TNT’s share price recovered today after a heavy fall on Friday driven by a profit warning for theExpress business which is due to be floated at the end of May.
On Friday, the TNT stock dropped 12.6 per cent to €16.01 after the company released a tradingupdate highlighting a ‘volatile’ start to 2011 due to rising oil prices, political unrest andnatural disasters as well as integration problems in Brazil.
But today the stock rose to €16.65 by late afternoon, up 4 per cent. Rating agencies Standardand Poor’s and Moody’s released credit ratings for TNT Express, with a preliminary SP credit ratingof ‘BBB ‘ – ‘Stable’ and a provisional Moody’s credit rating of ‘(P) Baa1’ – ‘Stable’.
Moreover, it emerged that TNT NV would not be able to block a takeover bid for TNT Expressonce the business has been floated on the stock exchange at the end of May, according toinformation with the TNT Express prospectus released today. Media and analysts have speculated thatTNT Express might be an attractive takeover candidate once it has been split off.
As part of the complex demerger arrangement to separate TNT Express, the parent company TNTNV will retain a 29.9 per cent stake in the company to cover equity and funding requirements. Undera so-called ‘lock-up’ arrangement, TNT NV is not entitled to sell this holding for six months afterthe demerger. However, TNT NV would be forced to sell the stake if an offer is made that issupported by the TNT Express executive board and supervisory board, the prospectus stated.
Assuming the split is approved at TNT shareholder meetings on May 25, TNT Express shares willbe traded on the NYSE Euronext Amsterdam from May 26 onwards. TNT NV shareholders will receive oneTNT Express NV share for each TNT NV share that they hold.
More details about TNT Express’ financial outlook for this year were also contained withinthe prospectus. The business’ full-year operating profit is now expected to be about €350 millioncompared to earlier forecasts of €400 – 420 million. TNT Express had revenues of €7.05 billion in2010, up 13.6 per cent from €6.2 billion in 2009 and slightly more than €6.9 billion in 2008,according to the prospectus. It had an operating profit of €180 million last year, compared to €61million in 2009 and €286 million in 2008. Net profit was €69 million in 2010, compared to an €8million deficit in 2009 and a €140 million profit in 2008.
In Europe and MEA, TNT Express made an operating profit of €371 million on revenues of €4.45billion last year. This was an improvement on 2009 but behind the 2008 results. This year, TNTExpress expects modest revenue growth and an underlying operating margin in line with last year (9per cent or slightly above). In the medium-term, the business aims for a 10-11 per cent operatingmargin in the region.
Asia Pacific moved into profit last year with a small €14 million profit on revenues of €1.6billion, which was a strong improvement on the results for 2009 and 2008. This year the region isexpected to see a partial recovery due to improving intercontinental volumes while in themedium-term it aims for double-digit revenue growth and a “solid” profits contribution.
The Americas increased revenues strongly to €502 million last year following acquisitions inBrazil but more than doubled their operating loss to €67 million. “A full range of correctivemeasures” are being taken in the region this year, according to the company.
The company’s ‘Other Networks’ (TNT Innight and TNT Fashion) made a small profit of €18million on revenues of €448 million last year, according to the prospectus.
