TNT Express restructures under revised transformation strategy
TNT Express has launched a revised transformation strategy including plans to restructure its management into three new divisions. The company said today, as it revealed fourth quarter and full year results showing sales down 1.9% in 2013, that it has analysed its previous transformation strategy, “Deliver!”, and is now looking for “substantial improvements” through a new plan, dubbed “Outlook”.
Aiming to sharpen the company’s focus on profitable growth, the new strategy seeks to build on the company’s strengths, particularly expanding its European road network, moving more items by ground transport, and focus more on SME customers.
It promises a “step change” in service and reliability and a “hassle-free” customer experience, as well as a “secure and meaningful” future for employees and “solid” returns for shareholders.
The revised strategy confirms TNT’s existing goals to achieve sales growth of around 2% per year and achieve an adjusted operating margin of about 8%, while delivering EUR 240m in performance improvements by 2015.
Management restructure
TNT Express will restructure its management into an International Europe division, covering all cross-border express activities in Europe, an International AMEA division covering cross-border business in Asia, the Middle East and Africa, and a Domestics division covering domestic services in France, Italy, the UK as well as those in Brazil, Chile and the Pacific region.
The company’s new management board keeps Tex Gunning as CEO and Bernard Bot as CFO, but will see former DHL North America CEO Ian Clough appointed managing director for the International Europe division, Michael Drake maintaining his position as managing director for International Asia, Middle East and Africa, and Marco van Kalleveen formerly of McKinsey and Bain Capital as managing director Domestics. Kalleveen is also chief transformation officer.
Steven Scheers, the TNT global HR director, now chief people officer, and managing director network operations Martin Södergård are also on the board.
Reporting lines are expected to change in the second half of 2014.
Commenting on the changes, Gunning said today that the company’s competitive position, service, productivity and organisational effectiveness had been carefully assessed.
“The conclusions are clear. We have distinct areas of strengths but also need to make substantial improvements. Building on our strengths, our vision is to be the ‘fastest and most reliable’ European road delivery company,” he said.
“With Outlook, we now have a detailed agenda to realise this vision and meet the expectations of our customers, employees and shareholders.”
Q4 results
TNT Express reported today that its revenues in the fourth quarter of the year were down 4.6% to EUR 1.7bn. Operating income was EUR 88m, an improvement on the EUR 52m loss made in the same quarter last year. Net profit for the three months up to the end of December 2013 was EUR 32m, compared to a EUR 148m net loss the same quarter in 2012.
Adjusted revenues were down just 0.7% to EUR 1.77bn, with adjusted operating income up 31% to EUR 76m.
The company said it achieved better results in Europe, other than in Italy and the UK fashion business. However, adjusted revenues were down 1.5% year-on-year in its core European market, and adjusted operating income was down 8.9%.
There was strong performance in the Americas and in its AMEA segment with the sale of the domestic Chinese business completed. Non-core European and Americas business saw adjusted revenue up 9.2%, adjusted operating income up 37%.
TNT said its Pacific region performance was in line with expectations, with adjusted revenue and operating income stable.
TNT’s transformation initiative Deliver was “on track” in the fourth quarter, delivering EUR 25m savings. Plans have changed in that the domestic Brazilian business is no longer for sale, and with the company’s Boeing 747 freighters also no longer up for sale.
The company said trading conditions remain “volatile and uncertain” in 2014, though expectations are for improving business in Europe and the Americas, with stable performance in AMEA and the Pacific region.
Full Year
TNT Express achieved adjusted revenues of EUR 6.89bn in the full year 2013, down 1.9% on 2012. Adjusted operating income was down 12.9% to EUR 230m.
The company said its core European market was affected by difficult trading conditions, particularly in Italy where the company is restructuring and downsizing its network. Adjusted revenue was down 2.7% to EUR 3.3bn, with adjusted operating income down 25.7% to EUR 150m.
Other European markets and the Americas region benefited from cost control measures, with adjusted revenue up 3.3% to EUR 1.2bn and adjusted operating income up 38% to EUR 69m.
The Pacific region business was “significantly” impacted by cost inflation and changes in the product mix during the full year. Adjusted revenue was stable compared to 2012, on EUR 724m, with adjusted operating income down 57% to EUR 12m.
The AMEA region performed better despite a decline in revenue, which was down 7% to EUR 1.1bn with adjusted operating income turning around a EUR 4m loss into EUR 22m income.
