Deutsche Post AG
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Deutsche Post AG
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A very warm welcome, dear colleagues, here in the Post Tower. I have the great pleasure to welcome you to our Q3 Press Conference. And I will be the Chairman or the host of this session today. Before I continue, let me point out that we've got simultaneous interpretation, German on Channel 1, English on Channel 2. A big thank you on behalf of the entire board and to my team that you followed our invitation, and a warm welcome also to those following us on their screens via the Internet. We know that this has become more and more frequent in recent years, and we are very pleased with the combination of a physical press conference and the possibility to join us over the Internet. Please mute your mobile phones so that there are no interferences, which will make it easier from a technical standpoint. Before I say a few introductory words, let me introduce the 2 people next to me. CEO, Frank Appel, to my left; and next to him, Melanie Kreis, CFO of Deutsche Post DHL. I will first give the floor to Frank Appel, and together with Mrs. Kreis, he will describe the development of our business activities in Q3 2018. Then you'll have the possibilities to ask questions. And now, I give the floor to Mr. Appel.
Thank you very much, Mr. Ehrhart. Ladies and gentlemen, welcome. First of all, I'd like to give you an overview of the group's current position, and afterwards, Mrs. Kreis will give you all the details on our financial KPIs. How can I sum up the results of the quarter? Well, I can sum them up by saying that everything is perfectly in line with our expectations. After we changed our guidance in the summer, the DHL divisions are developing very positively, as you will see in a moment. And in the PeP division, we can see that our measures are bearing fruit, and that also positively impacted on our numbers. Overall, the economic environment is shaped by more uncertainty, it certainly hasn't become more stable. But we can say that we are well on track to achieving our goals, both for this year and by 2020. So let's take a look at the figures. This is not adjusted for currency fluctuations and M&A. But you can see that our business grew overall in the third quarter, slightly so in the PeP division. Last year, we had the positive effect of the German federal elections, which positively impacted on volumes. Express is also growing very strongly. Within forwarding and freight, we are also witnessing growth even though there is a bit of a volume decrease, but our measures have been very successful. And at Supply Chain, we can see that there's also growth even though growth -- even though the numbers are negative, but that is to do with the effect of the Williams Lea transaction from last year. So overall, a positive trend, organic strong -- organic growth has been very strong. And that is also reflected in a positive bottom line development. At PeP, we had to take into account major restructuring expenses to the tune of around EUR 400 million, but the result is not quite as negative as it may seem. Mrs. Kreis will give you all the details in a moment. At Express, the positive trend continues. The margins are improving. Global Forwarding, Freight is back on track to achieving the same record results as in the past, and Supply Chain has also developed favorably, and therefore, we are very satisfied overall. Even though the sum -- the overall numbers for the group are negative, this is still the second-best third quarter in the history of our company. And here you can see the organic growth rates by divisions, adjusted for currency effects and M&A activities. You can see that we've grown across the board to a different extent. And you can see that at Express, the successful margin trend is continuing. You can see that we reached almost 12%, and this is the 12-month average on a rolling area. Then there was the decrease within PeP, and in Supply Chain, a very positive trend. Margins have improved considerably within Supply Chain, that has been a trend for years. But at Global Forwarding, Freight, we also see a very positive trend. We are almost at the historically positive development that we witnessed a couple of years ago. We are well diversified, and there are different risk profiles, as you can see on this slide. There are 2 businesses that very much benefit from B2C and eCommerce business, and that is not directly tied to the overall economic development, because there is growth in these areas regardless of the overall economic situation in the world. Here you can see B2B Express and we have DGFF. These are 2 areas that are more dependent on the overall economic development in the world. Supply Chain is less dependent on that, so that is a balancing factor. And then there is the mail business, which is in decline, but there's only a small correlation to the development of GDP. Overall, our portfolio is very well positioned. As we've stated many times in the past already, and that helps us to protect ourselves from major fluctuations out there. However, there is also uncertainty in the markets. In the third quarter, the results in the DHL divisions were very positive, notwithstanding. But ultimately, we lost some EUR 50 million because of negative currency effects, but still, the figures in the DHL divisions are good. I mean, they are even better considering all the uncertainty in the markets out there. Nobody can predict what the future will look like, but it goes without saying that more tariffs and taxes and cross-border trade can't have a positive impact, but we are using yield management and other measures to make up for the negative repercussions of such political trends. Trade conflicts, nobody knows how they will develop in the future, but at any rate, they bring more uncertainty. The good news is that we are well-positioned to flexibilize our costs and to transfer activities here and there, and we can see that our customers are following us here. After all, we do have a global footprint. Fuel. Prices are, of course, a major economic factor. And usually, we pass on any changes in fuel prices to our customers after a certain time. Now let's take a look at the divisions. We had a very strong third quarter at Express, even though as a result of last year's cyber attacks, we were struggling. We had -- we can see a still strong growth year-on-year, not quite as strong as last year, and I think ultimately, we will reach the same levels as in the past. We can see very nice organic growth with revenue. Revenues per day are growing more strongly than volumes, which is a result of the yield measures, which are continuously implemented by this division. And you can see that growth continues to be very strong. Of course, there are differences by region as always, but overall, we are quite happy with this trend. DGFF. Mr. Scharwath has already introduced several measures. Volumes are decreasing, both in air freight and in ocean freight, but the margins that we are generating per container, per tonne have developed very positively. And as a result, you can see what is shown on the left-hand side of the slide here, namely the conversion rate of the gross profit to the EBIT margin. And the revenue margin overall has also increased, and we are now approaching the historical levels of the years 2012 and 2013, which is very favorable, and it is to do with stronger focusing. It is also to do with the fact that we are addressing indirect costs very strongly. And it has also to do with the fact that we are rolling out new IT systems. And here I'm not only talking about the new transport management system, I'm also talking about other things that we have improved considerably. And therefore, we are seeing a very positive trend overall that we expect to continue. And one of the main drivers is the aforementioned[Audio Gap]We are now active in around 40 countries. We will complete the rollout in sea freight by next year. Years ago in 2015, we decided to basically discontinue the HR suite and instead, we are now working on the new transport management system. Others started earlier to implement such a system, but they still aren't done, so we've made a lot of progress. We will also go live with this system in air freight before long in the first country. So sea freight will be the first sector that will be completed here, but that is followed by ocean freight. And this means that we will have perfect transparency in terms of all the shipments out there. Data processing will also become much more effective. Supply Chain. I would only like to talk about one aspect here. We recently announced that we are selling our domestic business there to SF at a very decent price, and we will enter into a strategic partnership. So we will still be able to share in the growth in the Chinese market, because we'll be paid a franchising fee. And we believe that this cooperation with a premium provider in the Chinese B2B business is the right step and it'll help us to establish a long-term strategic partnership that looks very promising. I think it's a good step for our company because SF is a very strong partner. Which brings me to the business that I'm responsible for myself, in addition to my responsibility for the group overall, which is, PeP. We can see a decline in volumes and also in revenue in the third quarter, which is slightly above the framework that we communicated but that is only because of the comparison with the positive effect of the German national elections last year, which boosted revenue. Adjusted for this factor, and that is shown on the right-hand side here, we are still within the range of the volume trends that we forecast in the past. So everything is back to normal here. And we are also witnessing strong growth in Parcel, both in terms of revenue and volumes. And the gap between the speed at which volumes and revenues are growing is shrinking, which is good. And that is also a first indicator that the price measures that we have initiated are bearing fruit even though it would be premature to say that this has already been completed. But internationally, the business is growing very nicely here. Now let's take a look at the PeP pricing measures. There are several things here. The German regulator made it clear that they still need to analyze some of the figures that we provided. That is to do with our profit warning, as a result of which, our forecast for 2019 and 2020 was changed, and the regulator first wanted to analyze what this means specifically. And the regulator told us that they will only take a final decision next year as to whether stamp prices, postage prices will actually increase or not. But we believe that there will be a good price postage increase next year, and we've also taken more pricing measures in terms of direct costs, indirect costs, sales activities. Let me start with direct costs. Here we've done quite a lot. Takes a while, of course, for these measures to be implemented and to show some effect. We will see some initial effects in 2019 and then, of course, also in 2020. We've identified various measures that are already showing some first effect, and we are only using what we deem to be the best solutions. We are rolling out new systems here based on the right master data, and therefore, the rise in costs now is much smaller than in the first half of this year. And as for indirect costs, we can see that the trend is improving from one month to the next, and we are able to bring the indirect costs down. One measure is shown here. We are redesigning the PeP organization. I'll talk about that in a moment. That is currently being implemented, and we are also discussing it with the other side of industry. But -- so things are still in progress here, but we are well on track. We are refocusing our core business. We sold the Fresh business and Allyouneed, and we are also focusing on reducing our expenses in terms of marketing and IT if we want to become more effective here. I already mentioned the reorganization of the PeP division. We split it up. Ken Allen, who was responsible for Supply Chain before, very successfully so -- or for Express rather, sorry, will in future be responsible for eCommerce and Parcel Europe. Ken Allen, as you know, is a renowned expert, and he has been a very successful member on the board for a long time, and I am very confident that he will be just as successful in terms of eCommerce and Parcel Europe. I myself will then be responsible for the German mail and Parcel business as of January next year. Now even though 2018 has been a difficult year, I am pleased to say that our employee opinion survey has produced some positive results. Employee engagement, plus-1 percentage point, for instance. And let's not forget, we have 500,000 employees, and 75% of them took part in the employee survey. So if there is an improvement by 1 percentage point, then that is already a major step forward. You can see active leadership, plus-1 percentage point; customer centricity and quality, plus-1 percentage point. And the PeP division is showing the biggest progress here, which comes unexpected, because there's so many changes in the PeP division, so much uncertainty, and we actually expected the results to be worse than in the past, but that didn't turn out right. They're much better than expected, which is good. And I'm pleased to say that PeP is making a major contribution to the positive trends that I've outlined. And that's a good indicator, isn't it? If the working morale is right, if people are motivated, then that will ultimately also have a positive effect on the figures. So this was my last slide. On a very positive note here, and with that, I'd like to hand over to Mrs. Kreis. Thank you very much for listening.
Thank you very much, Mr. Appel, and a very good morning. Mr. Appel already gave you all the essential information, and I will now follow with the slides with all the figures, but I will focus on the most important points, just underlining what has already been said already. Let me start with the group P&L for the third quarter. Here I would like to focus on 4 figures. First of all, revenues. You can see that we had 1.4% growth in revenues, and Mr. Appel already said that it -- this does not look very convincing, but we also had adverse FX effects, and we also feel the sale of Williams Lea Tag last year. And if you adjust for these effects and have a look at organic growth, we have 4.7% growth. So the growth dynamics, in spite of all the uncertainties Mr. Appel already mentioned, continues unabated. If you now have a look at the EBIT line, this doesn't look that pleasant, declined by 55%. The main driver, as was already mentioned, being the EUR 400 million restructuring costs at PeP, which lead to PeP showing a negative figure for the third quarter. For the DHL divisions, very pleasing growth by 14%. What is happening below EBIT? Nothing new compared to the second quarter. In the financial results this year, we can clearly see the first implementation of IFRS 16, which is a burden to our results, EUR 90 million in the quarter. And if you adjust for that, we would see a positive development of the financial results. But as we had to apply IFRS 16 for the first time, we've got a significant downturn in the financial results. Together with the EBIT decline in PeP, we have a decrease here the [ tax ] result is unchanged. And thereof, summary is that the growth trends go on unchanged, and we also had some improvements at PeP. The one-off effects made the figures worse, but for the other DHL divisions, the growth drivers are fully intact. And this brings me to the individual divisions. Let me start with the PeP area. Here you can see what we have already mentioned several times in more detail. In Germany, you know that we are in a significant transformation process, and in the third quarter, as expected, we now booked the civil servants preretirements. We said that we will invest EUR 500 million into restructuring in 2018. EUR 400 million for the retirement for civil servants. And these EUR 400 million are now totally booked after Q3, and the posting in Q3 is the main driver for the decline in PeP's EBIT. Then we also have EUR 43 million other restructuring costs in the third quarter for PeP. And we also announced that next to the one-off restructuring measures, we will also invest into productivity measures again, and this is to the tune of EUR 150 million per year. This is not only for 2018, but it's also ongoing in the coming years. And in the third quarter, we also spend EUR 45 million on productivity measures. We want to be around the breakeven line, and this is -- in eCommerce-Parcel, this is the area that Miss -- that Ken Allen will be responsible for in the Board of Management. And this is in line with our expectations. I think we strongly focus on the developments in Germany right now. The last figure which I would like to mention here is the CapEx line, which is also very important for our colleagues. In spite of all the challenges that we currently have in PeP, we'll continue to invest into this area. You can see that CapEx in the third quarter was significantly higher than in the third quarter 2017. Year-to-date, we spent as much money as in 2017 altogether. So we are not saving money to detriment of the future, but we are investing into a sustainable growth of the business in Germany again. So in spite of the mail decline, we want to grow soundly again. If you now adjust for all the restructuring efforts into preretirement and the productivity investments and have a look at the real development of the business, the operating business, you can see that in the third quarter, we are above EUR 80 million below last year. You can now interpret it in 2 ways. First of all, it's not nice that we are still below last year's figures, but it's something that we expected, and the trend is going in the right direction. It's significantly better than in Q1. It's better than in Q2, and it's as we expected it. So we are on the right track, but it's clear that there's still a lot of work to be done, and Mr. Appel already mentioned the measures that have initiated -- have been initiated already to turn around 2019. A major step, of course, will be the result in Q4. And here you can see that in the fourth quarter, we still expect a slight decline compared to last year's figures, but around -- or between 0 and EUR 50 million. So this is what we expect for PeP for the rest of the year. This brings me to easier figures, the DHL divisions. For Express, Mr. Appel already mentioned this, this is the division which is feeling the adverse currency effects most significantly, both for revenues and for EBIT. But it's all the more pleasing to see that we've got an improvement in the operating results by almost 10%, which is a very positive result. The cash flow at Express was also excellent in the third quarter, but also in the 9 month of this year. And this is a good basis for us, and we will continue to invest into the Express division. You might remember that we also announced that we wanted to have new 777 aircraft, and we had made a down payment in the third quarter, which means that the CapEx is higher than in Q3 2017. This brings me to Global Forwarding, Freight. The trend, well, after a number of good quarters, we can really say that it's a stable trend that we see at Global Forwarding, Freight due to the selective focus on profitability, and we are growing in the EBIT. We've got a better conversion of the results, and this gives us an improvement of EUR 67 million to EUR 106 million in Q3 2018. The one figure which is not as good in Q3, is the cash flow. This is due to working capital, but this is something that also others in the industry felt in the third quarter. This is clearly a focus issue for the fourth quarter at Forwarding, Freight. For Supply Chain, Mr. Appel already mentioned the outstanding development in the third quarter, the partnership with SF for the China business. We can also note positively that driven by a strong development in almost all regions, with the exception of the United Kingdom, we managed to increase the operative margin to 4.7%, which is in the guidance of 4% to 5%, which we also see for 2018 and 2020. And I'm quite positive that Supply Chain will also give us good final results for the whole year. If you take everything together, you can see our guidance unchanged for the year 2018 and for the year 2020. Nothing has changed in the figures, and we have not taken into account the China transaction for Supply Chain, because it is unclear whether the closing will happen at the end of December or only in the new year. You might know that we are talking about around EUR 700 million cash, which is quite a significant figure, which is excluded from the figures here. So an unchained guidance for the year 2018, a group result of EUR 3.2 billion, including the restructuring costs for PeP. Otherwise, we would have EUR 3.7 billion. And for the year 2020, we expect more than EUR 5 billion operating results at the group level. And also, the other figures shown on this chart have not changed. All in all, it's fair to say that the third quarter was as we expected it to be. The PeP restructuring is going according to plan. We can see sustained growth at the DHL divisions. And on this basis, we confirm the guidance for 2018 and 2020, and we still are committed to our financial strategy. Thank you very much for your attention, and now back to Mr. Ehrhart.
Well, over to you. Over to the journalists here. You might want to press the green button if you want to make a comment. We would ask that you briefly represent -- introduce yourself. [ DPA ] wants to ask the first question, I take it.
[indiscernible] from [ DPA ]. Mr. Appel, with a view to German mail business, you said that you are still confident that next year postage prices will go up. Can you be more specific about that? What is the price range that you have in mind for a standard letter in Germany, that is? And can you tell us why you are expecting that postage prices will increase sharply next year?
Well, first of all, as before, we never comment any expectations and speculations in detail, and we'll stick with this policy. So I'm not going to specify any numbers here, because ultimately, this is going to be a decision of the Federal Network Agency. They will define a range, and then that range needs to be allocated to the various products out there. Why do I believe that postage will increase next year? Because factoring costs are rising as a result of the most recent collective bargaining agreement here, salaries have risen by 3%. Factoring costs are rising, and at the same time, volumes are declining. And we have a fixed cost network because we are covering all households in Germany 6 days a week. And if you only deliver 1 letter instead of 2 everyday, then that obviously means that earnings are down. And over the past 2 to 3 years, there haven't been any postage price increases, and we will also be witnessing price increases in other areas. And we are suffering disadvantages because of fewer economies of scale. And therefore, we believe that the Federal Network Agency will support our stance that postage prices should increase.
Mr. [indiscernible] will ask the next question.
[indiscernible] from dpa-AFX. Well, so maybe there will be a postage price increase next year and maybe that'll help you to achieve the EUR 5 billion in EBIT, but the analysts still don't believe it. They are still expecting something like EUR 4.8 billion, that is the analysts' consensus. And over the past few years, you've been saying that you will reach the EUR 5 billion, but you still haven't, well, convinced the analysts, apparently. So apart from the postage price increase, what else will you be able to use to make that leap towards the EUR 5 billion? That's my first question. And secondly, free cash flow. Well, that's not all that important, but how about a share buyback? Analysts are speculating that there may be a share buyback next year. And I am guessing that this will depend on several factors. Is that realistic? Are you even considering that? And I also have a question on The StreetScooter. There was an article in management magazine about the StreetScooter. It was a big story, and I just wanted to double-check. What are the losses that you are generating here? Are you posting such losses only internally? Are you just selling vehicles from one department to another? Are you selling them at the same prices as the ones that you'd be using for an external sales? And to what extent can we find the relevant figures in balance sheet? Have you considered a partial or a total sale IPO? So how about the valuation here? Is the valuation realistic? Or are the billions of euros expected by the investors not realistic at all?
Well, I will try to answer some of the questions you raise. Mrs. Kreis will then comment on a possible share buyback and how we are reporting the StreetScooter. First of all, as for the measures. The measures are covering all business segments. It's not only the PeP segment that is making a contribution to us achieving the EUR 5 billion. When you look at the situation in 2014 and the target for 2020, you can see that the lion's share will come from the DHL divisions. The PeP division only stands in the books with a 3% earnings increase, and we are currently at 1%. Like I said, we need to step up a little bit here. But overall, we are witnessing a very positive trend. And at Express, for instance, we can see the very positive trend, which is continued at DGF, the turnaround is still in progress. And in Supply Chain, we will also be able to boost our earnings considerably. Back to PeP. We are using all the levers that we've got within the framework of the business model, and we are very confident that we'll be able to return to the figures that we used to see in the past. And the profit increase that we are planning compared to 2014 is mainly based on the income generated abroad. After all, we have globalized our business considerably, and we don't expect the positive trends of that globalization to become any less important in the future. The analysts may not be certain as to whether we'll be able to achieve that, but ultimately, it's all speculations on their part, and we are still very confident that we'll be able to achieve the targets that we communicated. StreetScooter is very successful, both internally and externally. External sales are growing, continuously so. And we will discuss the option of working with financial investors when the time comes. But overall, we are very happy with the vehicles, including the StreetScooter. And Mr. Ogilvie has made a major contribution here. He's in charge of this matter now on the Board of Management. And the last thing that I would like to say is, you asked how is this reflected in our balance sheet. Well, actually, I'd like to hand over to Mrs. Kreis for that.
Okay, very briefly. Before I talk about the share buyback, let's talk about the guidance and the free cash flow 2020. One point is very important. Mr. Appel already showed you why we think that the EUR 5 billion can be achieved, because we've got concrete plans already. But this is not a matter in -- not a cause in itself. Yes, it's not that we just want to have EUR 5 billion. No, I already told you regarding the figures for the third quarter that we continue to invest into the expansion of our business. We are growing business, we want to continue to grow, and this means that we will continue to invest. And this is important to also make progress regarding cash flow and -- so that we've got enough money to invest into the business, and we are doing this, this year already. And this is why we said that we wanted to keep up investments, and we accept a lower free cash flow 2018. The free cash flow 2018, the guidance without the 777s, we would be around EUR 1 billion, this is our expectation. So we are investing even if this is bad for our cash flow. So you have to take a holistic point of view in the midterm. And now share buyback. In our finance policy, we clearly said that if you want to -- if you generate excess liquidity, and we did so in the previous years, this year, it's slightly different, as I explained, but if we generate excess liquidity, then we'll think about how to distribute this money to our shareholders. But this is not a mathematical equation that you say, now the pot is full and then we'll have an automatic share buyback or special dividend. But you have to see this against the general background, and this is something that we will discuss at the right point in time, and we will inform you about it. Regarding StreetScooter, we now have the StreetScooter in the area Corporate Incubations. The main customer for the StreetScooter is the PeP division. Internally, we want to have good intercompany prices at arm's length. Like for external customers, the PeP area will have some discounts, but these are major customer discounts or major account discounts. This is not due to an -- to it being an internal customer getting special rebates. The question was not heard by the interpreters. I think it would not be sustainable if we had cross-subsidies within the company. So we said we will have EUR 350 million of loss and EUR 70 million from Corporate Incubations, and the biggest area here is the StreetScooter. And this means the EUR 420 million for Corporate Functions is made up like this.
Okay, thank you very much. Then we've got Mrs. Dauer.
Can you hear me? Okay. Ulrike Dauer, Dow Jones. On PeP, or Post and Parcel Germany, I would like to know, Mr. Appel, how long do you want to continue to do this. You said that you are in this position as an interim function, perhaps, also until next year. Or what are your plans? You -- the media said that you are now building up the person to take over this area, perhaps you can share some details. Now on the measures. How can I really see that the measures are already taking effect in the third or fourth quarter? The EBIT margin is [indiscernible] that the -- we have lower loss in the EBIT margin. How can we really see this? And then the preretirement, how many people accepted this already and what is the percentage compared to the total investments? And then there was another question. Where is it again? No, I'll leave it at that for the time being.
First of all, how long will I still be chairing the PeP business. Until next year. And of course, we've got our internal deliberations how we want to continue. I always said that I will, first of all, start to initiate measures myself, and at present, things seem to be going quite well, and then it would be a good basis to hand over to somebody else. But who this is or when this will be is something I cannot tell you right now. And for Global Forward and Freight, we did the same thing. We laid the necessary basis, we took the necessary decisions, and now it's developing very well under Mr. Scharwath, and we want to do the same thing here. Then you mentioned the EBIT and how can we see this. Well, the quarterly development, we only have a slight improvement, but the effects were year-over-year, and Mrs. Kreis showed a picture on this. So the -- some of the price measures were only started in the third quarter, you cannot see the effects, but you can already see effects in the indirect costs. But the third quarter is also characterized by the fact that we only started and initiated measures, and it will take some effect -- sometime until the effects are shown. You will see more effect in the first quarter, but I see the details already, and this is why I am so confident, but we cannot give you any detailed figures here. Preretirement, how many people have accepted the offer? I do not know yet. I think it's in the lower-100 areas, but we already booked all the provisions, we made the offers. And then in the public, it was reported that not many people wanted to take it up, but this is not true. We got a lot of applications, and we will fully utilize the program. So this is the main message here. Now it's a process we have to go through. We have to find out whether the job will then be totally lost or not. It will take some time until we see an increase in the figures. But the good news is, and there are also auditors checking this, that we've got more than enough applications of people wanting to take preretirement. So we want -- we will achieve this. So all the speculations that the program is not going well is absolutely wrong. Otherwise, we would not have booked the figures for the third quarter.
Okay, thank you very much. The next question by Mr. [ Kolowski ].
I have several questions. First of all, how many parcels are you expecting for Christmas? And secondly, do you think you'll be able to really finalize the group structuring in Germany? And thirdly, you will split up the PeP division, and you have sold or downsized a lot of the businesses that used to be managed by Mr. Gerdes. So my question is, what does that mean for your strategy abroad? Will you continue to expand your business abroad or not?
Well, we are expecting around 11 -- not billion, I was about to say billion parcels, that'd be nice. Actually, I meant to say 11 million parcels on peak times during the Christmas season. And yes, our planning is very detailed, and I look into that myself because I'm responsible, and I'm very impressed by what is being planned here, and I'm confident that we'll be able to get the job done. The weather always means a lot of uncertainty. Nobody knows what the weather will look like in December. If there's a lot of snow, then that will, of course, impact on the quality of our service. And I'm monitoring what we are doing myself. I'm looking at customer complaints, I'm looking at the positive trends, and we can see that our quality is developing very positively. And I've been saying right from the start that we need to focus on the right quality, which is also reflected in our figures, which looked very good, both in terms of mail and parcel business. And in our operations in the production units, we are also getting a lot of positive feedback from our employees as well, all of which shows that despite the overall situation being difficult, people are highly motivated. And that's why I am convinced that we'll be able to do a good job during Christmas. And I myself and also the divisional board members are monitoring very closely what we are doing there. eCommerce. We believe that eCommerce will continue to be a major growth segment, both within and outside of Europe. I don't want to go into detail here. Ken Allen will look into this specifically, and of course, we wouldn't set up a new board department if we didn't believe that this is a growth segment. And it goes without saying that we want to positively further develop this segment in the long run, and we've given Ken Allen enough time to get things off the ground. And we'll have to figure out whether the current structures are right or whether some changes need to be made. And when the time comes, we will give you an update on that, of course.
Thank you. The next question comes from Mr. [ Invaradi ].
Just a brief follow-up on the StreetScooter. Mr. Appel, when you were asked what options you are pursuing for the future, for instance, a possible cooperation with financial investors, that you will sort this out sometime in the future. Does that mean that you are no longer considering the cooperation with a big carmaker?
No, I didn't say that. At the moment, we are, in fact, in talks with various parties, and it remains to be seen what the outcome will be. I'm not ruling out anything, any type of cooperation.
Thank you. Mrs. [ Monk ] is next.
I have a follow-up question on the early retirement scheme. You said that you've received enough applications, but how long does it take to actually process these applications? How long does it take for the colleagues to learn whether their application was approved or not? Have there been cases where you had to reject any such applications because the jobs were still needed? And I also have a question on the joint operations that you are setting up or will be setting up in the Parcel business. I understand that there've been some delays because of legal issues still pending. What's the current situation there?
Well, I'm afraid I can't answer your question on early retirement. Actually, that's not our responsibility. This is handled by a federal agency for post and telecommunications, because this is all handled under German civil servant law. I would have to say something off the cuff and I don't want to do that. But I think it's a very -- it's a standardized procedure. And I don't know how many applications have been rejected. I'm pretty sure that some applications have been rejected, but I don't know how many. I really don't because this is not my responsibility anyway. As for the joint operations, yes, there are some legal proceedings. It's an arbitration proceeding, as a matter of fact, and we believe that we'll be able to set up a joint operations between the parent company and a subsidiary before long to sort things out there.
Now there are 4 -- 2 questions from the web before Mr. [ Shlottman ] and Mr. [ Davis ] will ask questions. Mr. [ Becker ] from [indiscernible], hello to you, is asking the following questions. First of all, can you comment on parcel prices? What sort of price increases are you expecting specifically? And is Deutsche Post planning to set up additional partnerships along the lines of the strategic partnership set up in the Supply Chain segment in China?
Mr. Becker, I'm afraid, we can't give you any details. And we haven't announced any price increases, obviously, and we haven't announced a specific range that we are expecting, but we believe that the price -- the postage price increase will be higher than in the past. That is still work in progress, and we can see that this proposal is well received. Our competitors are also seeing that capacities are becoming scarce, but I can't give you any specific ranges here. As for China, we've prepared and negotiated the deal in China for a long time, and we are not disclosing any details to the general public here. You always have to bear in mind the general market situation, and in China, we are facing a very special situation. You see, our Supply Chain business in China so far was not very successful in terms of our cooperation with local providers. And here the partnership with SF will help us to move on, because they are working together with a lot of Chinese companies, needless to say. But there are differences in the various countries, and therefore, I cannot announce any other plans in the same direction. We always need to ask ourselves what is the right strategy, and this case the long-term strategy for China.
There's a question from Mr. [indiscernible], and he is asking whether it's true that [indiscernible] will no longer be responsible for the mail and Parcel business?
Well, we never comment on any speculations surrounding staff matters. If any decision is made in terms of our staff, then we will make an announcement. So I'm not saying yes or no, I just decline any comment on that.
Okay, let's go back here into the room. Mr. [indiscernible]?
Yes. I also have a brief question. About 6 month ago, there was the news by the [indiscernible] comm trade union, which criticized that your testing period would -- or the trial period would only be ended for new employees once they show that they are not sick for too long. And then people said that they want to talk to you personally in order to make sure that the working conditions improve and also the conditions when the trial period or a term period will be changed into a permanent job. Have there been any discussions with you? Has there been any progress?
In general, discussions that the Supervisory Board has with the Management Board, we can't comment on this. But I can tell you that we can explain very clearly that we've got excellent working conditions, that we've got a growing number of job contracts which are no longer term contracts, but permanent. And I can also explain what this [indiscernible] but we would still have some criteria to establish when a trial period will be ended. But we, of course, never share any information that we discuss with the Supervisory Board or the shareholders. And I can't do this today.
Mr. [ Davids ]?
I would like to come back to the topic of the booming Parcel business that in spite of the booming business, you still do not really seem to make a lot of progress here. One problem from my point of view was that major accounts, for example, Amazon, offered lower prices, but the margin, of course, is suffering. Do you want to ask for higher prices of these major accounts as well in the future? And if so, is this really feasible in view of the market power that the big players have in the market?
Of course, we are not excluding any company from the price discussions. We never did in the past either. All the companies had price increases. The only question is by how much the prices were increased. And we are supported by the competitive decision in Germany. We've got almost full employment, and transport costs are increasing for our customers as well. And against this background, I think it's logical that all the customers will contribute to the higher costs. And this is the fun that you have as a manager. You'll test out certain things, and you will see whether it works or not. If you could predict everything, it would be boring. The exciting thing is if you tackle difficult things, and we are doing this, but this is also the charm of chairing a company. So yes, we will continue to talk about increasing prices, and we are discussing with all our customers.
Okay, Mr. [ Needham ]. He came late. Nevertheless, welcome to you.
Yes, I come from [indiscernible] Research, and I have 2 questions. I'm not quite sure whether the topics were already covered. Again, about divestment of companies abroad. In China, as you had divestment of the Supply Chain business, you handed it over. And China is a big growth market, and you said that you rather want to sell it. So the question is, what are the criteria you use if you check or review your companies abroad? What is success? What is lack of success? How long will you keep a loss-making business? And then the new division eCommerce Solutions is still writing red figures. When do we expect it to write black figures? And now a standard question around the Brexit, it's still very uncertain what the development will be. How much have you prepared for the various scenarios?
Divestments or acquisitions are always based on our sustainable long-term strategy. And I already explained, I don't know whether you were there already, in China, we said if you want to grow quickly, we have to increase our customer base, going beyond international customers, and we said that this is too difficult without a Chinese partner. And this is why it was a strategic decision, and you can see that this was a very attractive business for us based on the purchasing price, because we sold a profitable business at a good price. And this is something that we would do again. The financial criteria that we use during the acquisition process, but we are also willing to accept losses for a longer period of time if we are convinced of the strategic importance of a business, and this is also true for eCommerce Solutions. We always said, and you also saw this during the profit warning, we said that we will still expecting losses in 2020 in eCommerce, or now eCommerce Solutions, and this is what we stick to, loss between 0 and EUR 100 million, but we will report more detailed information if we have more news. For the Brexit, of course, we are also taking our preparations. It's still unpredictable a little bit, but as an entrepreneur you, of course, have to get prepared to more difficult times coming. All the divisions are working on this and have set up a set of measures, which -- what we would do if there is a hard or soft Brexit. We don't expect a hard Brexit right now. It wouldn't be good neither for the United Kingdom, nor for the EU. We can already see some customers taking their decisions to shift their warehouses from UK to Europe -- to Continental Europe. So we are taking our preparations. We've got task forces in all the divisions, and we cannot just simply hope that things will turn out well on their own. Although I'm still quite confident that there will be an amicable solution between the U.K. and Europe at the end of the day.
Another follow-up.
For Parcel business, you are mainly talking about the major customers. Or do you also think about increasing the prices for the smaller, for the normal customers? And secondly, for the normal customers, they order something and then they -- do you think that eCommerce costs will increase or not?
So far, we are only a thing -- we have only decided price measures for the big corporate customers, but we'll also discuss this for private customers as of the 1st of January. So we don't have any major plans right now. But for the corporate customers, it's not only major accounts, but also the smaller customers. Corporate customers have a contract with us, because they are normally paying prices which are lower than the prices you would pay in the normal post office. Now I forgot your second question.
A basic question, whether eCommerce will become more expensive for the final customer.
Well, this is a question then you would have to put to the eCommerce companies. I don't think that we will see that the companies, the eCommerce companies, would burden their customers with higher service fees. Whether there might be some masked price increases within the products, I don't know. This is something that you would have to ask the suppliers or the customers, we can't influence this. But the eCommerce wave had one beneficiary in the market, and this is the private customer. They had very good prices, and they had very good product with easy returns. You will probably use this as I do. It's very comfortable to send merchandise back. And in how far our corporate customers pass on price increases to their customers, we don't know. They haven't told us, but I don't think that the prices for the retail customers will grow too much.
Okay. I can't see any further questions any longer. Yes, there is another question. Mrs. Dauer, please?
Apart from U.K., Supply Chain has developed positively, so you said. So what are you doing there? I also wanted to ask about the sales price of Allyouneed and Fresh, can you get back to that? And as for Brexit, do you think it depends on the industry that you're in? What sort of additional warehouse capacities you need? Or is that not industry-specific?
Well, we have a large business in the UK, and we probably did a lot of things there that were not really visible even though the underlying business developed very favorably. And we now delegated a very experienced manager to the U.K., who looks into things. And yes, there's still room for improvement, but outside of the U.K., this business is developing very favorably. And this is a very important market, so we'll definitely come to grips with that. Allyouneed and Fresh. We are not disclosing any details here. Mrs. Kreis knows more about that than I do, but after the strategic decision is made, a basic decision -- a basic announcement can be made, but not specifically. And as for Brexit, I always discuss this with my colleagues. And you asked about warehouse capacities in various industries. I'm afraid I can't answer that question in detail.
Thank you. I'm looking around here. I'm not aware of any additional questions, not here, not online. If you have more questions, then you might want to stay for lunch here and discuss things with the board members directly. They'll still be here. Our colleagues are also here to support you. And as always, we also have workstations prepared for the journalists right here. Before I close the press conference, I would like to say something else. I started out at my first press conference on the 11th of March, 2009. And now, almost 10 years later, I would like to bid farewell to you, because as we've communicated before, I will take on a new professional challenge as of January 2019. I would like to thank you very much for the very positive and fruitful cooperation. I can only do a good job if we can talk to each other, discuss things properly. I hope that you will continue to support this company, the company and its staff in particular really deserve that support. I hope that you've appreciated my work, but if you did, then that was only down to my team, Mrs. [ Cooper ] and Mrs. [ Clausen ]. And if you were not happy with the job I did, then that was only my fault. I think it's quite a tough job, probably you're doing a good job here if both sides are not entirely successful, and I think I managed just that. I would like to thank you very much, once again. I wish you all the best, and it would be nice to meet again. And with that, I wish you a very pleasant day. Thank you.