TNT Express today unveiled weak underlying Q1 2013 results due to tough trading conditions inEurope but reported a net profit surge due to the €200 million fee for the failed UPS takeover
offer.The Dutch delivery group also said its new Deliver! strategy would start to show an initialpositive financial impact in the second half of this year but the bulk of the targeted €200 millionprofit improvement would come in 2014 and 2015.
The €231 million operating profit reported for January-March 2013 included a €200 millionpayment by UPS following the European Commission veto on its €5.2 billion takeover bid. Theunderlying EBIT dropped to €38 million from last year’s €54 million.
Underlying revenues declined 3.9% to €1.68 billion, leaving the underlying profit margin at2.3%, down from 3.1%. The revenue figures now exclude the China Domestic business, whose sale hasbeen agreed, and the Brazil Domestic business, which is up for sale.
In general, the Q1 performance trend was similar to previous quarters as customers continued totrade down to economy products while weak demand put pressure on prices, interim CEO Bernard Bottold journalists on a conference call.
In particular, demand was lower from the key hi-tech and automotive sectors, he noted. “It’stough due to automotive and hi-tech struggling, and we are struggling with them,” he commented.Looking ahead, he hoped, however, that the European economy would pick up again “in the next coupleof years”.
Adjusted revenues in the Europe, Middle East and Africa region dropped 1.4% to €1.1 billion andoperating profits declined nearly 25% to €52 million, leaving the margin down at 4.6% from 6%.Consignment volumes grew 7% in the region but yields declined nearly 5%, although the impact onprofits was lessened by cost controls. Domestic and international economy volumes grew butinternational express fell back, while B2C volumes continued to increase. However, there waspricing pressure across all products, TNT stated. The Nordics, Eastern Europe and the Middle Eastperformed strongly while other markets were weaker.
In Asia Pacific, revenues declined by 8.4% to €394 million, mostly due to tougher tradingconditions in China and Australia. China International revenues declined due to weaker flows toEurope, Bot explained. The region had a stable €7 million loss. TNT is continuing to targetmulti-year block-space agreements with airlines for cargo capacity to replace its B747 freighters,interim CFO Jeroen Seyger pointed out.
In the Americas, now excluding the loss-making Brazil business, adjusted revenues were slightlylower at €42 million and the loss was reduced slightly to €4 million. Brazil, which is lined for upsale this year, continued to reduce its losses with a Q1 loss of €12 million on revenues of €80million. Bot stressed: “I believe it can be profitable.”
The Other Networks results were hit by lower automotive volumes at TNT Innight and a loss of amajor UK contract at TNT Fashion.
Looking ahead, TNT said trading conditions were expecting to remain challenging throughout 2013,leading to lower EMEA profits, similar results in Asia Pacific and Other Americas and lower lossesin Brazil.
