Dutch TPG unit back on track and hints at growth
TPG, Dutch postal group, has said its poorly performing logistics units were back on track and added that it was considering offering to run the supply chain operations of Ahold, the troubled grocery group.
Peter Bakker, TPG chief executive, also said he would make several significant announcements early 2004 about expansion in China.
Addressing a meeting of journalists at the company’s headquarters, Mr Bakker said TPG’s struggling logistics units in Germany and France and its non-automotive operations in Italy had, in recent weeks, met or exceeded profit forecasts.
He said the recovery of the units, which had suffered from integration issues related to several acquisitions, did not mean forecasts had been pitched more conservatively than in the past.
“We look at these on the basis of a weekly P+L [profit and loss account] and people are back on forecast, or in some cases even out-performing them,” Mr Bakker said. “A few months ago we met none of the forecasts we gave.”
Results from the logistics unit, which makes revenues of nearly €4bn ($4.8bn) annually and is the second-largest in the world, have in recent quarters undermined earnings elsewhere at TPG.
Last month TPG said a 3.5 per cent logistics margin target by the year-end still stood, although it would not be easily achieved. Unit earnings before interest tax and amortisation fell to €25m in the third quarter from €41m a year earlier, excluding charges.
A programme called “transformation through standardisation” has been introduced to bring the poorly performing units in line with overall logistics operations.
Separately, TPG is conducting a thorough analysis of how it could strip costs out of Ahold’s supply chain as it considers pitching for the grocery group’s distribution business.
“Ahold was of the opinion that logistics was part of its core business,” said Mr Bakker. “That is a view that is not shared by all retailers. I am sure that we can come up with an interesting case [for Ahold].”
Referring to Ahold’s commitment to reduce costs and improve efficiency after a devastating accounting scandal forced a wholesale strategic rethink by new chief executive Anders Moberg, Mr Bakker said: “This is as good a point as any to talk to them.”
Mr Bakker declined to detail Chinese growth plans but said it would be in all three areas of operations: mail, express and logistics.
