TNT Express has “mixed” Q3, awaiting merger clearance
TNT Express saw its underlying business slipping in the third quarter, although favourable currency exchange rates helped elevate the company’s reported revenue and income to a positive result. The integrator currently targeted for acquisition by rivals UPS said it had a “mixed” performance during its latest three months.
Business faced pressures on margins in Europe, but improved within the Asia Pacific and Americas regions.
The quarter saw reported results 2.1% on the same period last year, to EUR 1.81bn, but adjusting for one-off costs, the underlying business saw revenues down 1.9% to EUR 1.74bn.
Operating income was up 43.8% to EUR 46m on a reported basis, but adjusting for currency and one-off impacts would have seen a 11.6% fall in income, to EUR 38m for the quarter.
Bernard Bot, the interim CEO, said the company’s diversified product portfolio and “superior” customer service helped the company through a “challenging” economic environment.
“The quarter saw the highest customer satisfaction score ever realised,” he said. “Customer growth was also good, with notable additional business won in the Automotive, Industrial and High-Tech sectors.”
In the year to date, TNT’s adjusted revenue has decreased 1.5% year-on-year to EUR 5.29bn, while its adjusted operating income has fallen 15.6% to EUR 141m with pressure on European margins despite volume growth and some improvements in Asia Pacific and Americas operations.
Regions
TNT’s European business saw a 0.8% increase in adjusted revenues compared to the third quarter in 2011, to just over EUR 1bn, but adjusted operating income was down 22% to EUR 56m.
Volumes grew in all product segments, but the biggest growth was in international economy services.
However, the continuing growth in business-to-consumer ecommerce shipments saw weight-per-shipments dropping 5.6%, with cost control measures only partially mitigating the negative yield.
The Asia Pacific region saw adjusted revenues down 12% to EUR 404m, although the business was profitable during the quarter. Revenue dropped because of lower international volumes and the disposal of TNT’s India road business.
In the Americas, TNT’s adjusted revenues were up 5.2% to EUR 122m for the quarter, with operating losses down by 23% to a EUR 23m operating loss, helped by higher prices in Brazil. TNT said the turnaround in its Brazilian operations was “more challenging than had been expected”, and that additional cost-saving actions were being undertaken.
UPS offer
TNT Express said today it was currently preparing a response to the European Commission’s Statement of Objections, issued earlier this month regarding competition concerns about the potential takeover by UPS.
“Open and constructive dialogue continues,” the company said of its relationship with the Commission’s investigation, which has been ongoing since July.
The transaction is expected to be completed in early 2013, the company said, restating the view of UPS, expressed last week.
“TNT Express and UPS are committed to the intended merger and confident that European competition clearance will be achieved, allowing completion of the transaction in early 2013,” said Bot today.
UPS currently has a 9th November deadline on its offer for TNT Express shareholders to sell at EUR 9.50 per share. At least 80% of share capital will have to be sold to UPS for the deal to go ahead.
TNT said UPS would extend the deadline for its offer if it was allowed by regulators, or else “promptly” launch a new public offer with the same terms and conditions.
TNT Express is currently in talks to sell its airline – TNT Airways and the PanAir business – worth a total of around EUR 208m.
The airline would face the end of its full EU market access rights if it is acquired by a non-European company like UPS, and as a result TNT and UPS have agreed to sell TNT Airways and PanAir into independent European ownership.
