TNT reports 3Q revenues of €1,674m
TNT has reported third quarter (Q3) revenues of €1,674m, up 2.3% year-on-year, and a negative operating income of €27m, compared to a negative operating income of €51m for the same period last year. In a statement issued today (26 October), the company said that “the economic volatility in Australia, China and Brazil weighed on TNT’s revenues and overall performance in these parts of the world”.
The operating income included net one-off charges of €40m, which itself included restructuring charges of €23m. The adjusted Q3 operating income, therefore, was €13m, compared to €46m in Q3 2014. TNT said that the operating result was affected by “pricing pressures, Outlook-related transition and project costs (€8m), and costs to enhance service capabilities”.
Capital expenditures increased to €62m and TNT opened three new automated sorting facilities in Madrid, Swindon and Eindhoven during the quarter, as well as upgrading existing ones as part of its Perfect Depot project.
Commenting on the results, Tex Gunning, TNT’s Chief Executive Officer, said: “Substantial progress has been made in the recommended acquisition of TNT by FedEx: TNT shareholders have approved the resolutions of the Extraordinary General Meeting.
“We have been informed by the European Commission that it will not issue a Statement of Objections. We continue to support FedEx in obtaining all necessary approvals and expect the transaction to close in the first half of 2016. At the same time we remain focused on executing our Outlook strategy to transform and turn TNT around.”
Gunning said that “2015 is a transition year for TNT”, adding that the company’s Outlook strategy and its investments in IT and productivity are “on track” but “time is needed for these profound transformations to influence the bottom line”.
Focusing on specific business areas, TNT reported that revenues for the International Europe segment were up 4.4% to €693m. The segment’s underlying revenue growth was 6.5%, driven primarily by higher revenues from SMEs.
Revenues for the International AMEA segment rose 6.1% to €242m, mainly due to favourable currency effects. TNT said that the performance of this segment was affected by the drop in China’s exports, especially to Europe.
The Domestics segment saw revenues drop 2.7% to €615m.
According to TNT: “The decline is attributable to lower sales in Brazil and Australia, lower yields -particularly in France and Australia- and Outlook-related transition and project costs.
“To adjust to the economic recession, Brazil management took cost-reduction measures, which helped protect margins. TNT’s performance in France was affected by competitive pressures and higher B2C delivery cost. TNT also faced competitive pressures in Australia, compounded by the drop in commodity markets, and the ongoing cost of modernising the Australian infrastructure. During the fourth quarter, TNT will ramp up activities at two new hubs in Melbourne and Brisbane to enhance service to customers and productivity.”
TNT concluded its statement by saying that it “expects 2015 to be a challenging year of transition marked by the progressive ramp-up of new and upgraded facilities and other transformation projects, such as the outsourcing of IT”.
