TNT profit slumps due to rising costs
Dutch firm TNT Express today (Monday) revealed an 85% drop in net profit during Q2, despite “strong” performance in EMEA. However, the company blamed higher fuel and wage costs, as well as volatile intercontinental volumes, as net profit slumped from EUR 26m to EUR 4m for the quarter.
Revenue at the newly-formed business rose by 0.9% for the quarter, from EUR 1.78bn to EUR 1.8bn, however, operating income fell from EUR 60m to EUR 46m.
The operator’s problems in Brazil continued, where it experienced “significantly lower revenues”, which contributed to losses in the Americas region. During Q1, the company took a non-cash charge of EUR 120m related to restructuring operations in the country, as it struggled to merge the two companies it bought.
In terms of operating income, the Americas division made a loss of EUR 45m for the quarter, down EUR 30m on Q2 2010. Revenue also fell across the region by 13.4%.
Despite labelling the problems in Brazil “challenging” during the short-term, the company said turnaround was on track to meet a H2 2012 deadline.
In other areas, TNT described the EMEA yield and development as “positive”. Combined with cost efficiencies and productivity gains, this led to an 11.2% higher adjusted operating income. Asia Pacific adjusted revenues grew 9%.
TNT Express said its positioning in domestic emerging markets rests on continuing evidence that medium-term targets are achievable. Furthermore, good cost control ensured an appreciably lower non-allocated result.
Marie-Christine Lombard, CEO of TNT Express (pictured) said: “Europe’s performance was once again solid and is evidence of the strength of our intra-European network, wide product offering and clear customer focus.
“Demand from Asia to Europe has been volatile and we are optimising our capacity accordingly.
“The turnaround in Brazil is on track and although the short term will be challenging, we confirm our second-half 2012 deadline.
“Finally, our indirect cost optimisation programme has started, en route to the annualised – EUR 50m targeted in 2012.”
For the remainder of 2011, TNT Express said it hopes to “modestly” grow Europe & MEA revenue, and expects AsPac to “only partially recover”.
In May, the demerger of TNT NV, to form TNT Express and PostNL, was completed, only a week after the move was given the green light by shareholders at an Extraordinary General Meeting (EGM). The company joined the AEX Index on May 26.
Speaking at the time, Lombard said: “This is a great moment for all TNT Express employees and for me personally. TNT Express has extremely strong fundamentals and an exciting future ahead. We have a strong and experienced management team that is focused on realising value for shareholders and delivering on our targets.”