Q Results Presentation Frank Appel, CEO Melanie Kreis, CFO Tim Scharwath, CEO DGFF. Frankfurt, 09 November 2017

Transcription

1 Q Results Presentation Frank Appel, CEO Melanie Kreis, CFO Tim Scharwath, CEO DGFF Frankfurt, 09 November 2017

2 AGENDA 1 Q3 Highlights & Divisional Update (Frank Appel) 2 Q3 Financials, IFRS 16 & Guidance (Melanie Kreis) 3 DHL Global Forwarding, Freight Update (Tim Scharwath) PAGE 2

3 Q HIGHLIGHTS Continued strength in Q3 confirms leverage to structural and economic growth 10% EBIT increase driven by 6% revenue growth and further margin improvements Express: keeping momentum supported by volume, yield and efficiency PeP: contributing steady EBIT growth while driving forward international expansion DGFF: EBIT slightly up as tough market conditions begin to stabilize DSC: FX headwinds currently mask steady EBIT progression Strong YTD cash generation, on track for full-year expectations Sustained momentum towards our financial and strategic targets PAGE 3

4 PeP: UNABATED PARCEL GROWTH AND UNCHANGED MAIL TREND IN GERMANY Mail Communication revenue EUR m +0.7% 1,521 1,532 Q Q Parcel Germany revenue EUR m +5.5% 1,117 1,178 Dialogue Marketing revenue EUR m +3.8% Q Q Parcel Germany volumes m units +8.8% Business Highlights Confirmation of normalized underlying mail volume trend: - Mail Communication: -2.8% (-1.3% / WD) - Dialogue Marketing: +5.5 % (+7.1% / WD) Mail Communication trajectory and DM volume increase supported by federal election Sustained growth in Parcel Germany (volume +10.5% / WD) - yield development continues to reflect product mix changes Online grocery market gaining traction: delivery contract with major third parties started Q Q Q Q PAGE 4

5 PEP: CONTINUOUS INNOVATION ALONG THE WHOLE VALUE CHAIN, DRIVING STRUCTURAL E-COMMERCE GROWTH Production / sorting (e.g. 50k/hour ; MechZB) Network orchestration (e.g. routing, data analytics) Sustainable delivery (e.g. Streetscooter) e-commerce growth Penetration of new business fields (e.g. grocery marketplace & delivery) Recipient solutions (e.g. trunk delivery, DHL4ALL) Last mile automation (e.g. Postbot) PAGE 5

6 PARCEL INTERNATIONAL: EXPANSION ON PLAN Parcel Europe revenue DHL ecommerce revenue Business Highlights EUR m % 448 Q Q Profit development by country EBIT, schematic (year 0 = 100) _ EUR m 336 Q % 367 Q t (maturity) Parcel Europe: NL, PL, CZE, AUT, SK, SWE, ESP, POR, UK DHL ecommerce: THAI, VIE, CHI, MAL Continued strong volume and revenue development in and outside Europe, based on strong, structural e-commerce growth domestically and even more so cross-border In Q3, DHL Parcel Europe added Ireland, Croatia, Bulgaria and Romania through partnerships with leading local providers, both state-owned and private DHL ecommerce launched greenfield B2C networks in Vietnam, Malaysia and Chile in 2017 Margin improvement to follow network density created through revenue growth: countries with positive and growing EBIT financing expansion of network into new geographies PAGE 6

7 EXPRESS: STRONG GROWTH IN ALL REGIONS CONTINUES Time Definite International (TDI) 1) Revenues per day in EUR m 40.2 Q Time Definite International (TDI) Shipments per day 000s 771 Q % +11.9% 45.7 Q Q Business Highlights Double-digit TDI volume increase fueled by cross-border B2C, good B2B growth and further market share gains Volume growth again supported by all regions: MEA (+31.5%), Americas (+20.4%), Europe (+14.8%) and Asia/Pacific (+4.5%) Higher fuel surcharge and active yield management contribute to stronger growth in revenue/day than volume/day Yearly GRI (General Rate Increase) for 2018 announced with price increases calibrated by country 1) Currency translation impacts are eliminated. Data aggregated with same currency rate PAGE 7

8 DHL EXPRESS: NEW MARKET STUDY CONFIRMS SHARE GAINS IN ALL REGIONS Continued TDI leadership across all regions outside the Americas Americas [EUR 8.2bn ] <1% 4% 20% +2% 43% 33% Europe [EUR 7.1bn] 11% 10% 44% 11% +3% 24% Asia Pacific [EUR 8.0bn] 17% 4% 49% 11% 19% +5% +x% %pt change vs MI study Global [EUR 24.0bn] DHL TNT UPS FedEx Others Country base: 11% 5% 38% EU: AM: AT, CZ, DE, ES, FR, IT, NL, PL, RO, RU, SE, TR, UK AR, BR, CA, CL, CO, MX, PA, US; 22% AP: AU, CN, HK, IN, JP, KR, SG, TW 24% GLOBAL: EU+AM+AP+(AE+SA+ZA) Source: Market Intelligence 2017 PAGE 8 +4%

9 SUPPLY CHAIN: STRONG Q3 SIGNINGS AND SERVICE INNOVATION New signings, EUR m 1) 306 Resilience Q Q ) Annualized revenue Business Highlights Strong order intake of EUR 415m annualized revenue drives YTD signings above last year at EUR 895m on track for another year of solid, selective business wins DSC continues to be at the forefront of digital innovation not only in automation but also for example with Resilience 360: - our cloud-based risk management platform - using big-data analytics to provide early detection and warning about supply-chain risks - developed by CSI (Customer Solution & Innovation), our key account management for selected large global customers PAGE 9

10 YTD VIEW ON OUR FINANCIAL KPIS All key indicators pointing in the right direction EUR m 9m 2017 Change, EUR m Change, % yoy Supported by improving top-line growth, EBIT growth is on track for another strong year Revenue 44,335 +2, % EBIT 2, % OCF 1, % FCF % 1) 1) 1) 1) Increase in Operating Cash Flow reflects good EBIT and Working Capital performance FCF generation also strong and on track for full-year target 1) 2016 comparison adjusted for EUR 1bn pension funding in Q DPDHL Group well on track towards 2017 targets PAGE 10

11 AGENDA 1 Q3 Highlights & Divisional Update (Frank Appel) 2 Q3 Financials, IFRS 16 & Guidance (Melanie Kreis) 3 DHL Global Forwarding, Freight Update (Tim Scharwath) PAGE 11

12 GROUP P&L Q EUR m Q Q Chg. Management comments Revenue 13,862 14, % EBIT % t/o PeP % Organic growth accelerates to +7.8% supported by all divisions; FX effects turning more negative again at -3.3% Clear focus on yield and productivity supports gradual margin improvement; negative divisional FX effects partly offset in CC/Other line Steady growth momentum supported by dynamic Parcel markets and good letter volumes combined with continued cost discipline t/o DHL % All divisions contribute to growth; Express posting another excellent quarter Financial result % Includes write-downs on financial assets Taxes % 9M tax rate of 13%, in line with new full-year expectation (tax rate Q3 2017: 9% vs Q3 2016: 5%) Cons. net profit 1) % Strong EBIT growth partly offset by yoy higher tax rate EPS (in EUR) 2) % 1) Attributable to Deutsche Post AG shareholders; 2) Undiluted PAGE 12

13 FREE CASH FLOW Q FCF generation in line with typical seasonality and full year expectations EUR m Q Q Cash from operating activities before changes in Working Capital Changes in Working Capital Increase in OCF driven by strong EBIT performance as well as higher contribution from working capital Net cash from operating activities after changes in Working Capital Net Capex Net M&A Capex spend increasing as expected and reflected in fullyear guidance seasonally strong capex expected in Q4 Net Interest 4-1 M&A: includes Supply Chain acquisition of Polar Transportes, a Life Science and Healthcare logistics provider in Brazil Free Cash Flow FCF slightly lower as a function of higher cash-out for capex and bolt-on M&A spend in the quarter PAGE 13

14 NET DEBT (-)/LIQUIDITY (+) Usual seasonal pattern, with strong deleveraging expected in Q4 2,437 in EUR m ,261-1, ,387-3,211 Net Debt (Dec 31, 2016) OCF before change in W/C Changes in W/C Net capex Other effects Dividend Net Debt (Sep 30, 2017) N.B: Net pension provision up to EUR 5.0bn (from EUR 4.6bn at end of Q2) reflecting discount rate decrease in Germany and UK by 25 bps (funding ratio at 71%) PAGE 14

15 PeP DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 4,024 4, % E-commerce-driven Parcel growth and international expansion lead to 4.4% organic increase EBIT PeP % EBIT growth remains driven by German operations t/o Germany % t/o International ecommerce - Parcel 0-5 <-100% Continued solid EBIT momentum on dynamic Parcel growth and good election-enhanced letter volumes combined with customary cost control Ongoing expansion resulting in strong topline growth (+33.4%, adj. for UK Mail: +12.9%), as expected not yet contributing to bottom line Operating Cash Flow % Operating cash generation lower due to WC movements Capex % Parcel network expansion, mainly in Germany PAGE 15

16 EXPRESS DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,358 3, % EBIT % Organic growth of 13.8%, reflecting strong TDI volume growth, higher fuel surcharges and active yield management. FX effects of -5.3% Margin increase of +20bp to 10.2% a result of active yield management and operating leverage driving improved aviation costs per unit Operating Cash Flow % Reflecting strong operating performance, with minor WC build-up Capex % Investments in hub and gateway infrastructure as well as aviation continuing - expected to accelerate in Q4 in line with Group capex guidance PAGE 16

17 SUPPLY CHAIN DIVISIONAL RESULTS Q EUR m Q Q Chg. Management comments Revenue 3,416 3, % Organic growth of + 6.1% - negative FX effects continue (-4.3%), mainly as a result of GBP and USD weakness EBIT % Increase of 2.1% adjusted for last year s restructuring costs (EUR -8m) as adverse FX partly offset good underlying performance Operating Cash Flow % Mainly reflecting operational growth together with phasing of working capital Capex % Limited spending reflecting asset-light business model PAGE 17

18 UPCOMING ACCOUNTING CHANGES IFRS 15 Revenue from contracts with customers Jan 1, 2018 No material impact IFRS 9 Financial instruments Jan 1, 2018 No material impact IFRS 16 Leases Jan 1, 2019 (optional: Jan 1, 2018) See next pages DPDHL Group planning for early adaption of IFRS 16 as of Jan 1, Implementation of all three new standards in one step - No restatement of 2017 accounts sufficient transparency will be provided 1) Early adoption of IFRS 16 allows transparent development towards 2020 targets 1) Subject to EU endorsement PAGE 18

19 IFRS 16 BACKGROUND IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for the customer ( lessee ) and the supplier ( lessor ) Under IFRS 16 1.) A lessee will no longer distinguish between finance leases and operating leases 2.) All leases will be treated similarly to the current accounting of finance leases The International Accounting Standards Board (IASB) issued IFRS 16 Leases in January 2016: - replaces IAS 17 - effective on or after 1 January early adoption permitted before 2019 DPDHL Group plans to apply IFRS 16 as of January ) 1) Subject to EU endorsement PAGE 19

20 OVERVIEW IFRS 16 VS IAS 17 IAS 17 (today) Finance Leases Balance Sheet - Asset - Liability Income Statement - Depreciation - Finance cost Notes in AR - Maturities B/S: Operating leases are not reflected on the balance sheet P&L: Operating leases are accounted for as a straight line expense Operating Leases - Lease expense - Maturities - Total amounts Rating agencies already taking P&L charge for operating leases into account New IFRS 16 (DPDHL: as of Jan 2018) Asset Depreciation Leases Liability Finance Cost Maturities 20 The vast majority of all leases will be accounted for on-balance sheet : Companies to recognize assets and liabilities for the majority of leases Exemption for short-term leases ( 12 months) and low-value assets possible No change in consideration by rating agencies IFRS 16 eliminates classification of operating or finance leases PAGE 20

21 IFRS 16: P&L IMPLICATIONS Revenuenue Materials expense EBITDA D&A EBIT Net finance costs Income taxes Consolidated net profit No changes Decrease as lease expenses to be recognized as depreciation and interest costs Increase due to lower materials expenses (elimination of lease expense ) Increase due to new depreciation of capitalized operating-lease-assets EBIT increase as operating lease expense replaced by depreciation and interest Increase due to interest cost component booked in finance cost No material changes Whilst neutral over time, timing effect due to higher interest during first years Main P&L effects: increase in EBITDA and EBIT, long-term neutral to net profit PAGE 21

22 IFRS 16: CASH FLOW STATEMENT IMPLICATIONS (1/2) Current DPDHL Group FCF definition does not catch all IFRS 16 related movements EBIT D&A Operating Cash Flow Net Capex Free Cash Flow (current definition) EBIT increase as operating lease expense replaced by depreciation and interest Increase due to new depreciation of capitalized operating-lease-assets OCF increases in line with EBITDA Former leases treated as right-of-use assets: no cash-relevant capex on first-time recognition Significant increase, but not covering new cash outflow for repayment of lease liabilities Reported FCF would be significantly higher but not show true FCF generation to shareholders anymore PAGE 22

23 IFRS 16: CASH FLOW STATEMENT IMPLICATIONS (2/2) IFRS 16 related cash-outs recognized in Financing Cash Flow should also be considered Financing Cash Flow - o.w. change (Repayments) current financial liabilities Significant increase, due to redemption of lease liabilities and additional interest paid NEW: Redemption lease liabilities => to be included in new definition of FCF - o.w. interest paid NEW: interest component on leases Cash & cash equivalents Cash is Cash : IFRS 16 does not change actual cash generation FCF definition to be adapted: OCF - redemption of lease liabilities - net capex - net M&A - net interest Free Cash Flow (new definition) Remains consistent and comparable through adaptation of its definition For fair comparison: adapted Free Cash Flow definition to be used as of 2018 PAGE 23

24 IFRS 16: EXPECTED IMPLICATIONS FOR DPDHL GROUP Scope at DPDHL Group: >25,000 leasing contracts, covering >35,000 assets Expected major impacts on 2018 numbers: P&L Balance sheet EBIT: expected increase of EUR ~ 150m Net debt: Expected increase of ~ EUR 9bn Current internal estimates: to be further validated FCF Credit Rating No change based on new definition No impact on rating and related metrics expected No effect on actual cash generation and debt rating PAGE 24

25 EBIT GUIDANCE CONFIRMED, 2017 TAX RATE EXPECTATION LOWERED EBIT, EUR bn 2017 (confirmed) 2020 (confirmed) PeP ~1.5 ~ 3% CAGR NB: pre IFRS 16 effects DHL ~2.6 ~ 10% CAGR CC/Other ~ < 0.5% of group revenue Group ~3.75 > 8% CAGR FY 2017: Free Cash Flow: > EUR 1.4bn Tax rate: ~13% (from ~15%) Gross Capex: ~ EUR 2.3bn PAGE 25

26 Q3 WRAP UP Q3 confirms that we are well on-track to deliver on our 2017 targets EBIT performance shows that we are leveraged towards growth - macro and structural (e-commerce) Divisional performances drive consistent Group profit and cash flow improvements IFRS16 to influence reported numbers but not actual operating and cash performance On track for another successful year, while working on our long-term ambitions PAGE 26

27 AGENDA 1 Q3 Highlights & Divisional Update (Frank Appel) 2 Q3 Financials, IFRS 16 & Guidance (Melanie Kreis) 3 DHL Global Forwarding, Freight Update (Tim Scharwath) PAGE 27

28 TIM SCHARWATH: WHY I JOINED DPDHL GROUP AS CEO OF DGFF #1 #2 #3 Market leader in Air Freight and very strong positions in Ocean and Road Freight A unique freight forwarding history and excellent reputation in the industry Part of a Group of companies with unique logistics competencies - DPDHL Large potential to extend market leadership & become the undisputed industry leader PAGE 28

29 TIM SCHARWATH: MY FIRST IMPRESSIONS AFTER +100 DAYS Strong team with high passion for freight forwarding fighter spirit especially in rough times Right behavior and values embedded in the company High engagement and great morale Service quality on an upward trend, supporting customer satisfaction on a high level Many right initiatives already started to address key challenges Solid business model which can be further strengthened PAGE 29

30 DGF CURRENT STATUS: Q3 HIGHLIGHTS Air freight 000s Tons Air freight gross profit +8.0% EUR m % Q Q Q Q Ocean freight 000s TEU 1) Ocean freight gross profit +8.5% EUR m % Business Highlights DGF continues to participate fully in market recovery with good volume growth in Air and Ocean freight Market conditions improving slowly but pressure on GP margins remained in Q3 (yoy: GP/Export ton -9.8% and GP/TEU -14.9% ) After difficult H1, market discipline continues to gain ground and further stabilization seen towards quarter end Persistent focus on productivity and efficiency helps sustain EBIT margins during challenging transition period for the forwarding industry Q Q Q Q ) Twenty Foot Equivalent Unit PAGE 30

31 DHL FREIGHT: GOOD PERFORMANCE IN ROAD FREIGHT Q3 Revenue Q3 EBIT Business Highlights 1,025 Q % 1,053 Q M Revenue +225% 4 Q M EBIT 13 Q EUR m One of the leading European road freight networks Motivated employees and high customer satisfaction Very good development in 2017 with visible growth perspective EUR m EUR m Improvements in quality and productivity -1.5% +130% Sales effectiveness initiative kicked-off 3,176 3, Saloodo! with good progress as digital platform 9M M M M 2017 PAGE 31

32 DGFF CURRENT STATUS: Q3 FINANCIALS EUR m Q Q Chg. Management comments Revenue 3,362 3, % Growth fueled by strong markets and new business. Organic increase of 8.3% adjusted for FX effects Gross Profit % Decline as a result of continued market-wide GP margin pressure, although improved performance vs Q2 EBIT % Results and margins supported by sustained focus on productivity improvements Operating Cash Flow % Slight improvement in-line with EBIT growth Capex % Stable as a function of low capital intensity of business model PAGE 32

33 WE HAVE A SOLID BUSINESS MODEL IN AN ATTRACTIVE INDUSTRY DGFF: recent EBIT margin and ROCE history 60% 50% 40% 30% 20% 10% Fragmented market structure: room for further growth Global market share Freight Forwarding, based on external revenues 2016 Top 6 Tier 2 Other 33% 26% 41% DGF K+N DB Schenker Expeditors Panalpina DSV 0% -10% -20% EBIT-Margin ROCE excl. goodwill ROCE incl. goodwill Forwarding market share 2016 SOURCE: SEABURY; TI 2017 REPORT; REVENUES INCLUDE INTERCOMPANY SEGMENTS TIER 2 FREIGHT FORWARDERS COMPRISE, A.O, GEODIS, KINTETSU, AGILITO, YUSEN, KERRY, DAMCO, UPS, C.H ROBINSON, HELLMANN, PANTOS Attractive return profile for top players in highly fragmented market PAGE 33

34 A NUMBER OF CHALLENGES NEED TO BE ADDRESSED Short-term: Market pressure High market volatility Particularly challenging AFR environment OFR carrier consolidation and strong rate fluctuations Mid-term: GP-to-EBIT conversion is well behind best-in-class Decision-making and execution takes too long Complex structures and processes Working together as one network No state-of-the-art IT systems yet and new digital players entering PAGE 34

35 SHORT TERM CHALLENGE: AFR MARKET ENVIRONMENT AFR market challenges Measures Challenging market environment through high demand and declining capacity leading to all-time high buying rates Ex-Asia challenge especially worsened by carriers strategically decreasing capacity Peak season ongoing rates expected to remain high Increased block space agreements ex Asia to mitigate increasing rates Introduction of own controlled capacity, around-the-world and charters Exhaustive peak season preparation in execution PAGE 35

36 AROUND THE WORLD CHARTER - OWN CONTROLLED CAPACITY Objectives Ensure sufficient capacity, especially on transpacific routes, for key customers (Norwegian seafood) and maintain DGF s unique service provider position Control operational aspects and offer dedicated in-house product Solution Charter a Boeing freighter and deploy on a dedicated route to serve the highpressured trans-pacific market Create stable, year-round cost platform and encounter exposure to high peak cost Around the World Freighter Route Map 2 nd Rotation departure Sunday 1 st Rotation departure Tuesday and Friday ANC: Anchorage, CVG: Cincinnati, BRU: Brussels, OSL: Oslo, GYD: Baku, CGO: Zhengzhou; PVG: Shanghai, ICN: Incheon. PAGE 36

37 OFR CHALLENGE: INCREASED RATE VOLATILITY OFR market challenges Measures Five carriers control >70% of the market Consolidation of carrier landscape expected to continue Majority of carriers still not generating sufficient returns upward pressure on rates expected Continuously execute carrier strategy incl. active management of carrier portfolio Leverage lower spot rates in the market Optimize routing to reduce cost of sales PAGE 37

38 A NUMBER OF CHALLENGES NEED TO BE ADDRESSED Short-term: Market pressure High market volatility Particularly challenging AFR environment OFR carrier consolidation and strong rate fluctuations Mid-term: GP-to-EBIT conversion is well behind best-in-class Decision-making and execution takes too long Complex structures and processes Working together as one network No state-of-the-art IT systems yet and new digital players entering PAGE 38

39 WE HAVE A CLEAR PLAN TO MOVE FORWARD PAGE 39

40 SIMPLIFY: IMPROVE EXECUTION, OWNERSHIP AND INCENTIVES Challenges Simplify Decision-making and execution takes too long Complex structures and processes Working together as one network No state-of-the-art IT systems yet and new digital players entering 1 Adherence to a set of clear business rules along three areas: Mindset and behavior Roles and responsibilities Steering and incentives 2 Structural cost reductions on all levels 3 IT Renewal Roadmap (IRR) PAGE 40

41 1 Clear business rules: steering and incentives Initiated measures Strengthened focus on EBIT as the basis of bonus Only one EBIT number for incentivization of countries, regions or global Bonus will be more heavily weighted towards EBIT performance Conversion rate is more important than productivity Strong cost discipline targeting especially indirect cost already as target in 2018 budget GP-to-EBIT conversion rate as the central financial KPI being more important than productivity, i.e., we accept lower productivity if this leads to a higher conversion rate PAGE 41

42 2 STRUCTURAL COST REDUCTIONS Review of activities and processes on all levels (global, regional, country) to further reduce indirect cost Continuously leverage consolidation possibilities with captive service centers on all continents Insource of finance service center from external provider into own service center PAGE 42

43 3 MOVING TOWARDS STATE-OF-THE-ART IT SYSTEMS: OUR IT RENEWAL ROADMAP (IRR) IS WELL UNDERWAY Current status Global Transport Management System (TMS) rollout is underway with successful implementations for OFR in pilot countries Further global deployment of selected systems in progress, e.g.: - Shipment visibility - Electronic Document Management - Harmonized Quotation tool complemented by online functionality Next steps Continue rollout of Global TMS for OFR at scale Continue step-by-step renewal of IT system and process convergence Offer selective new service features leveraging deployed technology PAGE 43

44 NEW DIGITAL PLAYERS ARE ENTERING THE MARKET The threat is real Digital players address important customer needs, esp. visibility and invoice accuracy There is a value proposition & money in the market but we have a strong hand Pure digital does not seem to work; start-ups shift into physical models (ops personnel, warehouses) With IT Renewal Roadmap we can deliver similar/better functionalities We have forwarding expertise and are close to the customer to build superior solutions PAGE 44

45 DGFF SUMMARY: AMBITIOUS YET ACHIEVABLE PLAN Forwarding is an attractive industry and DGFF has a leading franchise, brand and people to be a successful industry leader We know our weaknesses and are committed to bringing our practices to best-in-class levels Our plan is ambitious, but the steps to address our short- and medium term challenges are well-described and accepted We remain committed to our goal of benchmark conversion ratios and profitability PAGE 45

46 AGENDA 1 Q3 Highlights & Divisional Update (Frank Appel) 2 Q3 Financials, IFRS 16 & Guidance (Melanie Kreis) 3 DHL Global Forwarding, Freight Update (Tim Scharwath) CEO CEO conclusion Wrap-Up PAGE 46

47 CEO WRAP-UP Making continuous progress towards our financial and strategic targets Unique global footprint for e-commerce logistics growth opportunity now supported by the macro environment Divisions are executing on their plans: providing earnings and margin uplift today, while optimizing growth and cost positioning for the future Clear commitment to continued innovation and investment to provide organic growth - all while generating sustainable shareholder returns Successful long-term strategic planning delivers benefits today and provides growth momentum into the future PAGE 47

48 DPDHL INVESTMENT PROFILE Global Powerhouse of Logistics Clear Strategic Direction Our roadmap for margin and profit improvement Sustainable Growth Momentum Unique position for e-commerce Increasing margins and returns Divisional self-help agendas Investing For Growth Innovation, quality & customer centricity Delivering attractive returns Committed to FCF growth and improving shareholder returns EBIT Margin 1) 8.1% 4.4% 11.3% 8.3% EBIT margin 1) 2.7% 1.8% 4.3% 1.9% Q PeP Express Q Q DSC DGFF Q