TNT Express today unveiled improved profits in Europe but deeper losses in emerging markets thatdragged down overall profits for the April – June second quarter of 2011.
Presenting its first quarterly results as a listed company following the de-merger fromTNT/PostNL in May, the Dutch-based operator reported a low 0.9 per cent rise in revenues to €1.8billion, with underlying revenues up 2.9 per cent to €1.83 billion. Operating profit dropped 23 percent to €46 million on a reported basis and was down 8.1 per cent to €79 million on an underlyingbasis. Net profit (attributable to shareholders) slumped 85 per cent to just €4 million.
The company’s largest market, Europe, performed well, with adjusted revenues up 2.4 per centto €1.15 billion and adjusted operating profits 11.2 per cent higher at €109 million. The EBITmargin improved to 9.5 per cent from 8.7 per cent. CEO Marie-Christine Lombard said: “Europe’sperformance was once again solid and is evidence of the strength of our intra-European network,wide product offering and clear customer focus.”
In Europe, TNT improved Q2 yields, with revenue per consignment 2.9 per cent higher despiteflat volumes. It had continued strong growth in International Economy, slower growth inInternational Express and ‘controlled growth’ in Domestic volumes. Southern Europe, the Middle Eastand the UK performed well despite tough economic environment.
In Asia, the second-largest region, adjusted revenues rose 9 per cent to €458 million but theregion slipped into the red with a €3 million loss compared to an €8 million profit one yearearlier. The key factors were “volatile” Asia-Europe demand, increased market capacity which putpressure on rates, and the negative impact of higher fuel costs on intercontinental services. InChina, TNT continued its targeted growth of the day-definite product to reduce the proportion ofLTL services. Overall, yields were higher with RPC up 6.6 per cent.
In response to the volatile demand, TNT is optimising its Asia-Europe freighter services andplans to operate four wide-body planes on routes between the two continents this autumn.
The Americas remained the main drag on profits due to heavy losses in Brazil. The regionsuffered a 10.4 per cent drop in adjusted revenues to €120 million but it had an adjusted operatingloss of €33 million compared to €14 million one year earlier. There were also €12 million ofrestructuring and one-off costs, leaving a reported loss of €45 million. The full impact of majorcustomer losses in Brazil was evident in significant year-on-year volume deterioration and relatedoperating losses, TNT commented. But the company said that the Brazil turnaround was proceedingaccording to plan with a new organisation and management in place, service quality stabilised andkey controls implemented. “ The turnaround in Brazil is on track and although the short term willbe challenging, we confirm our second-half 2012 deadline,” stressed Lombard. The company said itspositioning in domestic emerging markets rested on continuing evidence that medium-term targetswere achievable.
Over the first half of 2011, TNT Express increased underlying revenues by 3.6 per cent to€3.6 billion and operating profits dropped 18.5 per cent to €128 million, leaving the profit marginat 3.6 per cent.
For 2011 as a whole, the company reiterated its main aims of “modest” revenue growth andstable profits in Europe and MEA, a partial recovery in Asia Pacific and the ongoing turnaround inthe Americas. The company aims to achieve about €50 million in cost savings this year.
