TNT Express is an attractive investment with strong business growth potential in Europe andoverseas, top executives told analysts yesterday ahead of the company’s expected listing at the end
of this month.The express operator is a market leader in Europe and well-positioned to grow in emergingeconomies around the world, CEO Marie-Christine Lombard said at the Capital Markets Day in London.The company is “uniquely positioned” with a wide offering of express and economy products and abroad geographic presence, she said.
In Europe, TNT has a leading 18% share of the €19 billion intra-Europe B2B Express market aheadof DHL, UPS and DPD, she said. Its revenues are spread broadly across major markets such as the UK,Germany, France, Benelux, Italy, the Nordics and Spain/Portugal.
Growth in Europe would be driven by GDP-based organic growth and new initiatives, includingvalue-added solutions, B2C parcels and freight transport. The region’s market-leading profit margincould improve from 9% last year to 10-11% through higher prices, cost reductions and commercialinitiatives, she added.
In emerging markets, TNT has a ‘first mover’ advantage in countries such as China and Brazil,Lombard pointed out. The company claims a 33% share of the €1.2 billion China-to-Europe expressmarket ahead of DHL, owns the largest Chinese domestic network and the leading Brazilian domesticoperator.
In Brazil, subsidiaries Mercurio and Aracatuba had 20% of the €1.8 billion domestic expressmarket. But their integration had been disrupted by issues such as systems integration, ineffectivecentralisation and staff turnover as well as quality issues, she admitted. TNT has been forced tobook a €120 million impairment on the value of its Brazilian business. The Americas region as awhole, where Brazil represents about 75% of the business, saw revenues drop 7.9% to €105 millionand its loss more than doubled to €31 million in the first quarter of 2011.
Lombard stressed that an experienced new management team has been put in place and given adeadline to bring the operation back into profit by the second half of 2012. The Brazilian businesswould be reorganised on a regional and decentralised basis, indirect costs would be cut, qualitywould be improved and there would be a sales drive. Reuters cited her as telling analysts that shewould go to Brazil every six weeks to monitor the situation personally and she did not want hername “associated with a loss in Brazil”.
Michael Drake, head of the Asia Pacific region, said TNT’s strategy was to be the market leaderbetween China and Europe and the company had a competitive advantage in the domestic Chinese marketwith its day-definite road freight service. The Chinese domestic express market could grow to thesize of the US market by 2022, he predicted. TNT targets average annual growth of 15-20% in theregion and aims for TNT Hoau to be profitable by 2013.
