TNT Express today posted slightly reduced second-quarter adjusted revenue and profit figuresglobally, with increased volumes but lower margins in Europe alongside improved margins in Asia
Pacific and significantly reduced losses in its Americas region.Reported revenues were up by 1.7% to €1.83 billion, although adjusted for currency effects weredown 1.8%. Reported operating income increased by 67.4% to €77m, although adjusted operating incomeat constant currencies and excluding one-offs decreased by 6.8% to €69m.
The group said its €50m cost-savings programme would be fully implemented by the end of thisyear, although there were already positive signs. The company’s focus on improving itsresults in Brazil helped halve losses in the Americas region to €23 million.
Despite demanding economic conditions in Europe, the Middle East and Africa, the region showedgood volume growth, although customers increasingly opted for non-premium products. The resultingnegative product mix plus general price pressure were mitigated by cost-control initiatives, TNTsaid.In Asia Pacific, operating income improved even though international volumes declined. Allunits performed better, in particular Australia, China Domestic (Hoau) and India.
Its other networks results’ were ahead of the prior year’s.
Commenting on the quarter’s developments, Marie-Christine Lombard, CEO said: “Despite anincreasingly challenging economic environment, TNT Express was able to sustain profitability. InEurope, good volume growth underscores the strength of our diversified product portfolio. Costsavings and revenue-enhancement initiatives also supported profits. Performance in Asia Pacific andAmericas continued to improve as a result of business development and restructuring measures.”
In Europe, adjusted revenues were flat (-0.1%), resulting from good overall volume growth,balanced out by yield contraction. Volumes increased in all product segments, with the highestgrowth in the company’s International Economy services. Yields were negatively impacted byproduct-mix changes and pricing pressure. The company said cost-control measures, includingreduction of its European air network capacity and local savings, partially mitigated the impact ofnegative yield developments.
In Asia Pacific, adjusted revenues declined by 10.9% because of lower international volumes, itsIndia Domestic divestiture, and targeted reductions in China Domestic LTL volumes. Thesechanges mean Day Definite services now represent 35.8% of TNT’s China Domestic turnover, up from21.3% in the same period last year.
Higher Domestic prices, positive customer mix effects in International and higher fuelsurcharges compensated for lower International base pricing, the company said. Meanwhile, theresults benefited from the full-quarter impact of TNT’s agreement with Emirates Sky Cargo, whichreduces fixed costs by absorbing half of the capacity of the TNT’s three Boeing 777 freighters.Overall, Asia Pacific showed good adjusted operating income development, leading to a quarterlyprofit of €9m compared with a €2 million loss last year, “supported by improving revenue qualityand general cost control”.
In the Americas region, the company’s troubled Brazil operation achieved revenue increasescompared to the prior year, mainly as a result of higher prices. Brazil’s adjusted operating lossesdeclined, “but challenges remain” the company said, with the focus continuing on businessdevelopment and cost control.
It said the rest of its Americas businesses performed in line with expectations.
For the remainder of 2012, the company said it expected increasingly challenging tradingconditions in Europe and Asia Pacific for intercontinental business. In the Europe & MEAregion, it expects indirect and fixed-cost control initiatives in place to help mitigate impact ofnegative yield trends.
It expects Asia Pacific to further benefit from reduced exposure to fixed intercontinental aircapacity and contract portfolio management, while in the Americas, the focus would remain onimproving results in Brazil.
TNT said the timing of the implementation of certain long-term projects that are part of2012-2013 fixed-cost savings programme had been temporarily adjusted in light of the proposed UPSoffer.
The company declined to comment on whether any disposals were likely to be needed for any of itsEuropean businesses as a result of the deepening of the European Commission’s investigation intothe proposed acquisition by UPS. Instead, Lombard said: “Earlier this month, UPS and TNT Expressannounced that the European Commission’s assessment of the transaction would move to a phase IIreview as certain areas require more time to analyse. We expect to conclude the regulatory processby 4Q12.”
Lombard added: “I want to re-emphasise the strong strategic rationale for the combination. Anenhanced product portfolio, joint functional excellence and expanded geographic reach will createan unmatched combined service proposition for our customers. We look forward to discussing theoffer with our shareholders at our upcoming Extraordinary General Meeting.”
