TNT launches major strategy review
TPG, the Dutch mail, express and logistics group, has released its results for the full year 2003. At the same time it also revealed details of a major new strategy initiative which will see its present structure overhauled.
Overall the group reported revenues in 2003 of €11,866m, a small increase on €11,782 in 2002. The figures were negatively affected by fluctuations in currency over the year. Operating profits (EBITA) fell by 2.6% with foreign exchange rates again being largely responsible.
Mail revenues fell by 2.2% to €3,915m as a result of lower volumes in the Netherlands, although its European networks continued to see strong growth. However, operating profits rose by 2% to €820m largely due to tighter cost controls. Margins reached almost 21%.
Express
The Express division saw the strongest overall performance. Revenues grew by 1.8% to €4,251m, although without currency fluctuations this would have been 6.3%. Growth in operating profits was impressive even taking into account a €22m foreign exchange charge, with a 12.2% jump to €276m. The Benelux region has seen the highest margins, primarily due to more accountability and cost controls. France and Germany also performed well.
Logistics
The Logistics division saw strong organic growth with revenues growing by 3.5% to €3,735m even after the negative impact of foreign exchange rates. However operating profit fell significantly to €103m from €157m. Taking into account one off charges relating to its re-structuring and asset write down programmes, operating profit fell to €24m or a margin of 0.6%. Management also commented that another reason for the fall in profits was the high level of investment which was required for a number of major new contracts, including one with Fiat. North America and the UK however had performed well, increasing revenues and profits.
New strategy unveiled
Management also took the opportunity to launch a major strategy initiative. Called TPG-1, it will aim to bring the three divisions together to create a more cohesive unit and benefit from the synergies which could be found. It is believed that €200-300m can be saved a year over a 3-5 year time period.
China has also been singled out for special mention. The company intends to invest around €200m in the market with the aim of making it the second largest outside of Europe. In addition to this, management once again re-iterated its intent to enter the freight forwarding market.
