TNT is targeting strong growth in express, drawing up a new parcels strategy and is on track tosell its logistics business in 2006, CEO Peter Bakker said at the group’s 2005 annual press
conference on Monday. The company, which announced strong financial results and gave an optimisticoutlook for its core mail and express businesses, also sealed its acquisition of Chinese domestictransport group Hoau early on February 27.In 2005, TNT increased group revenues by 11 per cent to € 10.1 billion, including a 10.6 percent operational rise. Group operating income (EBIT) rose 3.9 per cent to €1.16 billion, includinga 3.5 per cent operational rise. The continuing operations (Mail and Express) made a combinednet profit of €772 million, up 7.1 per cent. Discontinued operations (Logistics), which is up forsale, made a loss of €111 million compared to a small profit of €31 million in 2004. The overall2005 group profit dropped 12.4 per cent to €659 million. Q4 group revenues rose 3.2 per cent to€2.77 billion, operating income increased just 0.6 per cent to €322 million, and group profitsdropped 48 per cent to €108 million.
TNT Express performed strongly in 2005, increasing revenues by 8.3 per cent to €5.3 billion andachieving an operating profit of €474 million, up 26.4 per cent on 2004. This improved itsoperating margin to 8.9 per cent from 7.6 per cent the year before. In the fourth quarter, theExpress business increased revenues 4.4 per cent to €1.44 billion, and improved its operatingprofit by 10.4 per cent to €148 million. This gave it an operating margin of 10.3 per cent versus9.7 per cent in Q4, 2004. Growth was driven by international traffic flows, with Rest of the Worldrevenues up 11.7 per cent in 2005 and European revenues up 7.6 per cent. China and the Middle Eastagain grew by about 25 per cent in the fourth quarter.
In 2006, TNT Express expects to increase revenues about 10 per cent, including the acquisitionof Spain’s TG+, and to achieve an operating margin of 9-9.5 per cent. CEO Peter Bakker highlightedthe acquisition of Chinese transport group Hoau, with revenues of €120 million, which was signedearly Monday and its investment in India as growth factors. Bakker added that Brazil and Russiawere other areas of potential expansion along with Special Services.
Asked by CEP-Research about the group’s strategy in China and the parcels market, Bakker saidthat the cooperation with China Post for outbound international EMS items was functioning well andwas not affected by the acquisition of Hoau. Increased cooperation with China Post in the domesticmarket had been held up by the slow progress of a new postal law in China and TNT had thus decidedto develop its own network, he explained. In the parcels sector, identified as a growth area underTNT’s new network strategy, Bakker said that the Mail and Express divisions were working on abusiness plan due for completion later this year, including looking at the B2B and B2C sectors. “Our best route of entrance is not yet clear,” he commented.
On the planned sale of TNT Logistics, Bakker said that there had been “serious interest fromstrategic and financial investors” who were currently studying the sale documents. Declining toname individual companies or their geographical location, he stressed that no negotiations had yettaken place.
