PostNL backs TNT leadership amid investor calls for change
Dutch postal service PostNL is standing by the management of beleaguered TNT Express, despite calls from other investors for changes at the top. Since demerging from TNT in May in order to boost shareholder value, PostNL has taken a EUR 734m hit from the poor stock performance of its 29.9% stake in the global express and logistics giant.
TNT share prices have fallen 30% since May, while PostNL’s stock has slumped by more than 60%.
TNT issued a profit warning last October after suffering a sudden decline in demand for its premium express products over the summer, particularly in the Asia-Pacific region, along with difficulties with its operations in Brazil.
Profits in the third quarter were down 64% year-on-year at TNT, and for the second quarter down 85%.
Investors Jana Partners LLC sent a letter to TNT late last month suggesting addition of three new members to the board, including former TNT Express CEO Alan Jones, former US Airways CEO David Siegel and former UPS mergers chief Thomas Delbrook. Jana, which has just over a 5% stake in TNT combined with Canada’s Alberta Investment Management Corporation, has suggested Jones as a replacement chairman for the TNT supervisory board.
The proposals have found favour among some other investors, including Canadian firm MacKenzie Cundill, which has a 4.5% stake in TNT, with share prices rising to a four-month high in response to the calls for change.
Earlier last month, Jana Partners had called for the replacement of TNT CEO Marie-Christine Lombard. The company has told media agency Reuters that if its proposals are ignored by the TNT board, it will seek support from other investors to address the situation at April’s TNT annual general meeting.
PostNL
Post NL, which has its own concerns struggling with declining mail volumes, is not in much of a position at the moment to absorb major costs from its stake in TNT. Its latest quarter saw operating income down 15.7% year-on-year, but the write-down from its TNT stock turned what would have been a EUR 27m profit for the quarter into a EUR 313 loss.
But the company told Post&Parcel this morning that it is continuing to back the current management team.
“PostNL still supports the current management at TNT Express,” PostNL spokesman Marc Potma said.
“Obviously we are disappointed about the share price development, as any shareholder would be. The development of the TNT Express share price forced us to take two impairments of our stake in TNT Express, for a total of EUR 743m in 2011.”
The PostNL spokesman could not comment further on the TNT Express situation, and did not confirm or deny reports in other media that it is open to talks with other investors regarding the Jana Partners proposals.
TNT Express declined to comment on the discontent among shareholders, with a spokesman telling Post&Parcel it was not policy to elaborate on communication with individual shareholders.
The company is set to reveal its full year results for 2011 on February 21, and its next annual general meeting of shareholders is scheduled for April 11.
