Explosive rise of TNT gives Royal Mail a run for its business market
TNT, the Dutch-based parcels and mail group, is poised to increase its challenge to Royal Mail with extended mail and parcels services in its GBP100m-a-year UK business, moving closer to the day when it has its own postmen on the streets.
End-to-end business delivery services are being extended to more major cities after successful trials in Glasgow and Manchester. The acquisition of the parcels deliverer JD Williams – with 2,000 couriers – also provides a platform for growth.
Peter Bakker, chief executive at TNT, revealed the plans after announcing an acceleration in second quarter operating profits, raising full-year expectations.
TNT expects to collect and sort 1.2bn items of mail in Britain this year, mainly for banks and utilities. At present, Royal Mail handles final delivery but the two city trials have encouraged TNT to offer more end-to-end services to business clients.
The group has been making use of its licences in Britain, the most open in the EU, but has no plans to enter the household postal market. Meanwhile, Mr Bakker is pushing the EU to remove Royal Mail’s biggest advantage: VAT exemption.
TNT is expanding rapidly in eastern Europe, where it is targeting acquisitions. In the Far East it is concentrating on developing extensive Singapore-to-Beijing road links to cut costs in serving clients.
Second-quarter profits before interest and tax jumped 10.7pc to euro342m (GBP234m) while earnings per share rose 7.8pc to euro49.7. The business expects mail operating margins to grow by 18.5pc this year, against earlier projections of 18pc, and express margins by 0.5pc to 9.5pc.
Takeover talk continues to surround the shares, with analysts predicting a private equity or trade buyer. Two private equity groups, Apollo Management and PAI, are favourites to stump up more than euro1bn for TNT’s logistics business.
