TNT shares slip as firm makes loss in fourth quarter
International carrier TNT said today it is still in the process of winning back customers lost over the past few years, after its latest quarter slipped back into the red. The company said much of the strain on its results are still from its major restructuring programme, Outlook.
In the final quarter of 2014, Netherlands-based TNT saw its revenues up 1.6% to EUR 1.78bn, but reported operating income dropped from a EUR 79m positive this time in 2013, to a EUR 53m loss.
According to the figures issued this morning, the quarter was impacted by about EUR 70m in restructuring charges and costs, along with EUR 32m in goodwill impairments resulting from its new reporting structure, along with a EUR 22m cost of re-launching the TNT brand after the company dropped the “Express” part of its name.
TNT’s quarter was also hit by EUR 77m in one-off tax expenses.
In the full 2014 year, TNT’s revenue dropped 3.2% year-on-year to EUR 6.68bn, with losses attributable to shareholders increasing by 59.8% to EUR 195m. Adjusting for transformation costs, revenue would have risen 1.8%, and operating income would have improved 20%.
TNT shares fell 9.95% this morning as investors reacted to the latest financial results, but executives insisted the company’s transformation programme was “on track”.
Tex Gunning, the TNT chief executive, said: “In 2014, we had to take significant Outlook-related restructuring provisions, one-off charges and valuation allowances. These non-recurring charges testify to the scale of the transformation that needs to happen and to the determination of the new management team to do what it takes to transform and turn TNT around.”
Gunning said the “building blocks” of the company’s Outlook strategy are now in place, with TNT upping its investment in infrastructure and people despite facing “stiff competition and adverse trading conditions”, particularly in Western Europe.
“We are still in a stage of improving the quality of our revenue base and winning back
customers that were lost over the last few years. With service quality improving in our unique European road network and competitive air network, we should be able to reverse any negative trends and achieve profitable growth,” said the TNT CEO.
Looking ahead, TNT said it expected the adverse trading conditions to continue in a “challenging” 2015, particularly in Western Europe.
The company is expecting its revenue growth to at least match GDP growth from 2016 onwards, with capital investments stepping up to EUR 800m-900m between 2015 and 2017.
Divisions
Within the TNT business, the company said its international Europe segment saw “moderate” revenue growth of 0.8% year-on-year in the fourth quarter, to EUR 723m, as shipments grew by 1.9% to 8.45m kg per day. However, operating income dropped by 51% to EUR 24m thanks to the brand relaunch and investments in the network, as well as strikes in Belgium where TNT has its hub.
In the full year, the International Europe segment saw 0.8% growth in revenue compared to 2013, to EUR 2.74bn, while operating income dropped 1.7% to EUR 118m.
TNT’s international Americas, Middle East and Asia segment saw revenue up 6.6% in the quarter, to EUR 258m, and down 14.6% in the full year compared to the previous year, to EUR 906m. The segment’s operating income grew from EUR 5m to EUR 22m year-on-year in the fourth quarter, while doubling over the full year to EUR 51m. The company said it benefited from higher intercontinental volumes, particularly from China to Europe.
In TNT’s Domestics segment, revenue grew 5.2% in the fourth quarter, to EUR 690m, but fell 0.7% in the full year, to EUR 2.56bn. Operating income fell 10% in the quarter, to EUR 9m, but grew 29.4% in the full year, to EUR 66m. The company said it was facing “intense” competition, particularly in the UK and France, but had made progress improving revenue from SMEs.
