TNT shares fall as Q2 disappoints on Express volumes
Shares in TNT NV fell on Monday as the Dutch postal group said it expects full-year 2008 organic growth and operating margins to come in at the low end of its guided range as it reported worse-than-expected second quarter results.
Net profit fell to 205 million euros from 244 million euros, missing estimates of 224 million to 232 million, while EBIT was 324 million euros, down from 330 million last year and below estimates of 339 million to 352 million.
‘The sharp rise in fuel prices during the quarter and the general economic outlook have impacted both our customers and us,’ TNT chief executive officer Peter Bakker said in a statement.
TNT said the full-year 2008 is expected to develop within its outlook range, albeit at the low end.
It had earlier guided for Mail to show a low single-digit organic sales growth, with an operating margin around 16.5 percent.
At the Express division, TNT previously said it expects high single-digit organic sales growth in International & Domestic, with a low double-digit operating margin.
Shares fell almost 11 percent in morning trade before recovering slightly.
‘When looking at the underlying second quarter performance and the deteriorating economy, we no longer believe TNT can make its full-year guidance come in,’ Petercam said in a note.
Divisionally, the Express division reported EBIT of 153 million euros up 1.3 percent from 151 million last year.
TNT said it saw a sudden slowdown in air volumes in June, but CEO Bakker said in a press conference that the decline was less strong in the first couple of weeks of July.
At the Mail division, EBIT fell to 173 million euros from 181 million, due mainly to volume declines in the Netherlands, where TNT expects volumes to decline by 3 percent to 4 percent per year until at least 2012.
TNT also announced cost savings at the Express division, previously only discussed with analysts, aiming to reduce annual costs by 100 million to 125 million euros in 2009 and 2010.
Rabo Securities said the disappointment over TNT’s second quarter results ‘should be somewhat dampened by the reiteration of the full-year outlook (although at the low end) and the new cost savings measures’.
TNT shares have rollercoasted in recent weeks amid media reports that early takeover talks with FedEx Corp had been entered into and later abandoned, but CEO Bakker declined to comment on the reports.
Bakker also downplayed that TNT might make acquisitions of its own, telling journalists that the company’s strategy can be deployed on a standalone basis led by organic growth.
At 11:24 a.m., the shares were down 8.51 percent at 21.94 euros. The AEX was up 0.04 percent at 395.92 points.
