Dutch goverment to cut TPG stake to 10%
TNT Post Group, the Amsterdam-based global mail, express and logistics company, today coupled the announcement of a 26 percent surge in net profits to an all-time high last year with the revelation that the Dutch government wants to cut its stake from 43.3 percent to 10 percent.
Net income rose to €526 million ($489.2 million) from €419 million ($389.7 million) on revenues up 16.4 percent to €9.94 billion ($9.24 billion) from €8.53 billion ($7.93 billion). TPG said it expects to grow net income in 2001 by 20-25 percent, assuming stable exchange rates.
The company said the Dutch government will initially sell a 7.3 percent stake in the company, reducing its holding to 36 percent.
The sale of the stake, currently worth around €800 million, began today.
Ultimately, the government wants to own just 10 percent of the company, which was privatized in 1998. "The government already intended to cut its stake to a third before 2004, but the real news is that it is now going back to 10 percent," said Ad Scheepbouwer, TPG's chief executive. He said the state would not sell another stake in TPG before Jan. 1.
The reduction of the government's holding to 10 percent will make it much easier for TPG to form alliances with other companies, especially in the US. Today's news will renew speculation of a long rumored link with United Parcel Service, the U.S. delivery giant that is eager to extend its global reach to counter the expansion of Germany's Deutsche Post World Net which has spent over $5 billion on acquisitions, including AEI, the top U.S. air freight forwarder, and DHL Worldwide Express.
Scheepbouwer said earnings growth last year exceeded revenue growth in all three businesses. "Mail has achieved an improved margin despite underlying domestic mail volumes growing only slightly. Express has delivered a 5.1 percent margin and has operated at 6 percent in the second half of the year. Logistics has continued to provide record growth and at the same time has improved its margin to 5.8 percent," he said.
Mail's €772 million operating income accounted for 60.5 percent of total operating income last year compared with 75.8 percent in 1999 as the company focuses on the express and logistics markets.
Income from express operations surged 41 percent to €213 million while revenues were 17 percent higher at €4.15 billion. The company has set a target of operating margins of six percent for the current year. "We want to be the fastest and most reliable service," Scheepbouwer said. "There are now more than a thousand depots in Europe and we will add more. The more we have, the quicker we can deliver." Last year TPG launched a same-day delivery service across Europe.
The logistics division grew rapidly in 2000, fueled by several acquisitions, especially the $650 million purchase of Jacksonville, Fla.-based CTI Logistix from CSX. Corp. last September, and the signing of significant new contracts. Revenue surged 43.2 percent to €2.18 billion and operating income was 46.5 percent higher at €126 million. Organic growth, however, was only seven percent as ailing British car maker Rover canceled contracts, while acquisitions accounted for 31.5 percent of the revenue increases, with CTI contributing €199 million.
TPG said the outlook for logistics is for continued high growth and focus on achieving a critical mass in key countries and sectors. Scheepbouwer said that excluding Rover contracts, organic growth was nine percent in 2000 and the company wants to raise that to 15 percent in the current year.
Separately, TPG said today it expects to receive clearance from the European Commission later this week for its global business mail joint venture with Britain's Post and Singapore Post. The company has offered to sell its TNT international mail business in the Netherlands to address the commission's concern that the $420 million-a-year joint venture, called Delta, would stifle competition in the Dutch market.
