Okay. Thank you for your question. Let me start on the CapEx side. So yes, you're right, enhanced CapEx level Starting pretty much 2018, given our very comprehensive capacity expansion program Across Austria, where we are either building new or substantially expanding almost every core sorting Site across Austria with the Vienna project, I think we're pretty much Not 100% true, but probably 80% true. So we do expect that after 2022, these CapEx figures will I've come down, but of course, with the enhanced footprint of our parcel network, including Turkey and including eight Geographies in Eastern Europe, we will have a sustainable CapEx level, which is higher than we had 3 or 4 years ago.
On the bank, yes, you're right. The equity contribution of around SEK 100,000,000 that we talked about is a Cash capital injection into the bank, of course, this stays in the group and will not change our group balance sheet, but will change both the balance sheet as well as The Austrian Post kind of legal entity, local GAAP balance sheet. And in terms of contribution to earnings, we We believe that a breakeven somewhere second half twenty twenty three, 2024 is now a lot better founded than in the past. Of course, we have Seeing a number of headwinds through the pandemic, which also worked against our business plans. And with this transaction, we think these targets are now a lot better founded.
That's great. Thank you. Sorry, can I follow-up on the CapEx? Friedemann, my question wasn't very clear. If I Compare the chart for this quarter to the one from 1Q, it looks like the bars for outer years have been shifted upwards implying higher CapEx expectations now compared to what you had at this time 3 months ago.
Is that correct? Or am I misreading the chart?
Yes. I think I don't have the charts for Q1 In front of me, so I'm not 100% aware of the size Of the bars without the numbers, but it's probably correct that for next year, we have Also for this year and for next year, we have upgraded our CapEx guidance a little bit. We are currently in the Planning process for next year and I think in November, we'll be in a better position to give a more precise guidance for 2022 and a better outlook for The midterm period. The reason for that increase was, of course, that also the growth in the parcel network was a lot stronger, Not only in Austria, but also in Eastern Europe and in Turkey.
That's it. Thank you very much.
The next question is from the line of Muneba Kagani from BofA. Please go ahead.
Hi. I wanted to ask about margins outlook in the Parcels business. So what are margins in Aliskirk in Turkey? And how should we think about margins for the Parcels segment going forward? And did you see any scope of price increases there?
And then secondly, given your CapEx plans and adding capacity of 50% to the sorting centers by 2022, What is your expectation for parcel volume growth going forward? And then just on your A slide that showed pickup points and all. What portion of your parcels are delivered to lockers or pickup points? And do you expect this to increase going forward? Thank you.
Thank you very much for your questions. Let me start with the margin questions. We do not Provide details about the specific profit margins for individual geographies, so please bear with us. But for the moment, I think we can share that we have double digit parcel margins Double digit margins in Turkey, which is a pure parcel network. And of course, the other result from An industry dynamic where a lot of demand has met constraint Supply and cargoes was one of the few suppliers who were able to offer capacity and also, Therefore, good demand in some areas, a little bit premiums.
Parcel Margins Going Forward, I Think We Are Cominsed That Parcel Remains A Quite Competitive Business with core customers across geographies also building up their own delivery networks.
So
as a result, I would say 2 years ago, we had a target margin of around 7% to 8%. I think for the midterm future, maybe there is a little bit of upside to that, maybe 1, maybe 2 percentage points. But I think upper end of single digit margins is probably Already a very ambitious target, short term, next 6 months. We might have some upsides to that given that the Supply demand imbalances still exist in certain geographies. On the volume growth, I think we Would expect volume growth rates coming down to single digit numbers as we have already seen for Q2, depending on geography, sometimes higher, sometimes lower.
This will, to a large extent, depend on what Big very big customers do in terms of on delivery network. It will depend on the speed by which they expand their delivery network. And the last question was on the share of Parcels going into our self-service solutions. So I think we are currently talking about 6% to 7% with an objective That this should go to around 10%. We still believe that at least in the Austrian market, Consumers prefer delivery to their home and locker stations are The solutions for customers who are not at home, we do not have specific plans To make lockers the primary destination for all parcels is some markets It's happening in some markets.
Thank you.
The next question is from the line of Marco Lomitae from Barclays. Please go ahead.
Hi. Thanks for the presentation. My first question is actually on mail volumes. I think you mentioned that in the first half you had some special mailing. But if I look at Q2 2020 and Q2 2021, It seems that on a 2 year basis, volumes are still down something like 12% or 13%.
So probably the CAGR is still above what used to be Your mid term guidance. So yes, I'm just wondering what's your latest view on mail volumes going forward And if you think that mail volumes are still affected, I don't know, for example, from low level of economic activity, so from My second question is on your acquisition of ING Austria. And I just want to understand a little bit better your strategy there. I think that Bank 99 was Set up as a fee based business. So the strategy was really to sell 3rd party products.
While with ING, I think you are taking a bit of risk on the balance sheet clearly with exposure to customers' loans and mortgages. So yes, just wanted to have a bit Better view on the strategy there. And thirdly, just if you can give a bit of color on the July rates for both May and August. Thanks.
Well, thanks for your questions. First, let me start Answering the question on the mail volume. Yes, you're right. As mentioned, in a 2 year Comparisons, the volumes for the 1st 6 months are down around 12%, which is if you should Divide that by 2 and say 13.6%, which is one percentage point above the guidance of 5%. So there was a pandemic and strong acceleration of digitization.
And in Austria, we in the 1st 3, 4, 5 months, we still had At certain sectors of the business activity at certain sectors with high restrictions or who were not Operating at all, the whole tourism sector and or the whole event sector. So it's very hard to now give a robust guidance going forward. I would interpret the minus 6% on average over the last 2 years with all the impact of the pandemic that We are optimistic that the future decline of mail is not substantially higher than what It has been before the pandemic, we've guided 5%, yes? But it's too early to tell. On ING, yes, you are, to some extent, right.
With ING, in addition to the fee business that we have with Bank 99. We are taking over an asset portfolio, Loan portfolio, however, with, in our view, a very modest risk, given that SEK 1,000,000,000 of the SEK 1,400,000,000 out of the SEK 1,400,000,000 is Mortgage loans with a high collateral behind it and also the consumer loan is very, In our view, a rather low risk portfolio. And it has always been also part of Bank 99 strategy to build up an asset portfolio, however, was a risk averse approach. And on July, please bear with us that we don't comment on monthly figures, but I would say the development that we have seen in Q2 more or less It's what we have also seen in the beginning of Q3.
And Just a quick follow-up on this. Given that in Q4, clearly, you had a lot of volumes, it's a very tough comp. Do you still expect volume growth in Q4 2021 against a very tough comp.
Yes. It's To be honest, it's very difficult to project now Q4 volumes. The 4th virus wave is now building up in Austria, and nobody really knows what will happen in Q4. And I think it's very hard to project. You're right, the comparison is high, But it has been high also in April, May June July.
And we saw single digit growth compared to very strong peaks last year. So we are optimistic, but you're right, the comparison is Very high and it will depend on the environment in Austria.
Thank you.
The next question is from the line of Christoph Schultas from Erste Group. Please go ahead.
Hi. Thank you for taking my question. I have actually 2 questions left. The first one is regarding your development projects. I think you mentioned in your last conference call some details about the Post City Limbs project.
And now you also present Poskvatfertl in Vienna. Can you give us also So here a little bit more information about that, about maybe zoning and permits for when do you Back to also the construction here to start. And the second question is maybe not so important, but We hear a lot of that in the media today. For example, there was another article in the standard touching your this New import taxes, what can it mean for you? Is it related with more risks For you with more efforts, with more costs?
Or do you also see here some opportunities on maybe also some Profits from that new tax coming. Thanks.
Yes. Let me maybe start with the Second question. You're right. As of July 1, there is a Ex on low value goods below €22 invoice value that wasn't there before And a customs process that we are obliged to perform. I think the main impact of this Will be that volumes from countries outside EU, in particular from China, low value Volumes will decrease as those goods will become more expensive for customers and the The degree times will get longer as there is the longer and more cumbersome given the customs process.
It's too early to tell after 1 month how this will develop, and those volumes have already Being reduced by the pandemic, we are talking more about letter volumes than parcel volumes. I would say the fees that we generate on this should more or less cover our costs. There is not a we do not see a substantial opportunity there. It's more a volume loss that will be the main Impact, but I think overall, it's probably of limited order of magnitude given total group numbers, yes? On the development projects, a brief comment on the 2.
Post City Linz is the site of our former Sorting center in Upper Austria, where we moved out 4 years ago, in a city location in The 2nd largest city of Austria on the railway station, so prime Real Estate, where we are now in advanced stages of a development project together with the city, The next step is to get the rezoning Decisions by the authorities, which we expect still this year early next year. And then we will decide on what to do with that piece of land. It's Bigger project. There are various scenarios on the table, but I think the most important thing is to get the Upgrade in value by the rezoning. This is now our biggest priority.
The other project is a bigger piece of land in the city of Vienna in We have a nice location, which 50 years ago was Rent it out to an NGO for sports use, and which will Also in the future, we'll to a large extent be dedicated to sports activities, but there is also an opportunity For residential development there, and there we are in the more early discussions development discussions With the City of Vienna and the various authorities there on what is the best project That fits the needs of the city of Vienna as well as our needs, yes? But again, there we see a substantial upside in developing this.
Great. And can you also say, you said that there would be a revaluation in Lindt and this can be expected For this year, what could that mean for your P and L?
This will not be This will not materialize in the P and L. We're talking rather about thin research given the way we account for these pieces of real estate. Okay. So thanks.
The next question is from the line of Bernd Maura from Raiffeisen Bank International. Please go ahead.
Good afternoon. Talking about revaluation and coming back To the Basel margin, adjusting the P and L for Basel and Logistics for 17,000,000 Valuation effect margin would be more than 13% in the second quarter. Previously or earlier, Mr. Bolino stated that positives and negatives effects leveled each other broadly out. Are there any other positive, call it, extraordinary effect in the Basel revenues in the Q2, which are not COVID related, when I do not want to see the COVID logistics as really extraordinary.
It's just the From the current environment we are in, so what is this there to add the EUR 17,000,000 to the parcel P and L back? Or is there anything what should compensate at least a portion of it?
Well, as I said, there have been positive one offs. The positive one offs have predominantly come from one off projects Related with the pandemic that will not continue into the next year. That also will, to a much lower extent, continue into the second For this year. And on the other hand, there was one big accounting negative P and L impact of the Revaluation of a liability in connection with a put option of our minority shareholder in Turkey. I would say in terms of order of magnitude, the two things pretty much net out.
And I would say order of magnitude wise, the roughly 10%, I think we show for the 1st 6 months is a reflection of the operative Profitability or of the at least in a short term horizon, More sustainable operative profitability of our parcel business. Yes, so much on your question.
Yes. Thank you.
The next question is from the line of Antrim Moulder from Kepler Cheuvreux. Please go ahead.
Yes, good afternoon. A few questions. First on the ING activities. As you said And also related to the question that BEM99 was mostly determined by the fee business, but it's a small negative for interest income. Can you fill us in on the composition of the €30,000,000 of revenues?
How is debt is being composed Split between commissions and interest income?
I'm not sure which revenues you are Talking about the actual $19.99 revenue?
Yes. If you look in the first half report, you mentioned revenues of €12,500,000 Further in the report, it splits Around €13,500,000 coming from commissions on a net basis and a negative €1,000,000 on interest income. So I'm curious to hear how the composition of the ING activity seems.
Well, of course, for RNG, the picture so for Bank 99, given that we don't have a loan portfolio yet, The priority over the last 12 months was to build up the provision based products. There is, As a result, no interest there has been no interest income for Bank 99. I would say for ING and please bear with us that before the closing happens, we are not able To give real financial details for ENGIE, but the picture in terms of distribution will be varied The other way. Yes, it's mostly interest income and a lot less fee income.
Related question to that, you mentioned a distribution of both the mortgage and consumer loans As well as investment products. Has there been any agreement on the continuation of these investment products with ING?
You mean on the asset management side, Whether ING will serve as a partner on those products? Yes. That's a question. No, there these are mostly actually non ING Asset Management Products. And there is some short term agreement on a corporation, but Not a material long term agreement.
The cooperation will mostly happen for migration period.
Okay. Then a question on Retail and Bank. Can you make any statement on what kind of negative we should expect for the full year?
I would expect something with a 3 And the number behind it.
Okay. And then last question is on the volumes. You for the first time mentioned now the volumes both in Eastern Europe as well as in Turkey. Can you also mention what kind of volumes you made in Austria? And possibly also what kind of volumes you made in the mail side?
Sorry, can you repeat the question? The question was on volumes?
Yes. You mentioned the volumes for the first half, saying that in In Europe, they amounted to €25,000,000 For Aras, it was €115,000,000 But you didn't mention the Volumes that you made in Austria and possibly you can also mention the volumes that you made in both in letter mail and direct mail.
Actually, we show the volume development on the pages 10 to 12. So Letter Mail volumes in Austria, Q1 minuteus 6, Q2 plus 1, half year Minus 3, Page 10, direct mail Page 11, first half totaled plus 2%, which is A combination of minus 8% in Q1 and plus 14% in Q2 and on Parcel, plus 20% in Austria With the distribution that you see on Page 12.
I noticed the changes, but can you help us with the absolute numbers as well?
I suggest you give Howard a call and We will have we are a little bit running out of time here, yes. Yes, that's fine. Thank you.
There are no more questions at this time. I hand back to Harald Hagenauer for closing comments. Please go ahead.
So thanks, ladies and gentlemen, for participating in this call. We hope to hear and see you soon and hopefully To see you in the second half of the year, the circumstance allow in one of the next roadshows. Thanks and have a good day. Bye bye.
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.