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Good afternoon, ladies and gentlemen, and welcome to today's conference call. [Operator Instructions] Let me now turn the floor over to your host, Mr. Martin Ziegenbalg.
Thank you. Hello, and good morning, everyone, out there. Thank you for following our last night's invitation to this call following our release last night on preliminary Q1, our decisions on AGM and guidance. As announced, we have Frank Appel, Group CEO; and Melanie Kreis, CFO, here with us to take you through the presentation that we have sent with the invite or that you can find on our IR website at this point in time. And I think we should be done within the 60-minute time frame. So without further ado, over to you, Frank.
Yes. Thank you, Martin. Also good morning from my side. Let me go straight away on to Page 2. I want to give you a brief summary, then an update on volume developments, in particular for the divisions, and then Melanie will summarize the preliminary numbers for Q1.On Page 3, you can see what is currently on our mind. First of all, of course, it's our main priority to protect our people and provide great service for our customers. We are doing everything we can, following the instructions of the governments or WHO to protect our people. We are in a fortunate situation that in most markets transportation of goods is allowed and seen as essential. And the people who are working for us at the moment are doing an outstanding job. I'm really impressed and proud of our workforce. They are so committed. They feel themselves proud that they can help the planet to move on in that very difficult situation. Of course, we see headwinds for our EBIT because, overall, the activities are on a lower level. We have, and Melanie will explain more about that, about -- close to EUR 600 million EBIT, including all onetimes, like the COVID-19 of EUR 200 million and the provisions we have built for the restructuring of StreetScooter. We also have -- based on the uncertainty we are in at the moment, we have a little -- very little pause to somehow what might happen and how big the impact is. Therefore, we think it's a prudent decision to withdraw the guidance. But we equally are confident that if things are recovering, which we expect, of course, until latest 2021, but probably earlier, that we want to confirm our guidance, our EBIT guidance for 2022. We also have announced yesterday that we want to move the AGM in a situation when the situation is a little bit more stable and we have more forward-looking. We say as well that we intend still to pay the dividend later this year when we have the AGM, but we said it's the right decision at the moment to postpone the AGM. Finally, from our side, what we said before, we are in very good shape as a company. That, of course, is a good situation if you go in such a massive crisis. Our balance sheet is in good shape. Our liquidity position is in good shape. And we have a very clear strategic focus. So that's the reason why we believe we are well equipped. But of course, such a crisis generates impact for our company as well. So let me then turn the page to Page 4 along our 3 bottom lines. It's clearly visible that our purpose we have now for 11 years, connecting people, improving lives, is very meaningful to the people in our organization. And that's the reason why we believe the heavy investments we have done in the last years and certified in employee engagement, Great Place to Work, all this kind of stuff are paying back now because we have seen a tremendous morale of our folks out there. Of course, we are doing our utmost to protect them, to stay healthy and save themselves. But again, I only can say a compliment to our frontline employees for the outstanding performance. That has led to the situation, despite that we see in some situations disruption, like in India, before in China or now in some parts of Europe, that we are doing our utmost to keep really the best service quality. And I have to say so far, so good. We really have -- we can be satisfied with the performance. Coming to the investment of choice, of course, our operations are in full swing. But nevertheless, we have lower volumes, and that, of course, has impact on our EBIT number. Despite that, all divisions are still -- have positive EBIT in the first quarter. I'll then go to the details and volume development, in particular, on Page 6 for P&P. What we have seen, we had a start into the year as we expected between 5% and 6% decline. But now it has accelerated, and the reason for that is currently only that direct mail volumes -- direct marketing volumes are going rapidly down because customers are stopping to do advertising if they are closed down anyway. We have seen, on regular communication, very little so far. On the other side, we have seen a good start in the range of 5 to -- 0% to 5% parcel volume. But in the last 2 weeks, we have seen a significant increase in our volumes. And we said on last Friday already, we expect for this -- before Christmas volumes. And of course, that's a challenge for the operations, but we are doing our best to manage these kind of volume increases. The financial impact in the first quarter was about EUR 40 million. And that is, of course, against the expected run rate we are reaching in our plans to deliver about EUR 5 billion. So that is on P&P. On Express, we have chosen to demonstrate here what happens if the crisis is normalizing in China. We saw a significant drop in absolute volumes in TDI in China. Of course, that was also influenced by Chinese New Year. But it didn't recover rapidly, but now we really see significant volumes coming back in China, which is encouraging. In Europe, we are now in the middle of the crisis, so that we see a decline in volumes. But we expect a similar pattern if the lockdown is relieved or released to a certain extent, and we should get additional activities and we should see increases in volumes. So we expect that this pattern will follow the Asian model. If it's as fast as in China, to be seen. But the measures the governments have taken apparently are now working and have reduced the number of new infections, as you all have seen. So overall, Express is working extremely well. The service quality is great despite that we have, of course, some missing values-based capacity for commercial lift. The team is doing a great job to find additional freighters or to use our own airplanes for further rotations. The impact was EUR 90 million, not unexpected because we have lower volume and lower utilization. But on the other side, we also have higher cost to protect our people. But of course, there is some movement on yield. But we can't do that too much because we see as well that our customers should expect from us that we are recovering -- can expect from us that we are recovering additional cost, but we are not increasing prices to a very high level to benefit from the crisis. DGFF, the volume development is, here as well, the same. EBIT, of course, came down. China is recovering. Ocean as well. Road is down in Europe as well due to the lower activity. We see a recovery and we expect -- in Asia, and we expect similar patterns for Europe and the U.S. to come. If it goes along, the rates are, of course, extremely high at the moment. The transparency is high. And that has led, despite a significant volume decline in the first quarter, to a relatively stable profit. As you can see, that we only had an impact of EUR 30 million, which is, I think given the tight market or low market volume, extremely good performance, I think. And we are very happy what we have done. Again, here, the focus is on service quality. We get a lot of thanks from customers because, of course, capacity on airfreight, in particular, is a very limited resource at the moment. The joint Supply Chain, different by sector. So we see some upgraders like life science, health care or some grocery. Of course, retailers, fashion or automotive are down. Again, the challenge here is how you manage the volatility. In some facilities, you will need more people. In others, you need hardly anyone. And of course, the ops people are working intensively to manage that. The impact has been EUR 30 million. So also here, we see some impact. Finally, eCommerce Solutions. B2B volumes are, of course, slower. But B2C growth is intact. India had a quite complete lockdown. It's getting released again, and we see increasing activity on a lower level than normally is happening. Focus, again provide great domestic and cross-border service. People are doing a great job. And here, we have seen the least impact of EUR 10 million in the quarter. And with that, I would hand over now to Melanie to give you a little bit more insight into our financial numbers. Thank you very much. And Melanie, now the floor is yours.
Yes. Thank you, Frank, and good morning, everybody, also from my side. I'm turning to Page 12 where we have tried to put together our best understanding of the Q1 2020 numbers. The first 2 columns are the Q1 2019 numbers, where obviously we had a significant positive onetime benefit from the disposal of our Chinese Supply Chain business. So if you adjust for that, the comparison is EBIT of EUR 814 million in Q1 2019. So how did we do in Q1 2020 compared to that? The third column shows you our reported numbers. And those reported numbers obviously impacted by COVID-19, order of magnitude is around EUR 200 million. And we had EUR 230 million hit from StreetScooter in line with our full year guidance of between EUR 300 million to EUR 400 million. So the reported number is about EUR 590 million. The clear caveat here is those are preliminary figures, which is also why we're giving you rounded numbers, you may have spotted, if you add up the divisional numbers, you actually end up with EUR 580 million. This is due to rounding. I think those numbers are not going to deviate in the final picture materially. So I think this is a very good indication for how we have done in Q1 2020. Looking at COVID-19 impact, EUR 200 million. Frank already mentioned the numbers by divisions. I think in terms of final phasing between Feb and March, end of Feb we had anticipated between EUR 60 million and EUR 70 million for Feb. We saw in the beginning of March, that was probably more at the lower end. I think when you do the best allocation between Feb and March, it's probably EUR 50 million in Feb and EUR 150 million in March. March is higher than Feb because now we have seen the spread of COVID-19 to more regions. And on that basis, all of our divisions have now been impacted in March and for the first quarter. I think, for me, the very positive news is that even including the EUR 200 million COVID-19 impact, all our divisions delivered a positive operating result in the first quarter. I think that's the first encouraging message here. And second encouraging message is if you adjust for COVID-19 and StreetScooter, we actually saw a solid year-over-year increase in operating results by around about EUR 200 million. In terms of free cash flow, we're still finalizing the numbers here. As you probably all know that we tend to have a negative free cash flow in the first quarter because we have a number of annual payments which are being made at the beginning of the year. Our current best estimate is for free cash flow to be around EUR 400 million, which would be a substantial improvement year-over-year because, again, in the first quarter of 2019, we had a significant positive impact also on the cash flow side from the disposal of the Chinese business. So that's the current picture. In terms of priorities, what are we focusing on and how are we trying to steer things from a financial priority perspective. That is what we have tried to put together on Page 13. So obviously, we are very focused on cash and liquidity. Starting with the EBIT side of things, we are, of course, looking for opportunities to work on the cost side. We are trying to find a balanced approach here, adjusting the cost base where necessary, but also being in a position to ramp up again when things get out of the lockdown mode. That is something we saw very clearly in China, where, based to our balanced approach on the cost side, we were actually able to ramp up quickly now in March. With regard to working capital, I mean, theoretically, if you have lower revenue, you should have a relieving impact on the working capital side. Let's see. The clear focus for the finance team is on collections. We did not see a material impact in Q1. Also in the last phase of March, payment behavior from customers was pretty much normal. But we are watching this extremely closely because we obviously have to expect some impact now in the second quarter. And last, but not least, on the CapEx side, we have categorized our CapEx projects. We will see some automatic delays in certain projects, for example, with regard to construction projects. But here, again, we're trying to take a balanced approach, and we don't want to sacrifice the future. So we're trying to continue with critical projects, but we're doing this in a very conscious and constantly adjusted and monitored way. That takes me to Page 14, where do we stand with regard to the balance sheet and our liquidity position. We started into the year and into the COVID-19 crisis with a very strong balance sheet. Our liquidity position at the end of last year was EUR 2.9 billion. We have a syndicated credit facility of EUR 2 billion, totally undrawn. We have bilaterals. And we have a very limited amount of maturities due in 2020. So we feel that we are in a comfortable position. Nevertheless, that does not make us complacent. We are watching this extremely closely both on the cost side and now particularly on the collection side. But I would say really, so far, also with regard to Q1, we feel that things are in a stable situation. That takes me to our guidance. As you can see on Page 15, quite visually, we have withdrawn our guidance 2020. I think there are 2 reasons for that. First of all, we don't have a crystal ball either, so we don't know how long the situation is going to continue. How quickly we will see a recovery. I mean that's one element. The second element is this approach of differentiating between the underlying performance and COVID-19 impact, which worked quite well for the first quarter is, of course, getting increasingly difficult. So now when we looked at Feb and March, we had a very good comparison, what was, for example, our Express volume growth going into COVID-19. That was a baseline against which we could really quantify the COVID-19 effects. Of course, with each week passing, that baseline gets more artificial. I think COVID-19 is the new reality. So we felt maintaining this differentiation would have been artificial and less and less meaningful. As soon as visibility increases, and I think that will be the case when we have a clearer picture for the main economies, Europe and the U.S. are coming out of the lockdown situation, we will work on the new forecast for 2020 and we will then give you a new guidance. Turning to Page 16. The second element of our guidance was and is our guidance for 2022, where we have not made any changes because we still feel that, yes, there will be a recovery and that should then put us back on track to deliver on our EBIT guidance for 2022, the minimum of EUR 5.3 billion. And we're also committed to our CapEx and free cash flow guidance there. With regard to free cash flow, we will have to see what is the COVID-19 impact for 2020. But in terms of underlying performance or based on what we have now seen in Q1 2020, we feel on a good path to deliver against those commitments. That's the financial overview. And with that, I will hand over to Frank for some closing remarks before we take your questions.
Yes. So you have heard from us that we were in good shape or better shape than ever before than we started the year and entered the crisis. Of course, that's still the case that we are in good shape. That's the reason why we have clear priorities. We want to protect our people at the best way. We want to keep our customer service up and running. And of course, we are focusing very much on the liquidity and the balance sheet strength. We have unfortunately, as Melanie said, a little bit limited visibility on what might happen in the next weeks even if I'm personally optimistic that the first signs of recovery, at least on the infection rate, is happening in some markets, and that should then lead, like we have seen in other markets, in particular in China, to a recovery of the economy. But it's too early to say that and it's too early to judge how long governments really keep the lockdown in place. That's the reason why we have done what we have done last night. The main focus, of course, going forward is that we provide great service for our people. And beyond the crisis, we will continue to invest into our core capabilities. I think we are in the good position that not only in we are in good shape, but also we have a very clear focus with our Strategy 2025 execution excellence and digitalization, other fees going forward. The world definitely will become more digitalized and the process will accelerate. That is, of course, nicely fitting to our strategy. Execution excellence is very much visible at the moment, on how important that is, and I think we can benefit from that in the long term. So overall, again, priority is manage the crisis, keep the liquidity in place and then focus on what can we -- how can we benefit after the crisis from our market positions. And with that, I hand over back to Martin. Thank you very much.
Okay. Thanks, Frank and Melanie, for the quick run through. And operator, we're ready now to start the Q&A sequence, please.
[Operator Instructions] And the first question for today have already come in.
Yes. Let's start with Rob Joynson.
I -- three questions from me, please, mainly on volumes. If we start with DGFF, you talked about a significant decline in volumes during Q1 for around each of Air, Ocean and Road. Could you perhaps provide some color on what volume growth was for each of those businesses towards the tail end of Q1, which will hopefully, therefore, provide us with some sense of the current run rate? And then second question on Express. With much of the passenger fleet grounded at the moment and airfreight is obviously spiking upwards in recent weeks, is DHL Express seeing incremental demand from customers that typically would not use an Express service? And then the final question on German Parcel volumes, where you've obviously seen quite good strength recently. Do you have any sense of the extent to which those volumes have been helped by one-off parcels? For example, people ordering printers for their home offices or that type of thing? I'm just trying to get a sense of the extent to which volumes trend may fade over the coming weeks if the lockdown continues.
Okay. So first of all, on the forwarding volumes, I'm a bit hesitant to give you concrete numbers because it is still hugely volatile. So we saw some encouraging trends on both Air and Ocean. So I would have said that it got better towards the end of the quarter and in March, but I don't see a sufficiently stable trend to give you any solid numbers on that. With regard to Express volumes, definitely, we see a lot of demand from regular customers but also from new customers. And we've seen a strong increase also from smaller shippers and over-the-counter, which has also helped us on the yield side. So there is very strong demand out there, particularly outperformance from China and increasingly also from the rest of Asia. With regard to the German Parcel volumes, yes, that's a very interesting question because we do see a number of mix effects at the moment. We see a lot of volume from big traditional B2C customers at the moment. There, I think in terms of what is getting shipped, there are differences. So I think fashion is a little bit less thought after than kind of like daily use goods. But in terms of the second, that doesn't make a difference for us. The interesting thing is that we do see a relatively strong growth also from small vendors and private customers. So we have seen quite a lot of volume coming in through our retail outlets, which are still fully open and operational across the country, which again should show some positive development on the yield side.
Yes. And overall, I think if you think about a little bit ahead, if you think about what might happen, so let's assume the market in Europe and the U.S. are coming back in the same way, what I don't believe will come back instantly is a lot of passenger traffic. People are learning now to work with their mobile activities and from home. And governments will probably be pretty reluctant to allow full-fledged travel again. What it means is that we will see a scarcity for airfreight capacity and value space for a longer period than just the lockdown. That's at least the assumption. And that's what you should see is that the Express operator should benefit and the ocean carrier should benefit to a certain extent. So you will see uptrading, downtrading until things are normalizing. When that happens? I don't know because that is a decision of individuals, which are very little to predict. It's not companies, it's mainly passengers. And if -- of course, the carriers can't fly empty airplanes. And that's the reason why we in Express will, of course, benefit from that situation. That's the reason why we are not playing games now with yields because we think that's not responsible. If you -- of course, we have to recover our extra costs we have, and that's the reason why we put some surcharges in, but not to extent the market would probably expect if you really see the rates and the market for freighters at the moment. And the ocean part will probably benefit. And the rail -- but the rail will not cover the impact. We have, of course, in DGFF an advantage, where the sister division is flying wide-bodies, and not every wide-body is 100% filled on a daily basis. So that gives us some opportunity. So that's the global picture. And that's not different from prices before because we always have seen that Express is a beneficiary from a slowdown in airfreight and ocean. But this time, the impact of the passengers are more severe than it has been in former crises, and it's not clear when this will get back to normal. So -- and we are nicely positioned for the long term on this because we have the most global network in Express and we have a very global network as well in DGFF without -- and that helps as well to get freighters, by the way, because also the big players should be -- have easy access than regional and local players because the people who have carriers or other airplanes, of course, are looking at who -- as a long-term partner potential.
Thanks, Rob, for calling. And we continue with a question from Tobias Sittig.
Two from me actually. Firstly, could you elaborate a little bit on the Supply Chain development? EUR 30 million hit, almost a 25% of profit in the quarter seems pretty harsh given that basically the real lockdown only started mid-March. So what's behind that? And going forward, what should we be looking at in terms of sort of would the 20% revenue decline have an overproportionate impact on EBIT? Or can you adapt the cost base more linearly going forward because it looks a bit overproportionate there? Secondly, could you explain a little bit the increase in the Corporate Center cost year-over-year? Is that due to underlying cost inflation? Or is that a function of lower internal cost allocation?
Yes. I think very good questions. So first of all, on the Supply Chain side, I do agree with you that the EUR 30 million looks relatively large. I mean Supply Chain is actually the one division where we had a bit of bad debt impact from a very specific customer that contributes here. I think, in general, also in terms of are we able to manage the situation in Supply Chain, there's a degree of cost variability. It very much depends on the country. So given that we have certain sites where nothing is happening at the moment, the key question for those sites is, what can we do to work with our people there? And what does the contractual agreement with the customer say? And that is really very much dependent on the country and on the contract specificities. It takes some time to work through it. What we now see is that we normally tend to find good solutions, but there's a certain time delay, which I think also explains the hit you saw in Q1 for Supply Chain. In terms of Corporate Center, our -- there are a number of more phasing-like one-off effects. We actually also have a bit of cost increase in Corporate Center due to COVID-19 because we have our IT infrastructure and all the additional measures there, which we didn't specify. I think in terms of underlying run rate, there's nothing to worry about. So I wouldn't over-interpret the Corporate Center number.
May I ask one follow-up on the dividend, please? Is there any causal relationship between you paying a dividend and you applying for Kurzarbeit or taking any form of support there? Or what would hinder you from actually paying the full dividend this year?
Yes. So I mean, legally, if we would get into a situation where the government would actually take an equity stake in us, I think that would be a hindrance element for the dividend. That is very clearly not on our road map. So at the moment, we don't have any reasons to believe that there would be some legal limitations for us to stick to our dividend payout plans.
Yes. In Kurzarbeit, I think what is the purpose of the Kurzarbeit? The purpose of the Kurzarbeit is not to subsidize companies. The purpose of Kurzarbeit is to keep people employed. And that is, of course, our objective as well. And due to 2 reasons, one is our responsibility for people that we keep as many people employed as possible; and second, it would prepare us as well better for the recovery. And you can see that Germany went out of their last recovery quite rapidly, financial market crisis, because there was a Kurzarbeit. And some European countries have now copied that model somehow to subsidize because it's better to keep the people, particular in markets like Germany where you had a labor shortage recently. So the objective is to keep as many people as possible. But this is not state aid in narrow sense, I think. And I think that needs to be understood as well. But on the other side, talking about the whole theme of the AGM. I think we always have to balance. And you have seen that as well that some companies got significant headwinds with doing certain things and announcing certain things. I think we have to keep everything in balance. We have to secure that the company goes well through the crisis. We have to keep our shareholders' trust in shape. And I think the timing is important. We have to keep our reputation in the best possible shape. And these things need to be balanced, and that's the reason why we came to the conclusion. I think it's good at the moment, even not knowing how the online AGM would work, by the way, because that's -- it's a rapid decision, the launch, but we need careful consideration as well. But I think the right decision is to postpone the AGM to a later part of the year, but keep the dividend and -- at the same level so far.
Okay. Thank you for this. And let's continue right away with David Kerstens from Jefferies, please.
Just 3 questions, please, from my side. First of all, I was wondering if you could please shed some more light on the EUR 0.5 billion underlying improvement in free cash flow. I understand you managed to hold up adjusted EBIT very well at last year's level, and you suggested this was not yet driven by a decrease in working capital. So if you could please clarify what was the EUR 0.5 billion improvement in free cash flow.Secondly, do you have any further detail on the breakdown of the mail volume decline? I think Dialogue Marketing had initially said that, that would be down more because of the change in regulation, and now you see the impact from COVID-19. So a better understanding of what's the drivers between Dialogue Marketing and Mail Communication would be very helpful. And finally, I was wondering what you make of the news overnight that Amazon in the U.S. is stopping the delivery for third-party customers. I don't think they're doing that yet in Germany. But do you see any pressure on their network in the current situation? Are you able to benefit from that?
Yes. So Melanie can take the first and I'll take the second. So overall, I think it's too early to say because the lockdown only started in the second week of March in Germany. What we really see is that people are just stopping advertising. If you have -- and you have a lot of local customers who have stores and sending them out special invites for sales they have, and they have not restarted. Maybe that changes again in the future because, actually, Dialogue Marketing or direct mailings need to be increased to get knowledge from your own store, if you want to do now some sales online and whatever, but that has not happened yet. On Mail, we have not seen a major impact yet on our volume. So it's an acceleration, but it's -- one effect is, of course, continuing that we have a reduction due to the change in regulation, which is uptrading to Mail Communication. And we see that trend. We have seen that trend in the first weeks, and we have seen an acceleration because people are just stopping advertising. There was a second part to that. I didn't write it down, unfortunately.
Amazon.
Yes. Amazon. So I think that's too early to say. What we definitely see is that some customers are -- we see more volume coming out, sometimes direct. That is what we can see. Anecdotally, if that's a trend, we will see. And of course, there is a limitation of how much volume we can digest. It depends a little bit how much additional volume is now coming into the market. The capacity of deposit delivery of the combined industry is not sufficient to deliver as much volume as usually is sold online and off-line because e-commerce was about 20% of the market. So we can now assure 80% increase in volume in the whole industry. So if that happens and everybody goes online, then definitely the capacity of the industry will not be sufficient. And I'm not talking at last about us. I'm talking about everybody, and it will not be sufficient. It's not the people who make the deliveries. It's more of a certain capacity which will become a constraint. So far, that's not the case, but we don't know how much volumes will go up. And then we have to see what that means.
So to the first question, why was free cash flow so much better? And I think there are 2 elements. The first one is the improved quality of our underlying performance. I mean just looking, for example, at the P&P results. Even including the COVID impact, it was EUR 100 million up in terms of build. And this is really also materializing in the operating cash flow. So the first element is the better underlying performance of our business. And the second element is what we said in connection with our Q4 numbers. We had a much more moderate approach to managing working capital in the year-end 2019. And hence, we had a significantly better swing back on the working capital side in January than what we had in January 2019.
David, clear enough?
Yes. Great.
Great. Thanks. And we continue with Andy Chu from Deutsche Bank.
Just one question from me, please. Just in terms of the COVID-19 effects, so that's very difficult to say what's going to happen to the year. But do you have any sort of flavor as to what the sort of short-term impact of COVID-19 could look like for April and May? Because clearly, that's very near term. We're obviously in April. We know what or we know what's happening to volumes across the group. But the sort of ramp-up in the Feb EUR 50 million to March EUR 150 million number, what do you think that, that could actually max out at short term? Is it possible to give us a flavor of that or not?
I would love to have the answer, but I think it's really not -- impossible to answer that question with some form of solidity. When you just look at development we saw in March and how much it changed from week to week in March, now looking at what we saw in the first week of April, to extrapolate that even for April, I think, is nearly impossible. I mean for example, when you think about the speed with which the volumes finally came back in China in the course of March. So do we now assume that something similar will happen in Europe in week 2, in week 3, in week 4 of the quarter? I think it's really impossible to predict that with any form of solidity.
Okay. Andy, that's what we have right now. And we continue with Cristian Nedelcu from UBS.
Three questions, if I may. The first one, coming back to one of the previous question, so the weekly numbers. So weekly volume numbers you noted for Express and for Post on direct marketing, I mean, very useful. I mean one thing that is obvious is that the week 14, the level of volume decline seems to be more -- seems to be higher than the averages seen in March. So I guess just based on that comment alone, that would indicate that the headwinds, the profitability, at least early April, seems to be higher. Is that fair to say? Or do you actually see -- on the cost offset, do you actually see more actions that you can make and here you're seeing more benefits from that side? Secondly, I remember you mentioned previously that the StreetScooter situation would allow for a bit of working capital relief. It doesn't seem to be the case that this had a benefit in Q1. But do you expect over the next quarters a bit more cash inflows from the working capital related to StreetScooter? And if you can help us quantify that to some extent. And the last one, if I may, please. I believe that direct marketing revenues, and please correct me if I'm wrong, but I have in my model around EUR 2 billion of direct marketing revenue. You talked about the double-digit decline in install as we enter April. Can you give us a bit more color? Are we looking below teens declines? Are you talking about 30%, 40% decline in the volumes in direct marketing?
Yes. May I take the first and the last, and Melanie, you take the middle one and the last one. I think we should not talk about weekly numbers now and say this is the impact. I think this is a little bit rough, and therefore, I would abstain to share. And that's the reason why we didn't show these numbers because it's unclear that it's a trend. If you look into newspapers, for instance, they see an increase in advertising for local shops who now have a website. So I'm not sure if not -- certain things will happen rapidly. But if the lockdown is continuing, then stores will say, okay, I need to send out material to the customers. I need to make people aware that I have a website. They will not be found in the Internet without actual intention. So they might come to the conclusion, okay, it's better that I send a direct marketing mailings out because that raises attention and maybe local people will say, okay, I buy there instead of buying on the portal somehow. So I can't predict that. That's the reason why I'm always cautious in saying it will now go to this level or it stays on that level. And it's changing every week. We have seen a relatively slow start. Then the market already talked about massive volume increase since early March for online. Nothing happened. Why? Because the people stayed at home and watched just the media, what's going on with corona? Now we see in the other extreme, the people say, Easter is coming, and they are used to that. And now they start ordering because they are bored at home and we might see a wave which will diminish again if people are getting, again, normal or they are allowed to go back to the office. So it's so unpredictable that we can only describe what we have seen. If that's the basic for the April numbers, I would seriously doubt that this is a prudent assumption. And that's the reason why I think we have to be very careful, and that's the reason why we intentionally didn't show you absolute numbers or relative numbers because every assumption you would make would be wrong. What we have to do as a company is we have to be as flexible as possible, and we are doing that. We are transferring people from mail to parcels. We are transferring from people from supply chain to parcel and so on. It might be the other way around soon if volumes are coming to normalize or the lockdown is finished in Germany. So that's the reason why we had a discussion in our senior team, should we not show the percentage point. We came to the conclusion, all these percentage points are misleading because if you take one as too positive, then you are wrong. And if you take one too negative, you are wrong as well. And that is what the reality is at the moment. I can't tell you what will happen in the next 2 weeks with volumes. There might be even a stabilization or increase in direct marketing mailings to the reasons I have just described. We just launched a process where we help now to get small shops online. We have developed that with partners in 9 days, but we are too late. Customers are flooding us with volume already. So because there isn't a lead any longer, they found solutions to get online service done. So I think the reality is it's so volatile that don't make any assumptions in your models because they definitely will be wrong.
So with regard to StreetScooter, I mean, what we said is that we expect a P&L burden of between EUR 300 million to EUR 400 million from StreetScooter, but the impact on cash is going to be limited. And why is that? Because we actually had quite a lot of cash burden from StreetScooter in 2019 also through the buildup of working capital. So we have a lot of unfinished and half-finished vehicles in working capital on the balance sheet, which is now going to be put into operations and into use in the course of 2020.
Question answered. Perfect. Let's continue with Mark McVicar from Barclays, please.
Two questions, please. First of all, I mean for Frank, can I just come back on this issue of the AGM and the dividend. What sort of delay do you and the Board have in mind? Are we looking at 1 month? Is it 3 months, maybe 6 months? And what would have to happen for you not to pay or not to be able to pay or not be willing to pay the full EUR 1.25? That's the first question. And the second one is we've heard from a couple of other postal businesses elsewhere in Europe that they've spoken to their regulators and are slightly reducing service quality to try and keep their network running as best they can, given rising absenteeism. Are you still planning to fully deliver the regulated service quality? Or do you think you might have to step back from some of that with the agreement of the regulator at some point?
Yes. So maybe on the second question, I'd comment on. So the absenteeism actually has stabilized. We see that. We have not -- we're obviously a rising star. I mean now we see a stabilization of absenteeism in the markets who are already longer in the coronavirus. That shows the commitment of our people to go back to work and work for our companies to provide great service. They really feel proud of what we are doing. If we really have to come that -- if volumes are dropping massively and we are at 20% or 50% level, of course, then we can't provide the same service in Germany. And of course, I think there will be acceptance from the public for these kind of things. But we're far away from the situation at the current stage. In Express, as I said, we probably have now a delay on certain routes to Africa because we used only commercial lift. But we are providing full service to Africa. And of course, customers are happy that there is still some service, but I think that's depending on the comparative situation. But I think we have, everywhere, still best in cloud services. On the AGM, we have not given a date yet because we don't know how long the situation will last. We want to have, first, the stabilization. Our priority would be that we have AGM with people being present, and that needs still then the preventive -- that governments are allowing that. We don't have any visibility on that at the moment. That's why I don't want to speculate when that will be. Between the date that it's all allowed to come together in a place and that we can then hold the AGM, there is a lead time to that because we have to prepare for that as well. Of course, we are looking into and trying to book already facilities on certain days, but it's too early to comment which one is probably finally the right one. So I think there is a time lag between that the governments are allowing meetings and how much -- when we can really perform that. On the dividend, that's just speculation. I always said to save speculation. But what we can't do, for sure, not as a company out for state aid and then pay the dividend. That is probably something I would not do because you can't explain that you are taking the money and pass it on to shareholders. I believe we are far away from that. We are very much down the food chain anyway. Our services are necessary to run any business. So if all our customers are going bankrupt, then we might have a problem as well or everybody doesn't pay any longer any bill, then we might have a problem. If that doesn't happen, I can't see any other reason why we get a real problem like I just described, that we need government money to survive. And that would be a moment where I would say, shareholders, I can't pay a dividend. If I need cash from the money to keep up and running and I convert the money I've just got to pay to the shareholders, I think that would not be acceptable from the public and I think we would make a big mistake. But as I said, Mark, a lot of things have to happen before that really comes even in our hands. And I'm not sure if then the government still have enough money to stabilize all the companies who have a liquidity problem.
Fantastic. Thanks, Mark. And we continue with Adrian Pehl from Commerzbank, please.
Three question from my side. First of all, on P&P. Assuming that the volume trends in your 2 subdivisions are staying as they were the last 2 weeks, i.e., week 13 and 14, I mean, is there a potential that actually structurally Parcel may compensate for the decline that you saw in volumes in Mail? And the second question is on pricing, pretty much in this division, but probably also with regard to all the other divisions. I mean you probably are in discussions with a lot of your business customers on pricing changes. So I was just wondering whether that is continuing in the current situation. Or are you postponing that as you partially you want to support your customers also to some degree? Or what's the status here? And lastly, on StreetScooter. You booked, obviously, Q1 impact of EUR 230 million. I was just wondering if there's a chance that actually that is the hit you're taking from it, more or less. I mean it's obviously already quite a big chunk of it. But I would have expected you to provide actually for the whole impact maybe in Q1 and then work some of it off. But maybe you could give some clarity what components actually you did book in Q1 on the StreetScooter EUR 230 million?
Yes. Melanie, I'll take the last and the first because I tried to do my best already on the first one. So maybe Melanie can add something, how much decline we can accept in marketing volume to compensate the Parcel. On the pricing, generally spoken, I think what we are not doing is we are not squeezing the orange and say, we don't care. There is a time after that crisis, and you should be very careful not to maximize your profit short term. I said that already, liquidity is important. So customers should pay for the services they bought, but we should not maximize EBIT numbers. That will not go a long way with any customers, I think. That's the reason why what we are doing actually, we put a surcharge in Expressing to recover the higher costs we have for commercial at the moment. But we are not doing that for our own airplanes. We are doing that for the additional cost we have for freighters we're hiring. The prices are going through the roof. And of course, we have to offer the protection measures we are taking. If you split your team, you have higher costs. The IT cost is one. It's a smaller one, but it's ending up and adding up to a significant amount, and we have to compensate. That's the reason why in Express. In Forwarding, of course, we can't do -- if the freighters are so expensive, we have to push it to our customers. But we are not doing premiums on top of that somehow. In P&P and Post, we are regulated anyway. And in Parcels, what we might have to do going forward is that we put limits into that. We can't give everybody the maximum volume. And therefore, we have to then -- if you want to give us more volume, you have to pay because we have to do workarounds to manage the volumes. So that's -- it's always driven by the idea, not to maximize the EBIT at the moment, but trying to compensate -- get compensation for the higher cost we have. That's the logic. And I, yes, in fully agreement and the Board that we are not squeezing the orange now because there is a time after the crisis, and people are hardly able to forget. I have to accept that we have to pay higher prices if we incur higher prices as well like in Forwarding. And they are happy to -- not happy, but they are willing to do that as they understand that. That's the reason why we declared force majeure already for quite some time in DGF because we can't provide the same service -- the service standards and for the same price, and that's the only way to do that. But we are not maximizing profits all of that, okay? That would be huge mistake if you do that.
Okay. To the first question for P&P, in March, we saw earlier decline in the Mail volumes then the uptick on the Parcel volumes. And what we now have to see in April is: a, how does that balance out on the top line, but also how do we manage it on the operations side. So I think on the operations side, we obviously have to look at the development of the business rate where we see encouraging signs of things now stabilizing. But we all of a sudden now, with regard to the Parcel volume, have been into our pre-Christmas schedule. So I think for me, it's a triangle equation between the Mail volumes, the Parcel volumes and how we manage the whole cost base. I think people are focusing on the right stuff. We have to see at the end what comes out of it. But I wouldn't overcut the whole March trend thing into April. With regard to StreetScooter, we booked indeed quite a lot of the balance sheet topics in Q1. But we couldn't book everything in Q1, and there will be more to come from StreetScooter, particularly in Q2. So our overall number of between EUR 300 million and EUR 400 million is the full year guidance for the StreetScooter impact.
But it has -- nothing has changed with regard to what we said at the -- a couple of weeks ago. And of course, the good thing is, as Melanie said, it's mainly noncash in that moment. I think it's an important message as well, that is write-offs or something we have already paid before.
Perfect. So 2 callers left I can see. Christian Obst from Baader Bank, you're next.
Just small balance sheet questions. I heard now from some companies, they're starting -- they're getting talks with their auditors that they are asking for higher risk premiums concerning cost of capital and so on and so forth. Do you also have these discussions with auditors? Do you see any difficulties going forward to keep the current intangibles at the current level? Or do you expect some kind of impairments going forward for intangibles or PPA?
Yes. So with regard to intangibles and goodwill, we had a lot of headroom, and we don't fully any issues in that area yet. Well, we don't see any issues here. I think the balance sheet topic we are most focused on at the moment is the receivables side. There, again, we didn't see anything in Q1. But that is the balance sheet item to watch in Q2, and we're all over that.
Thanks, Christian. Getting closer to the full hour with only one caller left. Daniel Roeska from Bernstein.
I'll try to fit it in the 3 minutes. Maybe a little bit longer-term color. So you're keeping the '22 guidance, and I'm sure you thought about the pro and contra on this. And is this more an expression of the limited foresight that's possible at this time or a sign of a strong conviction that by '22 the world economy will have worked through the current recession? Secondly, maybe also kind of long-term dynamics in the German market. Do you think on Mail there's a risk that there's a level shift in the Mail volumes so that kind of digital substitution increases substantially over the next 9, 12 months? And maybe longer term on Amazon. As they're building out their infrastructure across Germany, how do you assess the risk of price-based competitor responses on parcels in Germany? And then maybe the last one for Melanie on the cash flow. If we consider your midterm CapEx point, it's kind of EUR 9 billion. Doesn't crisis currently present a good opportunity to revise that budget? And what percentage of projects within those EUR 9 billion would you actually be able to review, change or cancel compared to projects that are more or less set in stone for the next 3 years? So kind of what's your CapEx headroom of flexibility that you may want to consider?
Yes. So let me take the first 3. So the assumption for 2022 are based on 2 assumptions. Yes, we should be back to normal, and we should, in our industry, be relatively stronger than we went into that. So as you know, we have great market positions in all our divisions anyway. And I believe that the stronger gets stronger in such a crisis, and the weaker will face more problems. So -- and that will, of course, help us to support these aspirations because I have no doubt that customers will remember that we helped, and some competitors might even go into bankruptcy. We don't know yet. But definitely, both those assumptions that we will be stronger after the crisis than -- relatively to our competitors than we went in and the economy will be back to normal. The long-term market shift, we had a test case some years ago, and we had a strike for 52 days. So we are much shorter into this crisis so far, and we had no major impact or acceleration of volumes after the strike. Despite that, of course, we had massive reduction at that time as well. So let's see. That's the only comparability I have. I doubt that this will make a massive change, and that's our assumption at the moment as well. With Amazon, they will continue to build their work activities. What I can say is from customers that we probably are the best performing, again, by quality. Some others are struggling with absenteeism and service quality. So the crisis, they'll learn and tell people that working with us is quite important for their business. And I think that's -- I think we are far away from price war in that segment anyway because we just changed it 2 years ago, and we have worked through that increasing prices. And that has worked pretty well, and I can't see any reason why that might change going forward. And with that, maybe Melanie you answer the last question.
Yes. So with regard to the CapEx headwind, I mean looking at the 3-year period, there's obviously a lot of variability and flexibility in there because we don't have many multiyear CapEx projects. So with regard to how much is actually already committed for '22, we have a clear understanding of directionally what we would want to do, but they're very limited commitments. So I think the more relevant question is probably with regard to the short-term CapEx, how much flexibility do we have under CapEx budget of 2020. And we have, of course, categorized all our CapEx project for the current year in the categories what is committed, what is not yet committed from the noncommitted stuff, how much do we really want to hang on to and how much could we move forward. And we also have a certain natural delay because certain projects just get pushed out because not much is happening on certain construction sites and so on. And also for the current year, there is quite a bit of delay, postpone, don't do flexibility. We are, at the moment, approaching this a very balanced way because we don't think that we're going to stay in this current state forever. And we don't want to do stuff short term which will then create a problem, for example, in the next Christmas peak. So it is a balanced approach. There is flexibility for the current year, and we're currently reassessing how much do we have to postpone and pull. But at the moment, we are still doing it in a very balanced way.
Yes. And I think you always have to -- as a senior team, and I'm very happy when I see my Board colleagues, myself and below that the agility to respond to what's happening is massive, but at the same time, the willingness to think about long term and midterm is equally valid for our senior people. So we have to balance both, and we will assess CapEx exactly in that way. You can't build capacity overnight. So you have to make the call constantly. And that's the reason why you have to monitor all these things all the time. You have to focus on what happens, and we are measuring that, what happens on your workforce on a daily basis, absenteeism and infections and protection that we discuss on a daily basis, which we offset. Then we have to look into liquidity, and the finance organization is looking to it on a daily basis what's happening. Then we discussed twice a week as a Board what else we need to do short term, midterm, long term, and we need to think all this in these 3 horizons on different scenarios. And actually, that is what the team is doing in a very agile world and very collaborative way. And that makes me very confident that because there will be an end to this crisis as well, hopefully, sooner than later, that the DNA of this organization is great for managing that and getting through that. And that makes me so confident what I've said before, we are in great shape before we entered into that and we will be in a very good shape as a company afterwards. Even if I would wish that we would not have such a crisis, but I see -- and that we're very proud of what the organization is doing at the moment. And therefore, we always have to say, maybe it's wise to spend most of the EUR 9 billion because that will make our company even stronger. And again, I -- we might have to compromise on EBIT on certain ways, short term, but we will never compromise on the long-term prospects. And that's the reason why we are confident that we can deliver EUR 5.3 billion in 2022. And we continue to invest into our business model, and we can because we have enough liquidity.
Okay. Thanks, Daniel. And thank you, operator. I think that concludes the Q&A round with no further questions out there. And...
I think I summarized already, but anyway...
That's the final word.
Yes. Okay. Well, then, thank you, Frank, Melanie, for your time. Thank you out there for your interest. Looking forward to catch up with you on whatever is going to happen now over the next weeks and month. And with that, I wish you a good rest of the day and given circumstances, stay healthy and safe. Thank you. Bye-bye.
Bye.