TNT profit drops 58.1%

As the global recession kept up the pressure on express and mail volumes, TNT saw revenue decline 10.2% in the first quarter to $3.3bn.

As the global recession kept up the pressure on express and mail volumes, TNT saw revenue decline 10.2% in the first quarter to $3.3bn.

Even as cost cutting measures proceeded ahead of schedule, the carrier’s operating income fell 43.6% to $217m in the quarter. Impairment charges brought net profit after taxes even lower to $99.9m, down 58.1% compared with first quarter 2008.

“The first quarter 2009 results continued the trend we saw at the end of 2008 and the beginning of this year, TNT reported May 4. “International express volumes are under significant pressure and domestic volumes saw declines as well, but as of February we saw no further acceleration in the decline,” the company said in a statement.

Of the revenue decline, TNT said 5.1% was due to lower fuel surcharges and foreign exchange. Cost savings are ahead of plan and in excess of $133m, which is more than 7% of the company’s cost base.

But impairment charges weighed heavily on profit. The company racked up a total of $109.3m in charges, including $84m for property, plant and equipment and $25.3m for intangibles.

“The global economic operating environment has remained challenging,” said CEO Peter Bakker. “Mail performance was good but impacted by higher employee-related expenses, a disadvantageous product mix and price pressure. With the Dutch mail market now fully open to competition, a further significant decrease of cost levels is required going forward.”