Good afternoon, ladies and gentlemen, and welcome to the Österreichische Post f irst half 2025 results. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Harald Hagenauer, Head of Investor Relations. Please go ahead.
Good afternoon, ladies and gentlemen, to this conference call of Oesterreichische Post , where we would like to discuss the trends and results of the first half of the last month. Here with me is our CEO, Walter Oblin, and our CFO, Barbara Potisk-Eibensteiner. I would directly like to hand over to Walter this concert.
Good afternoon, ladies and gentlemen. It's a pleasure to welcome you to our half-year results. As a summary upfront, the environment continues to remain challenging. However, I think we've shown resilience and can present solid results today. Moving to page two, a few sentences on the environment. As a summary, the environment remains challenging, both in Austria, where we are in the third year of a recession, as well as in Eastern Europe and in Turkey, where we continue to see high inflation. In Austria, there is cost pressure on the public sector. The government tries to consolidate the budget. The stationery retail is in a continued crisis mode. All of this is putting pressure on mail volumes. On the parcel side, the international trade conflicts create uncertainty and subdued customer demand, which overall leads to subdued growth in parcel volumes.
Against this context, I think we, as I said, have shown resilience and can show to you quite solid results for the first half year. We've shown here the two-year development, as I think the development from 2023 to 2024 puts the 2025 figures in the right context. Compared to last year, we report a revenue decline of 1.1%. This, however, after a growth of 17.2%, where in absolute terms, roughly EUR 100 million came from Turkey, where it was mostly an effect of high inflation combined with a stable currency, an effect which has not been present this year. This year, Turkey has been almost flat, despite some volume growth in euro terms. For the rest of the portfolio, the decline in mail volumes was larger than the growth in parcels, leading to a decline of 1.8% for all volumes, all revenues outside Turkey.
Again, this after an unusually high growth last year of 10.3%, where also one-off volumes resulting from two countrywide elections in Austria provided a special boost. On the profitability, both EBITDA as well as EBIT are below last year: 5.7% EBITDA, 11% EBIT, but pretty much on the level of a good year 2023. A lot of the decline in EBIT can be explained by the absence of elections and positive one-offs in mail, as well as by the development in the Turkish currency. However, the outlook remains challenging in terms of the overall environment. We have implemented additional initiatives, both on the revenue side as well as on the cost side, different growth initiatives. We try to strongly penetrate large international e-commerce platforms by offering them the Österreichische Post portfolio of companies as one region out of one sales interface with ideally one product and one IT interface.
We continue to invest in out-of-home offering through a strong initiative on the local side, both in Eastern Europe as well as in Austria. We have indirectly acquired a small competitor who exited the market in Slovakia, and we continued our international expansion out of Turkey into Azerbaijan and made first cautious steps into Georgia and Uzbekistan. On the cost side, we have taken several measures to adjust the staffing, both in operations as well as on the retail network side, on somewhat lower volumes. We have doubled down on moving mail volumes to a slower economy product, which in the meantime is the standard product in the Austrian market, both for national as well as international volumes.
We try to leverage synergies across the group, have integrated various affiliates into the parent company, and we have initiated group-wide cost optimization in administrative areas, which already have started to show effect in Q2. Page five summarizes the strategy update we communicated in May. Our ambition is to become a leading logistics and services group, reaching more than 150 million people in Austria, Eastern Europe, Turkey, and beyond, with three core business pillars. Number one, we want to be a strong post in Austria, but more than that, post and beyond in Austria, we call it. In particular, this means that beyond defending our market leadership in Austria on the postal side, we want to grow bank99 and also offer a post-owned telecommunication offering as of next year. Pillar number two, growth in international e-commerce. This is our obvious growth opportunity.
We cover here a region with 150 million people, with growth momentum, and we continue to invest in this region. Pillar number three, one group, operationally excellent. We think there is more to gain from a stronger integration across the group on the sales side, on the operation side, on core functions, and technology and efficiency have become part of our DNA. We continue to invest in leading-edge technology to drive efficiency. Let me now use this framework to give you an update on business development and strategy implementation along those three core business pillars, starting with our Austrian mail business. Letter mail continues to decline in Austria. We're now in the 17th year of mail decline. Mail decline versus last year, roughly 7%. Last year, a strong election year, within the first six months, two countrywide elections.
This year, pretty much apart from a Vienna municipal election in the first quarter, no more elections coming. We see the pure volume reduction. On the direct mail side, a similar trend here. The consolidation on the non-food stationery retailers is ongoing. At the same time, food retailers continue to work with postal advertising, mail, direct mail, both unaddressed as well as addressed as their main promotion form. We continue to be in the lower third of European tariffs. In a European comparison, our strategy is to offer high-quality services at affordable rates, both for private customers, but even more importantly, for business customers. We have successfully implemented a product reform as of May 1st, where we made the economy product the standard product. The standard product in Austria across all customer segments now has a runtime of three days. Premium continues to be offered as an additional service.
As a result, around 85% of the mail volume in Austria is already in the standard product. With this product, we can bundle every other day in the last-mile delivery. Moving to our bank on page eight, I'm very happy to be able to tell you that bank99 showed a positive result for the first six months, for the first time in its history, in its fifth full year now, since the launch of the bank in April 2020. As I always say, out of the home office into a full lockdown. The bank has a balance sheet of around EUR 4 billion, roughly 300,000 customers. We think that the business model to use the ecosystem of Österreichische Post was a trusted brand, a dense retail network consisting of postal branches and postal partners. All that combined with strong and impactful digital channels, that this business model is working.
We continue to attract easily customer deposits, and also loan production is going quite well in a challenging Austrian credit market. A very positive first six months for bank99. A very important milestone was also the successful migration of the core banking system of the former ING retail business to the outsourced core banking system of bank99. We are also proud that bank99 is increasingly showing up on the top spots in different customer service. Here you see some awards that bank99 has received over the last months. For us, a sign that after five years, bank99 has a strong awareness among Austrian consumers, and not only awareness, but also a positive, innovative, service-focused reputation. This makes us optimistic for the near future. In our Austrian marketplace, back to the postal core business, we continue to implement a comprehensive self-service initiative.
Last year, 32.4 million shipments were handled through self-service facilities by Austrian consumers. This number has grown 12% in the first six months, and we continue to roll out self-service facilities. By the end of the year, we expect around 3,000 postal network points. Here we're coming from 1,900 two years ago. The addition is pretty much only self-service. These facilities are adopted very well by consumers. In larger cities such as Vienna, we are also rolling out full self-service branches. You see some pictures here, which again are very well accepted by the Austrian market. Moving to page 11, we last quarter communicated that as of next year, we will lift the cooperation with A1 on a new level. We will launch a mobile virtual network operator under a post-owned brand as of Q2 next year.
The preparations for this offering are well underway, and we are very optimistic about this new service offering. Page 12, moving to our partner market, starting with Austria. Austria has seen growth continued in 2025 after a very strong growth last year, in particular in the first half year, 3% volume growth, 5% revenue growth, despite this subdued consumer demand. In Eastern Europe, we had a rather challenging first quarter. However, also to put this in context, last year we grew 27%, mostly through the influx of quite volatile Chinese volumes. Against this strong growth, we are down 70% compared to last year, which means that we're still up roughly 20% compared to 2023. Q2 showed a quite positive approach towards last year's volumes. In Q2, we were almost reaching last year's volumes. A similar trend in Turkey, where Q2 was better than Q1. In Q2, 4% volume growth.
We continue our expansion towards Azerbaijan, which is running quite well and made first steps into Georgia and Uzbekistan. The business model is always similar. We are following Turkish e-commerce platforms in their expansion into these markets. We're working with partners in those respected markets with a very risk-conscious approach. In Azerbaijan, we are already at a high single million digit revenue number with a positive earnings contribution. Also in Eastern Europe, we are expanding our out-of-home network. Our target is to, in the group, have more than 20,000 out-of-home points by the end of next year. Currently, we stand at around 1,600. We are in the midst of a very strong push in Eastern Europe, which is running according to plan. We continue to invest. We continue to invest in infrastructure and capacities, both in Austria as well as international.
Yesterday, in the Supervisory Board, we made the decision to start the implementation of the last outstanding logistics center renewal and expansion in the city of Salzburg on the existing site. This project will go into construction next year. With that project, we will conclude the rebuild and expansion of the Austrian logistics center networks. By then, we will pretty much have touched every logistics center and substantially expanded capacity, improved speed for the Austrian market. Internationally, we are investing in growth. We are in the midst of a project in Budapest, which should open next year, a new hub in Budapest, which has been a core center of the growth in Eastern Europe, with a lot of Chinese volume coming to Europe via Budapest. We are also in Istanbul, in the planning phase for a large logistics center north of Istanbul.
We also invest heavily into technology, both in hardware, software, robotics, and automation systems. Here are some examples. We equipped all Austrian mail and postmen with new handhelds last year. We are successfully piloting robotic technology in our sorting centers and in our e-commerce fulfillment business called Systems Logistics. We are successfully operating an out-of-store location, a highly automized 3D storage and order picking system, where we are serving Austrian large e-commerce players in e-commerce fulfillment. Concluding this strategy update with an update on sustainability, we communicated a few weeks ago that by the end of the year, we will have fully switched the city of Vienna to CO2-free last mile. We are rolling out electric mobility across Vienna, and to our understanding, this will be the first larger city in Austria where a whole postal network is completely CO2-free. Only pedestrians, e-bikes, and electric mobility.
We are already across Austria standing at more than 50% electric fleet. The plan, the roadmap towards CO2-free delivery across Austria in 2030, is defined. This train is running. Electric mobility, in the meantime, has positive total cost of ownership compared to combustion engines. With that said, I hand over to Barbara, who will give us more detail on the financials.
Thank you, Walter. A very warm welcome also from my side. Let me start with the financial highlights for the first half of 2025. When we set revenue and operating profit into the context of the previous two years, this reporting period compares well with the first half of 2023 and was even close to the top line result of 2024, despite all the special effects last year. The other observation I would like to make is that we continue to have a strong balance sheet with a low level of debt and, on the other hand, also a strong cash generation compared to last year. Let me go into further details of revenue development on the next slide.
If you take top-line growth over the last reporting periods, group revenues were down by 1.1% compared to the first half of 2024, but up by 15.8% between the first half of 2023 and the same period in 2025, with mail down by 2.6%, parcel and logistics increasing by 30%, and retail and bank up by 23.4%. At the divisional level, Walter already mentioned the special effects from elections in May 2024 of about EUR 20 million. In parcel and logistics, we had a positive FX effect last year in Turkey of about EUR 65 million. In addition, a reporting change in logistics solutions should be mentioned in the first half of 2025, but this accounted for only one percentage point difference in revenue growth on the parcel side.
Parcel Austria showed a revenue growth of 5.2%, whereas parcel in Southeast and Eastern Europe is volatile due to the volume shifts from Asia clients, with a big increase in volumes in Q1 2024 of 44% and in Q2 2024 of 13% because of the volume push of a parcel consolidator. This year, the volume development region was in Q1 - 13% and in Q2 only - 1%. In turn, parcel Turkey was up by 2.6% over the same period last year, but a significant 80% if compared with the first half of 2023. This puts our long-term ambition in this market into better perspective despite the volatility in exchange rates and continuing high inflation. Turning the page and applying the same divisional analysis for earnings, EBIT was down by 11% compared to the prior year, but only slightly below EBIT in the first half of 2023.
On a comparative basis to the same period last year, the main moving parts were the volume decline and lack of special effects in mail and lower profitability in Turkey and CEE. I'm particularly pleased to report positive earnings for our retail and bank division with an EBIT of close to EUR 5 million in the first six months of 2025. This is based on positive contributions from bank99, as well as a good earnings development of the branch leasework. Next page, we present the group income statement for both quarterly and half-year periods, and we'll just add the following observation from my perspective. We talked about revenue development already, and on the cost side, we make our best effort to keep them under control.
Staff costs, for example, despite various salary increases through collective labor agreements from last year and also from July 2025 onwards, we managed to keep staff costs quite stable year- on- year. Other operating income includes proceeds from property sales of about EUR 5 million and the indexation of rent and leases. Also, other operating costs show a slight increase, mainly due to higher IT expenses. Bottom line, EBIT was 11% down year- on- year due to lower profitability, but still on the level of 2023.
Going through the income statement for each division and starting with mail, the revenue decline of -5.9% year- on- year or -2.6% compared to 2023 was based on two main developments: ongoing digitization efforts by major customer groups like banking, insurance, or telecoms, as well as the cost pressure in the public sector, and the lack of the EUR 20 million special effects from elections in Austria last year. Ultimately, the strong volume decline and top-line pressure resulted in lower profitability. Looking at the income statement of parcel and logistics, we are pleased with revenue growth in Austria and Turkey, but see some volatility in the region of Southeast and Eastern Europe. This had to do with the push of volumes last year from the parcel consolidator, as already mentioned. Revenues in Turkey rose by 2.6%, which had positive effects over the same period last year.
Despite the positive top-line development in parcel and logistics, reduced profitability in Turkey and CEE resulted in lower earnings. Finally, retail and bank were slightly below the revenues of the previous year due to the lower interest rates, but achieved a significant 23.4% increase if compared with the same period in 2023. Having mentioned to turn around the bank by fully integrated IT system of ING Bank Austria and further improving the cost structure of our branch network, we are pleased about the first earnings contribution of bank99 and are now focusing on further developing our banking operation. Still, further development of bank99 will remain challenging, with interest rates coming down from 4% in June last year to 2% now.
On the next slide, we present the debt factor, and I would highlight here not only the continuing low debt, with net debt to EBITDA of only 0.5x or 1.5 x if IFRS 16 on leases contracts is included. This provides us with optionality for both organic and inorganic growth opportunities. Our strong operating free cash flow is certainly a very important highlight of the first half of 2025. As you can see from the comparisons with 2024, at the bottom of the page, the higher cash flow from operating activities, excluding core banking assets, was up compared to last year. More importantly, the operating free cash flow, which is the main metric for dividend payouts, is up by 9% compared to the previous year. Maintenance CapEx, as well as gross CapEx, were a bit under the level of last year.
This brings us to the next page, which shows CapEx development over the last five years, with a range between EUR 140 million -EUR 160 million. That is a level we also expect in the future. We are finalizing our expansion program in Austria, with an extension in Salzburg next year and the year after, and we'll focus on CEE and Turkey regions in line with volume developments there. In 2025, we aim for a stable CapEx of EUR 150 million -EUR 160 million, despite having spent only EUR 41.3 million so far. As you know from previous years, we tend to have higher CapEx requirements in the second half of the year. With this, I come to the end of my presentation and hand back to Walter to give the outlook.
Yeah, thank you, Barbara. Let me conclude with the outlook for 2025, for the full year. In general, we expect the market environment to stay challenging in all areas. However, our target to come out at stable revenues and stable earnings remains intact. On the revenue side, currently, our target is a revenue at the prior year level, of course, dependent on the development of the Turkish Lira–Euro exchange rate. On the CapEx side, as already mentioned by Barbara, an order of magnitude of EUR 150 million-EUR 160 million is what we expect to spend. On the earnings side, our targets remain unchanged, earnings in the order of last year's EBIT, so an order of magnitude of around EUR 200 million. With all that we've seen also over the last weeks, we are quite confident that this target is achievable. Thank you for listening, and we're now happy to take questions.
Ladies and gentlemen, if you would like to ask a question, please press nine and the star key on your telephone keypad. In case you wish to cancel your question, press three and the star key. Please press nine and the star key now to state your question. The first question goes to Patrick Steiner of Oddo BHF. Please go ahead.
Good afternoon, Patrick Steiner speaking. I have three questions from my side. I would take them one by one if that's okay for you. The first one, looking at the segment level especially, could you walk us through your assumptions of the drivers affecting the second half of the year in order to arrive at your EUR 200 million EBIT guidance? What are the main risk factors in your view?
I think in general, we do expect to come back to slight growth on the parcel side across our portfolio. The seasonality of last year was in particular a very strong Q1 with a special influx of Chinese volumes, in particular in Eastern Europe. This peak is behind us. The second half of last year was not as strong. Also, the main one-offs on the mail side were in Q1. In addition, we have the impact of the product reform with a tariff increase on the mail side. With that and with several initiatives on the cost side, we are optimistic and confident to reach the EBIT guidance.
Perfect. Thank you very much. Very clear. Second one, on page 2022 in the presentation, you stated the 6.45% salary increases mandated by collective bargaining agreements as of the beginning of 2021. I'm just curious, the number seems a bit high to me. Could you please provide maybe a bit more color and from which region this is coming, or is this an aggregate number? I mean, any information on that would be helpful.
Yeah. The 6.45% is the result of the collective wage agreement that was negotiated in March 2024, effective July 2024. This is kind of more than a year ago. The most recent result was 2.8%. This has always been inflation + 0.2%, 0.3%. We're talking about something that was negotiated 18 months ago. The most recent change is, to avoid misunderstandings, we negotiated in spring with effectiveness July 1st, always. The latest result, as I said, was 2.8%.
Okay, thanks. Yeah, very, very understandable. Last question. If I understood this correctly, you were stating 3% volume growth in the Austrian parcel business in the first half. Correct me if I'm wrong, please. Could you maybe give us more information on that number for Q2, if possible?
I think we are careful given some of the volatility that we've seen over the last months with precise percentages. I would say a low to mid-single percentage point number is what we expect. It's a little bit lower than what we expected a few months ago, but we do expect full growth for the full year.
Okay. Great. Perfect. Thank you very much. I'll get back in line.
The next question goes to Christoph Schultes of Erste Group. Please go ahead.
Hi. I had a couple of questions, actually. The first are related to the parcel and logistics services business. The first one would be the decline in the SCE segment, which is related to the decline in Asian volumes you mentioned in your presentation a couple of times. Do you think that this is, in general, that the trend is now broken, or is this, in your opinion, just a week or quarter in a long-term positive development? In particular, also maybe incorporating or thinking about the trade tariff discussions. Maybe you can give us a kind of best scenario you have for the SCE segment in the next couple of years.
Yeah. Overall, we see quite aggressive growth of Asian e-commerce platforms continuing in some areas with quite innovative, very cost-efficient business models. I don't think the trend is broken. I think we have to get used to more volatility. I think both in terms of volume and promotional activity, these customers have more intrinsic volatility, but also their loyalty to partners for logistics is less than what we are used to for European and U.S. clients. In general, we do expect continued growth. Also, if you look at what happens with MediaMarkt in Austria, the takeover by jd.com, I think a very capable Chinese e-commerce platform brings a new player to Europe. We also have seen Temu and the likes very aggressively expanding and really going to a next level. If you follow their communication, local to local is their next horizon.
Basically, they are expanding their shipping Chinese goods direct to Europe. They're expanding that model or complementing it by acquiring local producers and online retailers in Europe to serve the European market and thus going head-to-head against other e-commerce platforms. I think it's much too early to write further Chinese growth off. I would rather expect them to continue to grow at the expense of European online retailers.
Okay. Great. Thank you. You mentioned in your presentation also that you see again some insourcing ambitions and activities of the international e-commerce platform. When I think back in the last quarter, you stated several times that you see e-commerce platforms rather giving back volumes to you, and you were also able to gain market shares in the B2C segment. Do you think that you can lose now market shares again?
I think that message was focused on Turkey. I think in Austria, we see some kind of stability, at least for the time being. You know in some quarters, we gain a little bit more market share of some of the big, particular one big e-commerce platform. In some quarters, a little bit less. Overall, I think there we have reached some equilibrium, at least for the time being. In Turkey, we have two big customers that have grown their own delivery over the last years, which has also led to growth in Turkey. Volume growth of Aras Kargo has become more flattish. I think also there, these customers have come to a point where further substantial insourcing is not something that we do expect in the near term.
Okay. Thanks for the clarification. I have two more questions, if I may. The one would be looking at the development in your retail and banking services division. This was surprisingly strong in this quarter. Were there any positive one-offs? At least you did not mention any. You have reached more than EUR 5 million in the second quarter. I know you mentioned also the declining interest landscape we are looking at. Can we expect clear positive contributions in this segment also in the next couple of quarters and years?
bank99 did a great job in the first half of 2025. There were some smaller one-time effects. We did some provisions for the migration, but this was only a small effect. We did not use them. On the other hand, there was also a positive impact of retail. What you can expect for the second half of the year is, please do not take the results of the first half two times. This will not happen. You already said, okay, and the interest rates went down. This is also why we are rather cautious on the bank side, but we are committed for break-even. This we say. On the other hand, we also had some positive effects on the retail side.
Okay. Great.
This is more or less an internal calculation.
Okay. Thank you. My final question would be also looking at your segment reporting EBIT in your corporate division. This was also the best of the last three years on a quarterly basis. I was wondering, you mentioned there that you did, or this was partly due to some real estate portfolio cleanup. I would be interested in what this exactly was. Secondly, what do you expect for the EBIT line of the corporate division also on a normalized level in the future?
Okay. Austrian Post has a rather big portfolio on the real estate side. A lot of old branches, we have old post offices, which are not in operation any longer. What we did and we also do in the future is, there are some low-performing real estate where we say, okay, we have to invest. On the other hand, the return on the leasing side, rent and leasing side, is not that high. We are selling them off. The impact in the first half of the year was about EUR 5 million. We also expect to have this contribution also in the future. These are smaller things. The EUR 300,000 sale of real estate, and this is the size of the single transactions. I'm expecting it to go on also in the future for the coming years.
On the other hand, on the corporate side, you'll also see the impact of our cost measures we took. This is on the one-hand side, personnel cost, and on the other hand, also consulting costs and other costs.
Okay, many thanks for taking my questions.
The next question goes to Marco Limite of Barclays. Please go ahead.
Good afternoon. Thanks for taking my questions. I've got two. The first one is just a follow-up on what you have just said around the outlook for the consumer service and the banking unit. Did I get right that you mentioned that we should expect the unit to still be at break-even for the full year? Yeah, that will imply a second half down EUR 6 million EBIT. Maybe I got that wrong. The second question is on your letter volume decline in the second quarter. We have seen letter volume decline accelerating versus Q1. To be honest, also some of other postal operators in your geographical area have shown a high single-digit letter volume decline. What are your thoughts around the outlook for the second half of the year and going forward for letter volumes? Thank you.
Thanks, Marco, for your questions. I will answer the second one and ask Barbara to take the first one as a follow-up to her last answer. On the letter mail side, we have seen roughly a 7% decline over the first half. This is the order of magnitude that we do expect for the next months and quarters. Digitization is ongoing in Austria. There are limited positive impulses. The government is consolidating its budget. We do expect this somewhat increased rate of return for the next quarters.
Sorry, just to follow up on this, I mean, Q2 was lower than Q1. I think in Q3 2024, you also had elections. Q3 this year would also have very tough comps, right? We should expect even faster letter volume decline in Q3 than Q2?
I'm talking about rather adjusted numbers. Yeah. Where we try to take off the one-off, I would say as an intrinsic underlying trend, we take roughly the 7%. Last year, of course, in Q3, we had the parliamentary elections. Q3 is unadjusted. We should expect a little bit stronger decline.
Okay. On the bank and retail side, what are we expecting for the full year? I would say it's more, I would say, EUR 1 million to EUR 2 million to EUR 3 million of EBIT for the full year. We had some positive impact on also retail, it's only internal charging. There we had a special effect in the first half of the year. Due to this, I'm expecting bank and retail to come down a little bit.
Okay. Maybe another follow-up question on one of the previous questions from a colleague. In corporate center, we had EUR - 44 million in 2024. Now we're running at a very low run rate. Shall we still expect, let's say, high single digit to EUR 10 million per quarter of losses, or has that reduced now, normalized?
I think, Marco, please bear with us that we do not provide guidance on a quarterly result per division. I think if you look at the path, there is quite some volatility, in particular on the corporate side, given the impact of interest rates on our provisions and several things. However, I think what we can say is we have taken additional initiatives on the cost side, in particular in administrative areas, from vacation, bringing down provisions for vacations to marketing spend. We should see some of those savings also on the corporate segment.
Thank you.
The next question goes to Henk Slotboom of DID. Please go ahead.
Good afternoon. One question from my side. A lot has been said about the Chinese platforms and how you're benefiting from it. At the same time, during the presentation, you said a couple of things like the loyalty of the Chinese is less. They are known to be tough negotiators, and there is the uncertainty of the European Commission, which is weighing measures as well. How do you think all of this, and what is the rationale of the move towards accommodating more of the Chinese volume? Because what it does to your margin probably is that it will cause pressure on your margins. Is it so that you can safely use the volume they generate in the countries outside of Austria that helps you to develop more critical mass in those markets? That was my question. Thanks.
Thank you. I think a very good question. I think overall, our aspiration is to be a market leader in Austria and one of the leading logistics providers in e-commerce in Eastern Europe and Turkey. As such, I think we also have to work with large Chinese platforms as I do expect them to grow in market share and be a core driver of growth over the next years. Point one. Point two, these are challenging customers, but of course, we only work with them if there is a positive contribution to our P&L, which we have seen over the last years since we've been working with them. Third, I think coming to your question on, if I understood it as a question correctly, what will be the impact of European regulation on Temu, Shein, and the likes?
My personal opinion, but I might be right or might be wrong, is that this will have limited impact. I think whether there is a EUR 2 surcharge or not will not make a big difference. It's very often the cost difference between similar goods on Temu, Shein, or wherever compared to European retailers is much more than the EUR 2. That will not make a very big difference. Second, as I mentioned earlier, they are already anticipating stronger regulatory barriers and trying to build up suppliers, logistics platforms also in Europe. This is this local to local what you can observe with Temu. Finally, I think that Europe will have to try to keep a somewhat friendly relationship with China, as otherwise, given the difficult relationship with the U.S., I think European industry will suffer on both sides in the West as well as in the East.
I think this will not be a good scenario for Europe.
Okay, thank you very much.
That’s a personal opinion.
Okay, I agree with you. Only a EUR 2 surcharge, it won't make a difference. Maybe as a follow-up, there's also been a lot of talk about the safety of products sold by Shein, Temu, and that sort of things. In that case, they could face a heavier fine, and that could more constitute an obstacle for them to ship stuff to Europe than just a EUR 2 surcharge per parcel. I fully agree with you on the remark you made on the EUR 2 thing.
Yeah. I think in general, as far as we have got to know them, I think these are very capable companies. These are very financially strong companies. These are platforms that have emerged as winners in a very competitive 1.4 billion consumer market in China. We should not underestimate their aggressiveness and their ability to adapt to whatever challenges they face. I think they will learn to cope with, and they will become better in eliminating products that are not compliant with European regulations. I think that will not substantially limit their growth. Of course, there will be some ups and downs, but in general, I would expect them to grow further.
Okay, thank you very much.
Ladies and gentlemen, you still have the possibility to ask a question. We'll leave the line open for a moment. Please press nine and the star key if you have another question. There seem to be no further questions. Let me now hand back over to Harald Hagenauer for some closing remarks.
Thanks, ladies and gentlemen, for participating in this call. If you do have some more questions, don't hesitate to call us today or the next days. We are available. If not, of course, we wish you a very nice weekend. Goodbye.