TNT says Q1 broadly in line with outlook

Dutch mail company TNT NV’s first-quarter business trends were broadly in line with its annual outlook, the company said on Friday, in contrast with U.S. rivals which have cut their earnings forecasts.

Volume growth in the express delivery division in the first quarter was in line with that achieved in the previous quarter, Europe’s second-biggest mail company said in a statement ahead of a shareholder meeting. The unit makes up 60 percent of annual sales.

“This statement is very positive. TNT’s share price in the past few months has been punished as if a profit warning was inevitable. Today’s statement clearly shows that this expectation is not materialising,” said Petercam analyst Thijs Berkelder.

U.S. rival UPS lowered its quarterly earnings outlook on Tuesday, blaming worsening U.S. economic conditions and high fuel costs.

Last month, FedEx Corp gave a low outlook for its current quarter, citing the same factors, after reporting a 7 percent fall in quarterly earnings.

TNT shares were 1.6 percent lower at 24 euros by 1431 GMT, outperforming a 2.2 percent drop in the DJ Stoxx industrial goods and services index .

But the company’s outlook might change if the European economy slows, Chief Executive Peter Bakker told shareholders at the meeting.

“Should the recession in the U.S. spread into Europe, then of course we will be affected,” he said. TNT, which is due to report first-quarter results on April 28, has no operations in the United States.

It said operating income for express will be affected by Easter, which fell in March this year, but the impact should be reversed in the second quarter.

TNT is targeting high single-digit organic sales growth and low double-digit growth in its 2008 operating margin for the domestic and international express delivery business, excluding emerging markets.

The mail operation, TNT’s other major business, also grew in line with the outlook provided in February, when the company released 2007 results.

TNT has guided for a low single-digit percentage organic sales rise for mail this year, with a targeted operating margin of around 16.5 percent.

TNT, which is seeking to expand its business in Germany to offset domestic market share loss, warned it may withdraw from one of the region’s three biggest markets if it loses a court case against hefty minimum wages for postmen there.

“The business case for investment in Germany will be very difficult,” Bakker told shareholders at the annual meeting. He said the company was “very reticent” on investing in Germany now due to the court case.

TNT has said minimum wages shield Deutsche Post market liberalisation and raise costs for its rivals. Bakker said it would be about two years before the company knew how the whole situation in Germany would turn out.