TNT is to sell off its profitable freight forwarding subsidiary in order to focus on expanding itsEuropean mail and worldwide express activities. Its latest strategic divestment was announced today
along with Q3 results showing strong growth for TNT Express.TNT chief executive Peter Bakker said at a news conference that there were only “limitedsynergies” between TNT Freight Management and TNT Express. TNT had decided to invest in its mailand express networks, and would therefore sell the freight business. “We are building a strategy,we are focusing on networks, (and) that is why we have decided to sell Freight Management.”
Bakker stressed, however, that the freight subsidiary was “a great business… and in excellentshape”, and that there was already strong initial interest from potential buyers. He declined tosay whether TNT expected to make a profit on the book value of the company, and when a sale mightbe concluded. TNT Freight Management, which employs 2,300 people in 126 offices in 28 countries,has an annualised operating profit of about €40 million and annual revenues of some €800 million.
Formerly called Wilson Logistics, the company was bought for €257 million in 2004 at a timewhen the Dutch group was expanding its supply chain logistics business. After deciding to sell itsunderperforming Logistics business, TNT retained the originally Nordic-based international air andsea freight forwarder, pending a strategic review.
In the quarter ending September 30, 2006, TNT increased group revenues by 9% to €2,398million, improved operating incoming (EBIT) by 8.9% to €257 million and increased profit fromcontinuing operations by 5% to €169 million. Over the first nine months of 2006, TNT increasedgroup revenues by 7.9% to €7,293 million and improved operating income by 11.1% to €921 million.Profit from continuing operations was up 5.5% at €592 million.
Discontinued operations, covering both TNT Logistics and TNT Freight Management, made acombined Q3 loss of €102 million, largely due to one-off costs from a logistics contract, thelogistics sale and the sale of the 20% stake in Global Automotive Logistics in August.
TNT Express showed its strongest organic and total revenue growth performance since the firstquarter of 2000. Its Q3 revenue rose 13.5% to €1,479 million, operating income was up 31.3% to €130million and the operating margin rose to 8.8% from 7.6% one year earlier. Nine-month revenues rose11.9% to €4,387 million, operating income grew 24.5% to €407 million and the operating margin was9.3% (versus 8.3%). In the third quarter, TNT Express generated strong growth in all clientsectors, particularly global accounts. In the core products, global consignments were up 9.4% andkilos were up 12.7%.
In Europe, all business units reported growth, with Germany and Benelux making most progress,amongst the developed markets, and Eastern Europe growing by over 30%, TNT said. Both France andthe UK saw improvement in the domestic business. In the European international air network,consignments grew 7.6% and, in the road network, by 15.2%. In Spain, integration of the TG+business acquired last year had made good progress with rationalisation of locations, re-brandingand roll-out of operational standards leading to improved service KPIs. In the Rest of World,China, South East Asia and the Middle East all grew revenues by more than 20%. Australia continuedto improve, based primarily on the domestic business.
TNT Post, the mail operator, increased Q3 revenues by 2.6% to €922 million and nine-monthrevenues by 3.2% to €2,920 million, largely thanks to expansion in Germany and the UK which morethan compensated for falling volumes in the Netherlands. But its operating income dropped back by10.9% in Q3 and by 0.2% over the nine months due to the costs of investing in the German andBritish networks.
