TNT “cautiously optimistic” for 2010 after weathering the storm

TNT today presented a slightly more upbeat outlook for this year, forecasting higher expressvolumes, revenues and profits, after seeing results slump in 2009 due to the economic crisis and

The Dutch group, which did not issue any financial targets for 2010, expects its expressdivision to generate single-digit volume growth, mostly from international business, and especiallyfrom economy express services. Express prices, however, are likely to remain under pressure thisyear.

Its Dutch mail business expects lower results than in 2009, including a volume fall of7%-9%  due to the impact of full postal liberalisation but a lower decline of 2%-4% isexpected in the following few years.

TNT’s other key objective this year will be to make progress on its Vision 2015 strategy,including a focus on 4-5 core business areas. It expects further disposals and partnerships in itsEuropean Mail Networks this year following several deals in recent weeks.

In 2009, when it “weathered the storm”, TNT’s reported group revenues dropped 6.7% to €10,402million, Ebit fell 34% to €648 million and net profit was down 49.5% at €281 million. On anunderlying basis, excluding one-off effects and charges, revenues were down 5.3% at €10,566 millionand Ebit dropped 21.5% to €896 million.

In Q4, reported revenues rose 0.5% to €2,947 million, while Ebit dropped 20% to 128 million,including €191 million worth of one-off charges. Net profit was down 57.6% at €25 million.Underlying revenues rose 0.7% and Ebit improved 3.2% to €322 million.

CEO Peter Bakker said: “Operating results in Q4 2009 were relatively solid in a tradingenvironment that continued to improve, leading for the first time since Q2 of 2008 to a highergroup operating income than the same quarter last year. For the full year, significant cost savingsand a strong focus on cash have made us come out of the severe economic crisis as a financially andoperationally stronger company.

“The first weeks of 2010 make me somewhat optimistic on improving economic conditions, however,we will continue to manage our group from cautious assumptions, leading to continued strong focuson cash and cost,” he stated.

The Express division’s 2009 revenues dropped 10.5% to €5,956 million on a reported basis (-8.8%on an underlying basis) and its operating profit declined 48.7% to €193 million (-36.8% to €282million underlying). The division reduced costs by €428 million, took nine aircraft out of serviceand scaled back employee numbers by 2,545 during the year.

In Q4, however, Express revenues increased 0.5% to €1,675 million and underlying operatingprofits improved 20.5% to €106 million. The quarter saw the first year-on-year volume increase of2009 (air +9.7%, road +2.6%) and the underlying margin rose to 6.3%, the highest of the year.Growth in emerging platforms outside Europe, especially China and India, largely compensated forlower revenues in Europe.

In the first six weeks of 2010, TNT’s express volumes are 10%-15% up on last year while comparedto 2007 road volumes are higher but air volumes are lower. Further job cuts would not be a prioritythis year due to the improving volumes and TNT would focus on reducing costs through more efficientoperations and switching volumes from air to road transport, Bakker said.

The Mail division had a slight 0.7% revenue fall to €4,216 million last year and a 25.4% drop inoperating profits to €472 million (underlying -12.5% to €632 million. In Q4, mail revenues werestable and underlying profits declined 1.3% to €229 million. Dutch addressed mail volumes declined5.9% in Q4 and the company took a €146 million impairment on the value of its EMN businesses.

Bakker said he expects mail staff to approve the new Collective Labour Agreement which reflectstheir wish for pay ahead of job security. On the future of TNT Post Germany, he welcomed the recentdecision against the minimum wage and the cooperation agreement with publishers, and said there isnow “a business case” in Germany even though it would still have to be looked at critically.