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Operator: Ladies and gentlemen, welcome to the Kuehne + Nagel Management AG Q1 2026 Results Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Stefan Paul, CEO of Kuehne + Nagel. Please go ahead, sir. Stefan Paul: Thank you very much, Sandra. Good afternoon, and welcome to the presentation of Kuehne + Nagel's First Quarter 2026 Financial Results. I'm CEO, Stefan Paul, and I'm joined today, as always, by our CFO, Markus Blanka-Graff. Page #2, first quarter 2026 results. Recurring EBIT exceeded our guidance. The recurring EBIT of CHF 308 million in Q1 exceeded the guidance we communicated with Q4 results. That is a result that would broadly match the CHF 285 million we achieved in Q3. We attribute most of the upside to first signs of visible cost reduction with phasing running ahead of plan. We had announced this cost reduction program in Q3 and booked provisions, as you all know, for it in Q4. We still expect to achieve at least CHF 200 million of annualized gross savings by year-end 2026. At the close of the first quarter, we are running ahead of plan and confident in our ability to reach our target. Our successful cost management in Q1 mitigated some of the effects of volume impacts from the conflict in the Middle East. Also, the year-over-year comparison was high, especially in Sea Logistics, where underlying volume growth last year was 6% in the first quarter. That was due in part to front-loading before Liberation Day. The net effect in Q1 was a year-over-year decline of 17% in group EBIT. Recurring group EPS declined by 18% year-over-year on the same basis, excluding consideration of negative currency effects and a one-time CHF 35 million gain on a real estate sale and leaseback transaction. The combined Sea & Air conversion rate was 26%. Free cash flow generation in Q1 exceeded that of last year, supported by disposal proceeds linked to the real estate sale. Excluding these, underlying free cash flow conversion of 40% in Q1 reflects typical seasonality as the first quarter is normally the weakest of the year. Before moving on, I would like to address the current market situation. With respect to market share, it is currently more difficult to assess our progress versus peers in Q1, given the spike in volatility set off by conflicts in the Middle East. Pending further clarity, we are assuming that recent trends continued and that our market share was stable or slightly greater in the period. In terms of expectations for near term, we expect a Q2 EBIT result greater than that of Q1 on the back of higher and sustained service intensity during a period of supply chain disruption. As such, we are modestly raising the lower end of our full year financial guidance, a topic which Markus will cover in more detail shortly. Now let's turn to our performance by business unit. Page #3, Sea Logistics. Cost control drives recovery of unit profitability. As always, volume on the left-hand side, GP per container unit in the middle and EBIT per TEU on the right-hand side. In Sea Logistics, unit profitability recovered significantly versus the last couple of quarters, thanks to our cost reduction efforts. You can see this underlying improvement in the last 2 quarters in the middle and in the right-hand chart on the slide. Sequentially, the Q1 volume performance was better than the average change over the last 5 years. Volumes in Q1 declined by 2% year-over-year, mainly due to the events in the Middle East. This pace matched that of Q4, but with a tougher comp. Underlying volume growth last year in Q1 was plus 6% versus plus 4% in Q4 2024, Enhanced by front-loading effects ahead of Liberation Day, European imports volumes from the Far East were once again robust, extending the strong trend we saw in Q4. Transpac volumes remained under pressure on a year-over-year basis. Average yields were stable sequentially for the second consecutive quarter, in line with the expectations we shared during our last earnings calls. This stability has continued thus far into the second quarter. As we mentioned at the time of Q4 results, we do not foresee a repeat of the yield pressure we saw in Q2 and Q3 2025. The Q1 EBIT improved sequentially by 7% to CHF 113 million as cost management efforts more than offset the volume decline. This resulted in a plus 13% increase of EBIT per TEU quarter-on-quarter basis. The Sea Logistics conversion rate was at 25% in Q1. This compares to 23% in Q4 and a 35% conversion rate in Q1 last year. Let me turn now to Page 4, Air Logistics. Stable unit profitability is supported by cost control and mix. In Air Logistics, strong cost control was the most prominent factor supporting stable unit EBIT during the seasonally weak first quarter. You can see this development in the third figure on the slide. Favorable mix shifts also contributed to the stability. Volumes in Q1 were flat year-over-year. This marked a declaration from plus 7% growth in Q4, chiefly due to reduced perishables and Apex e-commerce volumes. Excluding these lower-yielding segments, we achieved upper single-digit volume growth. On a quarter-over-quarter basis, the volume decline exceeded the 10% seasonal decline we have averaged since Apex was acquired in 2021. Volume growth was most robust in Asia-Europe trade lanes, followed by North American exports. North American imports were relatively weak, especially from Europe. Average yields increased by 2% quarter-on-quarter, a notable improvement on the result we usually expect coming out of Q4. From Q4 to Q1, demand for higher-yielding cargo usually softens while lower-yielding perishable volumes tend to remain stable. As I just explained, this was not the case in the most recent quarter as the mix shift resulted in positive yield effects. EBIT rose by 7% to CHF 111 million year-over-year in Q1, excluding FX headwinds. The Air Logistics conversion rate was at 27% in Q1 versus 26% in Q1 last year. That was Air Logistics. Now Page #5, our business unit, Road Logistics. EBIT growth supported by ongoing volume recovery. In Road Logistics, the signs of demand recovery we highlighted in Q4 extended into the first quarter and supported our EBIT growth. Net turnover grew by 9% year-over-year in Q1 or 5% organically, both excluding currency headwinds. This affirms our view that Q4 marked a positive inflection point for shipment demand after a sustained weaker period in the European market. Demand for custom solutions also remained robust, a consistent trend since Liberation Day in April last year. Additionally, we reinforced our services to the UAE in response to supply chain disruption from the conflict in the Middle East. EBIT rose sharply to CHF 25 million in Q1, a 42% improvement on last year or 35% on an organic basis. Please follow me to Page #6, our Contract Logistics business unit. Strong underlying profitability impacted by FX headwinds. In Contract Logistics, recurring EBIT increased modestly year-over-year, offsetting material currency headwinds. The net turnover grew by 5% year-over-year in Q1, excluding these currency effects, in line with the underlying rate of growth over the previous 4 quarters. We saw continued market share gains across geographies with a particularly strong contribution from our North American business. Recurring EBIT totaled at CHF 59 million in Q1, which is 4% higher year-over-year or 11% higher, excluding the currency effects. This figure excludes the CHF 35 million gain from a real estate sale and leaseback transaction. The recurring conversion rate of 6% is in line with the prior year result. With the Q1 results, the trailing 12 months ROCE for Contract Logistics alone is stable at a level of 25%, excluding the effects of exceptional items. And lastly, we are confident in the growth trajectory with more than 30 new contracts currently in the implementation phase. This overall concludes my comments on the performance of the business units, and I will now hand over, as always, to Markus. Markus Blanka-Graff: Thank you, Stefan, and good afternoon all. Thank you once again for your interest in Kuehne + Nagel and taking the time today to review our financial results for the first quarter 2026. First, we see on our profit and loss statement a pronounced 7% foreign exchange headwind at both EBIT and net earnings level. That is because the prior year benefited from a stronger U.S. dollar ahead of Liberation Day. Second, the material cost reductions in the first quarter, which are part of our restructuring program, helped mitigate this impact of the headwinds. Third, while Sea Logistics yield stabilized over the last 2 quarters, the first quarter year-over-year comparison for gross profit reveals some pressures. And lastly, Stefan already mentioned a nonrecurring CHF 35 million EBIT gain related to the real estate sale and leaseback transaction in Germany, a factor to consider when evaluating recurring profitability. Turning to working capital. We saw the base increase to more than CHF 1.5 billion over the past quarter or an increase of 9%. With this, net working capital intensity sits at 6% or above our guidance corridor of 4.5% to 5.5%. This compares to 5.2% at the close of the fourth quarter or 5.1% at the end of the third quarter last year. You can see the spread between DSO and DPO narrowed as DSO deterioration outpaced the DPO improvement due to a temporary shift of business mix. Additionally, the share of multinational customers with extended payment terms in contract logistics is growing. The net CHF 129 million increase of core working capital in the first quarter 2026 was comparable to a CHF 132 million increase over the same period last year. All business units contributed to this expansion, except for Air Logistics. So let's now have a look at how this fits into overall free cash flow generation in the first quarter 2026. We produced CHF 194 million of free cash flow, bolstered by CHF 105 million of cash proceeds from the real estate sale and leaseback transaction just mentioned earlier. Excluding the proceeds, free cash flow sits at CHF 89 million, and that compares to CHF 167 million from last year in Q1, also excluding modest disposal proceeds. For a closer look at cash conversion, let me move on to the next slide. Here, we see the usual comparison of free cash flow conversion in the most recent quarters versus the historical average. The first quarter is typically the weakest cash conversion quarter of the year with an average 48% conversion. In the first quarter 2026, conversion was 40%, including some material cash flows linked to our cost reduction program. Accounting for these, we view the first quarter cash conversion as very much in line with the historic average. We expect a continuation of normal underlying free cash flow conversion trends over the coming quarters. Turning to our financial guidance for 2026, and Stefan mentioned that we have raised the lower end of our 2026 recurring EBIT guidance to reflect both our current expectations and the better-than-expected Q1 results. As such, our guidance range is now CHF 1.25 billion to CHF 1.4 billion, up from the previously communicated CHF 1.2 billion to CHF 1.4 billion. For the second quarter, we expect the recurring EBIT results to exceed that of the first. This is also consistent with the historical long-term average seasonal development from Q1 to Q2. And we consider the seasonal impact of any wage increases, the bulk of which take effect in April. As a reminder, our underlying core guidance assumptions include the global GDP will grow, but with persistent uncertainty across geopolitics, macroeconomic policy and trade. As a base case, global sea and air freight volume demand will grow no faster than GDP. And as we have already highlighted, our cost reduction program remains and is on track, and we still expect more than CHF 200 million of gross savings on an annual basis. These savings will ramp up over the course of 2026 with an estimated impact of at least CHF 100 million in the current year. There is no change to the assumed 5% currency translation headwind reflected in our EBIT guidance nor is there any change on our expectation for a 25% effective tax rate. With this, I would now like to close our presentation with a summary of our key takeaways. Our focus remains on market-beating growth in targeted attractive sectors. At the same time, we are striving to meet the heightened market demands and complexity borne out of the conflict in the Middle East. Yields in both sea and air logistics remain stable and slightly improved. Our cost reduction program is on track with continued confidence in targeted savings, whereby the progress in the first quarter was ahead of plan. We have a strong foundation to achieve AI productivity gains and foresee material traction from 2027 onwards, a view that we shared on our last call. We have seen continued progress over the past few months with AI adoption expanding across our operations, empowering our workforce in their daily work. We will share a more comprehensive update, including further details on operational integration and next steps alongside our second quarter results. Lastly, we are raising the lower end of our full year earnings guidance range to reflect the better-than-expected first quarter results and current expectations for the rest of the year. With this, I want to thank you for your attention and hand back to the operator to open the Q&A session. Operator: [Operator Instructions] Our first question comes from Alex Irving from Bernstein. Alexander Irving: Two for me, please. First one, what impact on earnings do you expect from the recent events in the Middle East? Given the small narrowing of the guidance range, the answer looks like none or at least net none to get your perspective on that. Second, regarding the cost cuts, how far into those and especially how far into the expected headcount reductions are you now? How much is still to be done? And how significant do you take the execution risk to be? Stefan Paul: Alex, Stefan speaking. I take the 2 questions. First of all, in the first quarter, just to reiterate, there was no no impact to be seen on GP or EBIT level from the Middle East crisis. Moving forward into the second and third quarter, mainly into the second quarter, we do not believe there is a significant impact to be expected other than the volume trajectory in sea freight. We see bookings currently are down by 70%, 80% in and out for the GCC. We have mentioned in the numbers that, that had an impact of 1.5% approximately, particularly in March on the volumes. The yield will be stable, as Markus mentioned as well. Yield will be stable in sea freight moving into the second quarter. What you will see more and more coming into the second quarter and the result to be expected is the fuel adders, which we transparently pass forward to our customers. And I want to reiterate very transparency, very transparent. So we definitely will share that on a regular basis with our customer base in order to ensure that everybody understands what is happening. So overall, from a volume perspective, we expect air freight slightly picking up. Volumes overall in sea freight, most probably flattish. We are confident that we can move forward with certain other trade lanes and piggyback on certain other trade lanes and growth, particularly coming in from Asia to Europe and to a certain degree as well to the U.S. to offset the decline in the Middle East. So overall, not a huge impact to be expected from the Middle East crisis, rather not negative, not neither positive. And the main focus in terms of the EBIT improvement will come from the cost efficiency and cost-cutting program. That now focuses on the -- or let me focus on the second question, how many FTEs, what has been executed already by end of March this year, end of March 2026, we have executed in full, and there will be no further reduction from that particular program to be expected in terms of additional FTEs in the second or third quarter. Operator: Next question comes from Muneeba Kayani from Bank of America. Muneeba Kayani: I just wanted to follow up a bit more on the air market, which is clearly tightened because of the Middle East disruption, a bit surprised to hear you say that, that hasn't had an impact and you don't expect it to have an impact. So I just want to understand how you're seeing that. And I wanted to clarify on air yield expectations for 2Q. Do you think there could be a further pickup from the strong performance we've seen in the first quarter on air yields? And then secondly, just on the guidance. So I appreciate you've raised the lower end. But based on what you've said on kind of 2Q expectations, that would imply a second half EBIT lower than the first half, which is seasonally not what happened. So really kind of what needs to happen to reach the second -- the lower end of your guide? And why did you raise the upper end of your guide by a similar CHF 50 million? Markus Blanka-Graff: Muneeba, let me just take the second question first on the guidance. I think I even mentioned it, I think, in my presentation, we expect the second quarter to be seasonally as well stronger than the first quarter. So there is no concern that the second is going to be lower than the first. Why we increased and raised the lower end of the -- the lower end of the guidance is basically because we exceeded on the first quarter and we adjusted the lower end to that effect with a little bit of an add-on on top of it. But it actually means we are consistent and remain with our assumptions and conclusions for the guidance for the rest of the year. Stefan Paul: Yes, Stefan speaking. Muneeba, so clarification or more clarity on the air yield. So what we expect is a slightly higher yield into the second quarter versus the first one on Air Logistics. I mentioned Sea Logistics most probably rather flat in terms of volume and yield. Air will be slightly up. Same is expected for volume. Remember what I said during the call 6 weeks ago in the first quarter in March, when the crisis started, when the war started in the Middle East, we missed roughly 16% to 18% of the total volume, the capacity, which was grounded from the Middle East carriers, that is now back. Single digit still is missing, but this is back. And why do I state that we believe there is a little bit higher EBIT to be expected or yield per 100 kilo expected is based on the product mix, based on the better mix, which we have seen in the last couple of weeks, less perishable, significantly less e-commerce and a better basically gain ratio in the hard cargo segment where we traditionally see a higher yielding paired with the surcharge adders, which will increase the rate level as well to a certain degree. Muneeba Kayani: That's clear. Markus, actually, my question on guide at the lower end was on the second half, not the 2Q, which 2Q is very clear, but how you thought about the second half of the year in that guide? Markus Blanka-Graff: As I said, we are not changing our assumptions for the rest of the year. Operator: The next question comes from Parash Jain from HSBC. Parash Jain: My question is more into -- in your discussion with your customers, both on air and sea, what kind of commentary are they sharing with you given we have seen U.S. retail sales to inventory has come down. But at the same time, do you think that higher inflation will dent the business sentiment or consumer sentiment as it is shown in the U.S. Michigan index. So going into the second half, do you have certain assumptions by when this crisis will be over or where the oil price will be to get to the numbers, the range that you are offering? Stefan Paul: Yes, Stefan speaking, Parash, thank you for the question. So as mentioned, so the Transpac, so the volume, the consumer volume and the sentiment mainly from Asia into the U.S. is rather soft. And I think depending on where you are in the U.S., $1 -- up to $1.50 more per gallon basically and the inflation overall is impacting the consumer sentiment, and you mentioned that quite rightly so. This is definitely ongoing. We do not see any signals that the Transpac market, the U.S. market is recovering soon as long as we have that situation. But that was baked into the updated outlook and forecast that will be offset to a certain degree by other trade lanes and in particular, by our cost measures. But your main question was about the consumer sentiment, and we see that is still rather soft. Parash Jain: And then just in terms of -- has the duration of the war or oil prices has gone into your assumption? Or you think that oil price irrespective will be passed through almost on a real time? Stefan Paul: It will pass through, yes. As I mentioned before, I think that was the question. It will be passed through. And at the beginning of your question, you mentioned how our customers are reacting, right? I think we have very open, transparent discussions and 99% of the customers fully accept and expect it, right, and accept the discussion, and we do not see a significant topic in regards to the fuel price and the adders. But as I said again, and I'm repeating myself, we are extremely transparent. Operator: The next question comes from Marco Limite from Barclays. Marco Limite: I have one follow-up question on your Q2 outlook. So you have talked about sea yields stable quarter-over-quarter. And then you have talked about volumes also stable. Now the question is, is that year-over-year stable or stable quarter-over-quarter? Because generally, Q2 has got better seasonality versus Q1. So yes, wondering if that's year-over-year or quarter-over-quarter. And actually, same question for air freight volumes, where you -- when you said slightly up for volumes, were you referring to year-over-year or quarter-over-quarter? And then my second question, again, another follow-up question is on your cost savings. Clearly, the peak in Q1 was all driven by -- or mostly driven by cost savings. Now are you able to quantify where are you in terms of run rate compared to the CHF 50 million run rate by year-end? Because I mean, if the beat versus the CHF 285 million guidance is all coming from cost savings means that, yes, you achieved CHF 30 million basically more of cost savings than what you expected. So that's a run rate of -- yes, rate compared to the CHF 50 million by Q4. So yes, that would be helpful. Markus Blanka-Graff: Marco, it's Markus. And I'll start with the cost saving part. I appreciate your reverse engineering calculation and you are relatively close to reality. So we had a head start, I would call it, into the first quarter with the cost savings. So it's not a linear development as we anticipated still at year-end. I would say that from our ambition of a CHF 50 million per quarter cost reduction, so CHF 200 million annualized, we are probably just past the 50% on a quarterly basis cost reduction. So you talked about CHF 30 million. We're probably somewhere in that ballpark. That also means we might not see the same linear development going into the CHF 200 million run rate. We might see the second quarter being a bit flatter. We have already talked about inflationary impact on April through the manpower cost. So we might see a bit of a slower progression. But then from then on, we will continue into the third and the fourth quarter. As I said, I think our CHF 100 million ambition for this year, we should be able to exceed that. On your first question, the comparatives had all been on a year-on-year basis. So every comparison on volume and yield had been on a year-on-year basis. Marco Limite: Sorry, just to -- I think it's quite an important point. So also your comment on air yields of small up is on a year-over-year basis, okay, which was CHF 770 million, right? Does not make -- if I can, does not make sense, does not make the outlook for Q2 quite positive, especially in air if you have quarter-over-quarter, let's say, based on normal society, 10% more volumes on higher yields means that Air EBIT will be significantly up quarter-on-quarter versus Q1 in your view? Stefan Paul: I would say the likelihood is there, yes. Short and crisp. Operator: The next question comes from Cedar Ekblom from Morgan Stanley. Cedar Ekblom: I just wanted to ask a little bit more on your air business. Can you talk about your approach to buying capacity? Obviously, there's a huge amount of volatility in the market. And so I just want to get a better understanding for how you're risk managing some of the potential impacts around spot rates for your business. So how are you positioned, net long, net short? Maybe a little bit of color by region would be helpful. Stefan Paul: Yes. What we do is, as you know, we have a combination of block space agreements long and short with the commercial carriers. And we have since years now, a charter operation together with our subsidiary, Apex, where they operate on our behalf as well. So what we do is we have secured in addition the last couple of weeks, we have secured additional charter operation, especially when you look into the Southeast Asian markets where the technology comes from large demand from the hyperscaler, semicon industry and the other tech companies, mainly from Thailand, from Vietnam, to give you 2 main examples, Taiwan, Taipei is as well, very hot in terms of the volume demand is concerned. And we don't only piggyback on the normal commercial flights, the uplifts directly airport to airport from these destinations into the -- or from that locations into the receiving countries. We will operate or we already operate with charter capacity point to point. But additionally, with capacity, which we utilize from Southeast Asia to China, and then we take from China, from Western -- from an airport in the West China region, we take uplift, significant additional uplifts from China in order to ensure that we always promise or keep the promise towards our customers to have enough capacity and to guarantee a certain transit time even if there is a problem on the commercial flights, we add and balance this with additional charter capacity for the customers. Operator: The next question comes from Kulwinder Rajpal from Baader Europe. Kulwinder Rajpal: So 2 questions on my side. First on Road Logistics. So I wanted to better understand how much of the EBIT growth actually came from going to road from sea in the Middle East and how much actually came from the demand recovery in Europe? Just a qualitative flavor there would help. And secondly, I'm not sure if I missed it, but when we look at the decline in air volumes in Q1 on the lower-yielding side, was there some selectivity at play here? Or if there are some other factors behind the scenes. So could you please elaborate on that? Stefan Paul: I'll take the road question first. So it was mainly 90%, 95% coming from additional volumes in the European marketplace plus the U.S. and only to a smaller degree based on our size of business, book of business from the Middle East crisis. Markus Blanka-Graff: Raj, on the second question on the decline in air volumes in Q1 compared to last year, major contribution is coming from a reduction on e-com business, e-commerce business that in the first quarter 2025 was still let's say, there in a simple world. And right now, it has declined by over 50% in volumes. So that's really the volume impact and also the mix impact. Kulwinder Rajpal: Right. So just to clarify, I mean, would we expect some sort of a catch-up? Or would it be determined by customer behavior in the future as to how these volumes trend? Markus Blanka-Graff: But it's not only customer behavior, I think it's also how attractive that volume is for our profitability and how it matches with capacity, right? Operator: The next question comes from Hugo Watkins from BNP Paribas. Hugo Watkins: Just to go back to airfreight. Can you give any insight on potential jet fuel shortages, whether that's from yourself or what you're hearing from carriers and just what that might mean for airfreight capacity more structurally for the remainder of the year? Stefan Paul: Yes. We all know, and this is not a secret that especially in Southeast Asia, I think lowest capacity is in Indonesia, followed by Vietnam, Thailand to a certain degree. I think China has significantly more reserves. I would not worry about China currently. And as I said before, with our strategy to balance charter block-based agreements and own capacity operated by FX, I think we are well positioned to manage that crisis if it would even come. But repeating myself, the highest risk in terms of mitigating lies in Southeast Asia, where some of the countries do not have buffer beyond end of May or so. Operator: The next question comes from Alexia Dogani from JPMorgan. Alexia Dogani: Just firstly, you mentioned you are targeting growth in other trade lanes to offset the Middle East pressure. Can you tell us which trade lanes you're working on? And what gives you confidence that there is kind of growth to be captured there? And then secondly, I'm aware that usually wage deals reprice every April. What is your target or I guess, your assumption for wage inflation this year, considering the CHF 100 million or over CHF 100 million is a gross cost saving target? Stefan Paul: Yes, I tackle the growth question, trade lanes, we have started, and I think I mentioned it now 2 times, we have started heavily to look from a sea freight perspective into the prepaid China market. You have a lot of new Chinese giants who are asking for support and they always call it help me to become global. So we have reiterated and dedicated additional sales force in the Shenzhen area, for instance, where a lot of these customers are located. And we are confident from what we have seen already in the last couple of weeks in terms of business gains are concerned that we can offset with China prepaid additional volume coming in from new customers and existing customers, the mid prices from a pure volume perspective. Markus Blanka-Graff: Alexia, it's Markus. On the inflation base, so as you can imagine, we try obviously to address inflation topics and compensation on the larger workforce on the ground. And I think overall, we usually have a compensation for inflation also for Contract Logistics business. That is usually a pass-through. So where we really have cost impact that is also impacting the bottom line is on the sea and air freight basis. And here, I can safely say we remained below the global inflation values, but I don't want to disclose precise numbers. Alexia Dogani: And can I just ask a follow-up on this prepaid China market? Is that intra-Asia or kind of ex China to the world? Stefan Paul: No, it's ex China to the world. As I said a couple of times, we are not focusing so much on intra-Asia. The volume is huge, but the profitability is rather low on the low-end side, $50, $60 per container unit. So it's always focusing on China long haul to the world. Operator: The next question comes from Gian-Marco Werro from ZKB. Gian Werro: I have 2 questions. The first one is a follow-up really on what you discussed already on this kerosene potential shortage in the belly capacity. So can you tell us, are your clients already planning alternatives to Air Solutions with you, which might be beneficial to you, I think? And then also the charter situation, how does that work with the kerosene availability? Does some of the charters already have their own stock fuels? And then the second question is just on your AI potential that you mentioned already 6 weeks ago. Can you so far already give us a bit more details here about the potential cost cutting that you see there? Stefan Paul: So on the jet fuel, I would say, yes, of course, we have with certain customers different models. And what we do is -- and don't get me wrong, we are -- we cannot do something which is not possible at all, but we can do proper planning. And then with our charter capacity, as I mentioned before a couple of minutes ago, Gian-Marco, so we refill certain charter flights in China. We have access to certain capacity in China. So we bring cargo from Southeast Asia into China and then we refill our aircraft on the way back to Vietnam, for instance, in China. And on the long-haul flights, we refill as well in China. And remember what I said, China capacity will last significantly longer than in Southeast Asia, just in case something is happening. And I'm not saying that we will see a significant shortage. It remains particular on how fast the straight of homes will be reopened and we come back to a normal situation. But just in case this is going to happen, then we are already in close contact with some of our very large customers to do certain planning and scenario planning in order to help them to maintain a certain supply chain accuracy. Markus Blanka-Graff: And Gian-Marco, on AI, so clearly, that's an ongoing development, and we see continued progress over our last couple of weeks. But between our last announcement and today, it's really just a couple of weeks. And I would ask you to wait until we get into the half year results in July. And I think we should be -- you can expect from more tangible report and numbers, I think, at that point in time. But between the last 6 weeks and now, really not much has changed. We have expanded our use cases, and we are more and more seeing the benefits in empowering the workforce and making really their work more or supporting their work in a much better way. Operator: The next question comes from Lars Heindorff from Nordea. Lars Heindorff: The first one is on the road business. It sounds like you actually see maybe a little bit of sign of improvement in the European market. Maybe just if you can sort of elaborate a bit on that. We've seen Maut statistics in Germany still being down. So this increase in the organic revenue growth, is that caused by price increases? Is it volumes? Or where do you see any pockets because I mean, feedback on Germany is still pretty big in my view. And then the second part, which is what most of the other questions have been around, which is still regarding the yield development, the bunker surcharge, particularly in sea freight. To what extent is that affecting the yields positively or negatively? In sea freight, I'm hearing that the carriers are, to some extent, struggling a bit passing through the emergency bunker surcharges and maybe that many customers are waiting for the regular BAF to kick in sometime in the third quarter? And how will that affect your yield development if we look a little bit further beyond just what goes on right now? Stefan Paul: Yes, Lars, it's Stefan. I'll tackle the first one. It is mainly market share gains, right, in the U.S., in particular as well in Europe. We have seen a pretty good development in the last 6 weeks. We have gained additional volumes in Germany and France in the large domestic markets, but as well international. I think it has to do with what we have started last year on the back end of the softening when we saw that the market has really started to soften quite a bit. And then we increased our sales efforts. This is paying off now. And then with you, overall, the German economy is still pretty challenging, but even so we see good development from customers and new customers and the volume is coming in much better than expected. Markus Blanka-Graff: And Lars, I'll take the question on -- I think your general question is any fuel bunker or any surcharges beneficial to the yield. And I can answer, I think, for all 3 business units, if it's road, sea or air, that is neutral to the yield. I think what is important is what Stefan also mentioned a couple of times, there is transparency from that impact towards the customers. And I think that is the most important thing we can do being transparent and straightforward. It's not a yield topic. It's a cost pass-through. Operator: The last question comes from Marc Zeck from Kepler Cheuvreux. Marc Zeck: Last question then would be actually on the macro situation in Europe. We talked about the U.S., I guess. But let's say, volumes into the U.S. were kind of sluggish for the last 2 years and most of the volume growth, at least for the entire market was driven by volumes into Europe. And now the energy crisis is probably more of an issue for Europe as we are not really self-sufficient on energy over here. So what is the latest really that you see for April or that you see forward bookings for May? How is the energy crisis affecting Europe? And why would you be kind of positive that -- yes, that you will get over this rather without a major slowdown in European activity towards peak season in ocean freight in August and September? That's my question. Markus Blanka-Graff: Mark, this is an interesting question because it's, I think, nearly impossible to answer correctly. So I take the risk of being wrong, right? So I think on energy crisis and what is the impact on the macroeconomics, the first question for us is, and I have -- we have talked about a little bit what is the expectation of how long energy prices are going to stay at such a super elevated level, much connected to how long the crisis in the Middle East is going to continue. What -- what we can see is that at the current stage, the trade lanes, Asia to Europe are basically holding up strong. How much the inflationary impact is going to put on customer confidence in the U.S. remains to be seen. But again, here is a question more like how long is it going to persist. So I think too early to say if there is already an impact into the third quarter peak season expectations. I think we really have to sit here and look at the development for the next couple of weeks before we have any idea what's going on. You know better than certainly us, oil price volatility is a topic on the day. And obviously, for us, as I said in the previous answers, we are passing through this impact towards the customers. Their behavior, I think, cannot and has not reacted on a daily basis. How that's going to be going forward, I think, as I said, we have to wait a bit. Marc Zeck: Understood. If I just have a chance to follow up on that one. If you compare the current situation to how things played out during the Ukraine crisis, let's say, from a current perspective was pretty similar end of February, right? When -- then when did you see from European customers really the action that they put back a bit on the other side? Markus Blanka-Graff: Well, I think my first answer would be the magnitude or the impact on economy, on macroeconomics of the Middle East crisis now is far bigger than what we have seen on the Ukraine war. So the energy prices and the severity, I think we have talked about even the potential of jet fuel shortages. That has never been a situation from the -- coming from the Ukraine war. So I'm not sure if that is comparable. What we can generally say is when there is such severe disruption in supply chains, there is a certain period of a couple of weeks, so maybe 6, 8 weeks where alternatives, we spoke about how alternative supply chains are being designed are being done. And then if that new situation persists, then slowly that becomes that new situation to deal with. But I think we are far away from any of that stage right now. We are still in a stage of disruption. Operator: We have a follow-up question from Marco Limite from Barclays. Marco Limite: So I just want to go back to one of your statements, which is the Middle East had no real impact in Q1 and potentially into Q2. Was that referring to the sea freight business or to all the divisions? Yes, I would say this is the question and then in case I've got a small follow-up. Stefan Paul: So my answer was -- Stefan speaking. My answer was that the impact from an EBIT perspective in Q1 was not to be seen from the Middle East crisis. just piggybacking on what I said before, we will see an impact on the overall freight rates due to the fuel surcharge adders, which we transparently hand forward and put forward to our customers, and I talked about that as well. From a yield and from a volume perspective, you might see and I mentioned it as well that the second quarter in air freight will have a little bit of a better yield. Is that coming from the crisis or from a better mix? I would say it's more coming from a better mix and less from the crisis. But overall, one thing is clear due to the fuel surcharge adders, the freight rates overall are getting higher. Marco Limite: That makes a lot of sense. And when we think about the better mix, is that market-driven? Or is you guys trying to... Stefan Paul: Nothing to do with the market. It's us we decide basically based on verticals and higher profitability, where do we play and where do we want to play. Marco Limite: That makes sense. Is that because in a period where capacity there is shortage of capacity, I guess you prefer to go with better yield volumes. Is that the logic or... Stefan Paul: Some of the logic, yes. some of the logic that and we put much more emphasis on the general cargo on the hard cargo, right? And with our service, with our product offering, with the quality we offer, we have the choice to basically go for the higher-yielding business. Operator: Ladies and gentlemen, there are no further questions. Back over to you for any closing remarks. Stefan Paul: Thank you very much, as always, for your interest, listening for the good questions, and we speak to you then when we communicate the Q2 figures. Stay tuned and healthy. Bye-bye. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
