Dutch Logistics group TPG intensifies restructure
Dutch mail and parcels firm TPG, the world’s second-largest logistics group, delivered second-quarter results yesterday that were better than expected and stepped up efforts to restructure its logistics operations.
The group, which owns Atherstone parcels carrier TNT, employs over 160,000 people in 62 countries and serves over 200 countries. During 2002 the company reported sales of £8.2 billion, an increase of 5% over the previous year.
Chief executive Peter Bakker hailed the performance of the mail and express businesses but said: ‘Logistics continues to produce disappointing results but I am confident that major improvements will be made in the future.’
TPG, whose brand names are TNT and Royal TPG Post, reported operating income of £178 million, down 1.6 per cent, against analysts expectations of £174 million.
The figures and TPG’s plans for the logistics arm supported its shares and investors shrugged off news that it now expecting about 5% growth in net profit from continuing operations before additional pension costs.
Previously TPG had forecast growth of 5 to 10%.
The group said it would take one-off charges of £45 million for restructuring the logistics activities, aiming for annual cost savings of £39 million.
Operating income at the division dropped 43.2% in the first half and had a 10.2% negative currency effect due to the weak dollar.
Delta Lloyd trader Paulo Nunessaid: ‘Overall results were in line and there were no surprises in the bottom line. One negative is they have downgraded their outlook but I think investors are pleased that they are addressing the problems in the logistics division head on.’
Group sales were up 1.3% to £2.06 billion. Net income from continued operations before pension costs was £109 million, up 7.6%, against a forecast £99.6 million. Net profit fell 1.4% to £100.7 million, said the former Dutch monopoly mail service, which diversified into international logistics and express deliveries to compete in a deregulated market against rivals like Deutsche Post.
TPG said David Kulik, who previously managed the US logistics operations, would take over the helm of the logistics division, whose activities range from delivering spare car doors to mother boards for computers, to replace Roberto Rossi.
TPG may also take a goodwill charge of up to £123 million on logistics this year and another £14 million on assets.
The logistics business accounted for 29% of group revenues and 8% of earnings before interest and tax last year. Among key contracts held by TPG’s logistics arm are ones with German carmaker Volkswagen and Italy’s Fiat.
Postal services saw an overall 4.1% rise in first-half operating earnings and the express business increased 19.6% with a 3.9% currency drag. TPG’s express delivery business competes with United Parcel Service, the world’s number one package carrier, and air-express carrier FedEx.
