TNT today announced a sharp drop in premium air express volumes and scaled back the outlook for itsexpress business this year. Its shares dropped dramatically in early trading as a result.
TNT, which will release June-September 2008 Q3 figures on October 27, said in a statement: “Trading conditions in TNT’s European Express business have significantly worsened in September and,based on the volume patterns in the first two weeks of October, TNT expects this pressure tocontinue in the fourth quarter.
“Within a context of severe global volatility in financial markets, the recessionary trend inthe economy in Europe has accelerated, causing the volumes in the premium International Express(air) product to decrease around 10%. The Economy Express volumes (road) have continued to growalbeit well below levels of 2007,” it said.
But growth rates and margins in its Express Emerging platforms continued to develop in linewith the outlook, the Dutch group stated. TNT’s Mail business is also developing according to theoutlook, producing a robust operating income and cash flow for 2008, it added.
TNT said it will present an updated outlook for 2008 in its Q3 results on 27 October. Themargins in the Express ‘International & Domestic’ line of business are currently expected todevelop around a solid 9% for the full year, with somewhat lower revenue growth. No changes inother lines of the outlook are currently foreseen, TNT said.
In July, at the announcement of its Q2 and half-year results, TNT said that this year TNTExpress was expected to show a high single digit organic revenue growth in International andDomestic, with a low double digit operating margin. The Express Emerging platforms were expected todeliver organic revenue growth in the high teens, with a low single digit operating margin. Mailwas expected to show a low single digit organic revenue increase overall, with an operating marginaround 16.5%.
The TNT share price, which had closed down 5% at €17.75 yesterday, opened at €14.82 and wastrading at €16.22, down 8.6%, at 12:30. TNT has already announced it aims to achieve savings of€100 – 125 million in the express division by 2010. In 2007, TNT Express made an operating profitof €599 million on revenues of €6,551 million. The TNT group, including the mail business, hadoperating profits of €1,192 million on revenues of €11,017 million.
TNT also said that it was able to refinance its capital requirements in August, ahead of thedeepening of the financial crisis in September/October. Combined with the strong cash flow, thisput the company on a solid financial footing going forward.
