TNT Logistics turnaround underway: profits double
The second quarter of 2004 has seen TPG, the owner of the TNT Express and Logistics brands, post record profits as a result of the strong performance of its express and mail divisions. Group revenues increased to €3,058m, a rise of 4.2% on the same period in 2003. Operating profit increased by 25.3% to €366m.
The increase in profitability in the Mail division was achieved despite a continuing fall in revenues (down by 2% to €948m). Operating profits increased by 9.4% to €232m, representing a 24.5% profit margin. Its European Mail Networks business unit, which competes with Post Offices such as Deutsche Post and Royal Mail in their domestic markets, saw a further quarter of double digit growth with revenues growing by 15.2% to €121m.
Express
TNT Express saw revenues grow by 11.4% to €1,154m in the second quarter. At the same time operating profits leapt by 54.5% to €102m, representing an increase in margin from 6.4% to 8.8%. Management singled out the UK operation for praise although Central & Eastern European countries realized amongst the highest growth in percentage terms. TNT’s operation in China saw revenues grow by 50%.
Logistics
The Logistics division has experienced difficulties over the past year and TNT’s management has put in place a recovery programme (Transformation through Standardisation) to turn around performance. Revenues grew by 2.3% to €966m although this masked a fall of 9.6% in North America. This was due to some contract rationalization and the loss of a major automotive contract. However operating profit doubled to €42m, with margins rising from 2.2% to 4.3%. The new strategy of only taking on higher margin contracts would seem to be paying dividends. Contract wins in the second quarter had annualized revenues of €108 million, compared to €97 million in the first quarter. Annualised contract terminations amounted to €42 million, many of which were due to portfolio re-structuring.
