TNT Express issues profit warning, plan to settle antitrust case
TNT Express share values dropped 11% yesterday as the company issued a profit warning, and said it will settle a French antitrust lawsuit. The troubled integrator said since its last results statement in July, trading conditions in its core market of Europe had deteriorated, while competitive pressures have increased.
It said its profit forecasts had been based on an economic growth rate in Europe of 2-3%, but that such guidance was no longer “prudent”.
The company said its Europe Main division and Other Europe and Americas division would not add up to achieve the predicted 8% operating margin in the 2015 fiscal year.
A margin of around 5.8% was being seen in the second quarter.
Nevertheless, with shareholders powerful enough to cause problems, TNT was keen to tell its investors that its cost-cutting campaign is continuing to produce results even if they would take up to five years for full benefits to come through.
Tex Gunning, the TNT chief executive, said: “Whilst it is clearly disappointing to see that wider trading conditions within Europe have remained challenging, we are confident that TNT is on the right track to create a sustainable business with good value creation opportunities for its shareholders.
“We are accelerating our investment programmes and cost reduction initiatives. We have the right competencies and experiences in our top team, we have the right network and we have the commitment of 65,000 TNT’ers to make this a success.”
TNT Express made EUR 6.7bn in revenue in 2013. Third quarter results are expected to be released on 27 October.
Antitrust settlement
TNT Express said yesterday that it will set aside EUR 50m in its third quarter results to cover a potential fine over the French antitrust lawsuit that emerged this summer.
The company, along with FedEx and Royal Mail’s GLS France business, had been investigated by the French competition authorities for some years over claims that they had been colluding in some way via certain trade association meetings.
The French Competition Authorities issued all three firms a Statement of Objections in July.
TNT Express said yesterday: “TNT is now entering into a settlement with the FCA with respect to the investigation of alleged anti-competitive behaviour in the French parcels delivery sector. The settlement will include a reduction percentage to the fine, the absolute amount of which the authorities are not expected to determine before the end of 2015.”
