TPG boosts profit margins across all main business areas. Express division breaks 5 per cent barrier for the first time
TPG (TNT Post Group) increased operating profit margins in all three of its main business sectors last year.
This all-round improvement helped the Netherlands-based global mail, express and logistics service provider yesterday to publish record results for 2000 which included a more than 25 per cent surge in net income (the-chain, News Digest, March 12). All three divisions also managed to achieve higher percentage growth in earnings than in revenue.
The biggest increase in margins, from 4.3 per cent in 1999 to 5.1 per cent last year, was achieved by the express division. That performance is described by TPG as “an important milestone” since it marks the first time the division has achieved an annual operating margin of more than 5 per cent. In fact, says Ad Scheepbouwer, TPG chairman and chief executive officer, that figure was improved further in the second half of 2000 to reach 6 per cent.
TPG attributes the improved margin performance by its express division to “the successful introduction of a new yield management programme, combined with the benefit of the fastest and most reliable service in the express industry”. These factors, it claims, enabled the business to “deliver positive yield performances throughout 2000”. With the exception of Australia, adds TPG, all geographic areas delivered “solid” business growth during the year.
This enabled the express division to improve total revenues by 17.2 per cent on 1999 to EUR 4,145 million ($3,838 million). Organic business growth contributed 8.6 per cent, while acquisitions chipped in with a further 5.1 per cent and foreign exchange factors, 3.5 per cent. Earnings from express division activities improved by 41.4 per cent on 1999 to EUR 213 million ($197 million).
TPG’s fast-growing logistics division also pushed up operating margins last year, although only by 0.1 per cent on 1999 to 5.8 per cent. Operating revenues increased by 43.2 per cent to EUR 2,179 million ($2,018 million). Organic business, which was hit by the “voluntary termination” of several contracts in the United Kingdom and France, increased by 7 per cent. Acquisitions, notably that of CTI Logistix which was bought in September, accounted for 31.5 per cent, and favourable foreign exchange rates for the other 4.7 per cent. Earnings from logistics division operations increased by 46.5 per cent to EUR 40 million ($37 million).
TPG’s third major division, mail (international, domestic and direct), also achieved a small increase in operating margins last year, from 20.3 per cent in 1999 to 20.8 per cent. Revenues were up by 1.5 per cent to EUR 3,706 million ($3,431 million). Organic growth contributed 0.9 per cent and favourable foreign exchange rates a further 0.8 per cent. However, the net impact of acquisitions and disposals reduced growth by 0.1 per cent. Despite that slowing in mail volume growth, says TPG, earnings from mail activities last year still increased by 4.2 per cent to EUR 772 million ($715 million).
