TNT plans aggressive UK expansion
TNT, the Dutch mail group, is planning a further aggressive expansion in the UK and elsewhere in Europe in a new drive to offset its declining postal business at home.
Executives said in Amsterdam that the company was raising its forecast for volume growth in its European mail networks (EMN) division – mainly Britain and Germany – to between 30 pct and 35 pct this year from 25 pct and its operating margin to 17.5 pct from 17 pct. Volume growth was 37 pct in the second quarter.
TNT, which has capitalized on the running series of strikes by postal workers at Royal Mail, said organic growth in EMN was up 21.3 pct in the first half, driven overwhelmingly by its UK business. It has started up a new parcels business in Britain. But mail volumes in Holland declined by 3.5 pct in the second quarter.
The former Dutch monopoly, one of Royal Mail’s biggest new rivals, has already indicated that it plans to develop a full-scale network in Britain rather than use that of its UK rival to deliver mail. Peter Bakker, chief executive, said today the group’s new strategy would be disclosed in December.
Giving an upbeat outlook for the full year, Mr Bakker said operating income fell 2 pct in the second quarter to EUR 330 m (GBP 223 m) because of one-off costs but half-year sales were up 9.6 pct at EUR5.4 bn and profits up 2.6 pct at EUR 681 m. TNT is raising the interim dividend by 15 pct to EUR0.30 and initiating a further EUR 500m share buy-back.
Mr Bakker made plain that TNT is worried by the delayed date – 2011 rather than 2009 – for the introduction of full-scale liberalization of EU postal markets and the impact of this in Germany which is due to bring in full competition for Deutsche Post next year. Britain’s market has been open to competition since 2006 and TNT is active in eight of the 27 domestic European markets.
