The week that was: 7 May 2010
USPS posts further losses, TNT looking healthy in comparison, whilst DHL expands in Asia… With Post&Parcel still dreary-eyed after staying up into the early hours of this morning to watch the UK election results, we will start our new round-up in the US this week.
The depressing situation at USPS took another turn for the worse this week as postmaster general John Potter announced huge six-month losses of $1.9bn. During this period, mail volumes in the States dropped to 88.1bn for the period, ended March 31. Potter reinforced the need for legislative and regulatory changes necessary to maintain a viable Postal Service. Two of those changes could save the Postal Service more than $8.5bn in the first full year they are implemented: restructuring the prepayment of retiree health benefit payments and eliminating one day of delivery service per week. Examining the finances, total volume was 3.3% less than the same period in 2009. Even with a one-time boost of $180m of First-Class Mail revenue related to the Census, revenue at $16.7bn was still 1.4% less than the same period a year ago. For the first six months of the fiscal year, operating losses totaled $1.8bn in 2010 compared to $2.3bn in the previous year. Included in the March 31 quarterly and year-to-date operating losses are expenses of $1.9bn and $3.8bn, respectively, to fund retiree health benefits. “Despite aggressive efforts to reduce costs, including the reduction in full-time equivalent employees by more than 120,000 since 2008, we are still experiencing unsustainable losses,” said CFO Joseph Corbett. “Quite simply, the business model is broken and laws, regulations and contracts must be changed to provide commercial operating flexibility needed for financial stability.”
There was better news across the Atlantic, as TNT CEO Peter Bakker said he was “satisfied” with TNT’s Q1 2010 results. Reported revenues increased by 12.4% to EUR 2.75bn due primarily to higher revenues from Express. Reported operating income grew by 54% to EUR 251m because of a rebound in Express profitability as well as a good contribution from Mail. Reported profit attributable to shareholders came in at EUR 143m (EUR 76m in Q1 2009). Net cash from operating activities was EUR 31m, a decrease of EUR 126m versus last year, due in large part to higher taxes paid and working capital outflow. Net debt held steady at around EUR 1.1bn.Commenting on the news, Bakker said: “As noted in our 8 April AGM trading update, Q1 2010 continued to show a positive trend. Reported operating income from both divisions was up versus the prior year. We have every reason to be satisfied with the results in all parts of our business. The profit recovery testifies to the hard work of TNT’s employees around the world, squeezing the cost base and helping the company navigate through the 2008/09 economic crisis. However, as a guide for full year performance, this quarter also needs to be understood as having benefited from extra working days.”
As a part of it’s fast-paced expansion plan in Asia, DHL has announced an investment of $9m to strengthen its freight forwarding and supply chain operations in Pakistan. The investment will go towards the upgrading of warehouses, fleet, offices, IT systems and employee training and development programmes. Amadou Diallo, CEO, South Asia Pacific, DHL Global Forwarding said: “DHL Global Forwarding in Pakistan has grown exponentially over the last few years and the $9m investment reflects our continued confidence and commitment to the market. During this visit, I’ve had the opportunity to meet many employees and customers and I am greatly encouraged by the widespread enthusiasm, optimism, and entrepreneurship in Pakistan.”
And finally…
The shortlist for the World Mail Awards 2010 will be announced next week. Have you made it? Stay glued to Post&Parcel to find out.
