TNT Express restructuring strategy bringing results, says CEO
TNT Express boss Tex Gunning hailed his company’s improved performance in the first quarter, despite a drop in reported profits and revenue. The Netherlands-based integrator benefited from its ongoing restructuring, its CEO said, with the “Outlook” strategy achieving EUR 30m in cost savings in the quarter.
The company’s comparison to last year’s first quarter results suffered the absence of the EUR 200m termination fee paid by UPS after its attempted takeover failed. Currency movements also hit operating profits in the latest quarter, which fell from last year’s EUR 219m to just $17m.
TNT’s reported revenues, meanwhile, were hit by the sale of its domestic China business, the termination of unprofitable contracts in Italy and the loss of a fashion logistics contract in the UK, as well as currency movements, sliding 6.6% to EUR 1.61bn.
With various one-off impacts excluded, adjusted operating income was up from EUR 21m to EUR 51m in the quarter. Adjusted revenues were 2.8% down on last year’s first quarter, to EUR 1.67bn.
TNT Express said it achieved “substantially better” results in its core European market, and in the Americas. The company’s Africa, Middle East and Asia (AMEA) unit also achieved higher operating profits, but the company said it was suffering persistent challenges in its Pacific business.
The core European business saw adjusted revenues down 3.1% in the first quarter, to EUR 790m, but adjusted operating income grew 31% year-on-year to EUR 38m.
The other European and Americas business achieved 6.2% growth in its adjusted revenue, to EUR 291m, while adjusted operating income was nearly double on EUR 17m. The AMEA unit saw its adjusted revenues down 18.3%, but the unit turned around an operating loss of EUR 5m into an adjusted operating profit of EUR 7m.
The Pacific unit saw adjusted revenues down 1.8%, while adjusted operating losses worsened from EUR 2m to EUR 3m.
“Pleased”
Commenting on the results, Gunning said: “TNT Express’ performance improved this quarter. I am particularly pleased with the profit recovery in our core European segments and in Asia Middle East & Africa as a result of the restructuring initiatives taken since last year.”
Gunning made special mention of his Brazilian team, which he said had turned around the business, resulting in a break-even result for the quarter. TNT Express recently reversed its decision to sell the domestic Brazilian business.
Looking ahead, the TNT CEO said further improvements were needed to the top and bottom line in the company, through its Outlook Strategy, in order to achieve its 2015 goals.
“As significant progress has been made in restructuring our businesses, we are now increasingly focusing on growth in our target segments,” he said.
TNT Express also confirmed today that it is selling its TNT Fashion logistics business, with the sell-off expected to close by mid-summer. This would be the Dutch part of the TNT Fashion business, since the company decided to keep the UK part, merging it with its core TNT Express business in the UK.
