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TNT 2nd quarter performance

Posted by | Jul 28, 2008 | |

Group
• Operational revenue growth 7.5 pct
• Operating income resilient
• Strong operating cash flow
Express
• Operational revenue growth overall 10.7 pct; core volume growth 6.9 pct
• Sudden pressure on volume growth in June; recovering somewhat in July
• Sharply increasing fuel costs in quarter; time lag effect costs EUR 7 million
• Strong growth in Emerging Markets at 18.3 pct
• Operating income at constant fx up 5.3 pct
Mail
• Emerging Mail & Parcels operational revenue growth at 15.6 pct
• Operating income robust, but under pressure from expected volume declines and higher salary costs
• Agreement with unions on collective labour agreement
Outlook
• Full year 2008 expected to develop within outlook range, albeit at low end
• Express cost savings programme EUR 100 – EUR 125 million announced; fully realised in 2010
• First indication cash generation programme; EUR 300 – EUR 400 million by end 2009 from real estate and working capital
CEO Peter Bakker comments:
“The second quarter of 2008 has seen a shift in trading volumes in Express. In April and May the volumes in Europe were in line with the preceding quarters, but in June we have experienced a slow down in the premium Express volumes in Europe. The sharp rise in fuel prices during the quarter and the general economic outlook have impacted both our customers and us. The resilience of TNT is however best demonstrated by the fact that the volumes in our European Road Network have continued to grow throughout the quarter and in June. Also our emerging market activities in Brazil, China and India, with the connecting lanes to Europe, have all shown double-digit growth.
In Mail the results were robust. Volume declines were at the expected levels, with substitution in letter mail being the main driver. It was pleasing to see that after a long negotiation period the Unions and TNT Post have agreed a new collective labour agreement and avoided a national mail strike. This agreement creates the framework for more market conform labour conditions, through a separate Production labour agreement. The short term impact of the CLA has seen an increase in wage costs that contributed to the expected decline in the operating margin at Mail in Q2.
The quality and mix of our network, combined with cost saving programmes as announced today, give me confidence in our performance, also under more difficult circumstances. The development in Brazil, China and India, continue to show the differentiating nature of our strategy is working.”

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TNT shares fall as Q2 disappoints on Express volumes

Posted by | Jul 28, 2008 | |

Shares in TNT NV fell on Monday as the Dutch postal group said it expects full-year 2008 organic growth and operating margins to come in at the low end of its guided range as it reported worse-than-expected second quarter results.

Net profit fell to 205 million euros from 244 million euros, missing estimates of 224 million to 232 million, while EBIT was 324 million euros, down from 330 million last year and below estimates of 339 million to 352 million.

‘The sharp rise in fuel prices during the quarter and the general economic outlook have impacted both our customers and us,’ TNT chief executive officer Peter Bakker said in a statement.

TNT said the full-year 2008 is expected to develop within its outlook range, albeit at the low end.

It had earlier guided for Mail to show a low single-digit organic sales growth, with an operating margin around 16.5 percent.

At the Express division, TNT previously said it expects high single-digit organic sales growth in International & Domestic, with a low double-digit operating margin.

Shares fell almost 11 percent in morning trade before recovering slightly.

Divisionally, the Express division reported EBIT of 153 million euros up 1.3 percent from 151 million last year.

TNT said it saw a sudden slowdown in air volumes in June, but CEO Bakker said in a press conference that the decline was less strong in the first couple of weeks of July.

At the Mail division, EBIT fell to 173 million euros from 181 million, due mainly to volume declines in the Netherlands, where TNT expects volumes to decline by 3 percent to 4 percent per year until at least 2012.

Bakker also downplayed that TNT might make acquisitions of its own, telling journalists that the company’s strategy can be deployed on a standalone basis led by organic growth.

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TNT 2nd quarter results

Posted by | Jul 28, 2008 | |

TNT NV slumped as much as 11 percent after second-quarter profit fell short of analyst estimates and it said 2008 earnings will be at the low end of a forecast range.

The shares declined as much as 2.61 euros to 21.37 euros in Amsterdam after TNT said today net income dropped to 205 million euros (USD 322 million), or 55.9 cents a share, from 244 million euros, or 63 cents, a year earlier. Profit missed the 224 million-euro median estimate of seven analysts surveyed by Bloomberg. Sales rose 4.5 percent to 2.81 billion euros.

TNT experienced slowing growth in deliveries of air express packages as customers moved to cheaper road-based options, amid soaring fuel prices, echoing trends at competitors such as United Parcel Service Inc. The strength of the euro against other currencies hurt profit by 7 million euros. TNT said 2008 earnings will be at the “low end” of its outlook as Europe’s economy soften.

The Dutch company’s stock rose 30 percent in the previous two weeks on media reports that FedEx Corp., the second-largest U.S. package-shipping company, might buy the company. FedEx was in preliminary talks to buy TNT, the Financial Times said July 12. The two companies had “low-level” talks about a takeover recently, though the discussions didn’t lead the U.S. company to make an offer, the Wall Street Journal reported last week. TNT and FedEx declined to comment on the reports.

TNT shares were down 2.21 euros, or 9.2 percent, to 21.77 euros at 12:36 p.m.

Chief Executive Officer Peter Bakker declined during a news conference today to comment on the reports. He added that the Dutch company would review any “serious” takeover proposal.

TNT reiterated a forecast that the express division’s Dutch and international operations will generate “high single-digit” sales growth this year, excluding acquisitions, and that earnings before interest and taxes as a proportion of sales will be in the low double-digit percentage range. Mail-unit revenue will rise by a low single-digit percentage, also excluding takeovers, producing an operating margin of about 16.5 percent, TNT said, repeating earlier targets.

“The sharp rise in fuel prices during the quarter and the general economic outlook have impacted both our customers and us,” Bakker said in the statement.

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Post Office travel services sees boom in pre-olympics yuan sales (UK)

Posted by | Jul 28, 2008 | |

During July 2008 the UK’s largest provider of foreign currency the Post Office has seen a 44 per cent increase in its sales of Chinese yuan compared to the same period last year.

Post Office head of travel services Helen Warburton said: “The huge demand for yuans at Post Office bureaux de change over the last few weeks shows that many people are planning to travel to China. We advise Olympic travellers to make sure they take a mix of travellers cheques, payment cards and currency.

“Although ATMs are widely available across Beijing and China, the acceptance of foreign debit and credit cards can be a bit hit and miss so travellers should make sure they take a sufficient supply of yuan to meet their initial day to day needs.”

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Chile, Spain and Uruguay launch new electronic money transfer service through postal network

Posted by | Jul 28, 2008 | |

Chile, Spain and Uruguay launched a new electronic money transfer service linking their countries, bringing Latin America into the fold of the Universal Postal Union’s international financial network.

People in all three countries will now be able to use the postal network to send and receive money to and from abroad. The service is currently offered in 110 post offices in Chile, in 2,300 in Spain and in 60 in Uruguay. The service is fast and secure; money transfers can be executed and delivered in 15 minutes.

The service relies on the International Financial System (IFS) application developed by the UPU’s Postal Technology Centre. IFS is the backbone of the UN specialized agency’s international financial network. The launch of the new service between Spain and Latin America is part of the UPU’s global efforts to modernize the obsolete paper postal money order and respond to some of the challenges posed by the phenomenon of international migration, including better access for migrant workers to secure remittance services through formal channels, such as the 660,000 or more post offices around the world.

According to World Bank data, more than 220 million migrant workers send over 300 billion dollars annually through formal channels. But officials believe that just as many remittances are being sent through informal channels, promoting money laundering and financing terrorist-related activities. Spain is home to 4.5 million immigrants, 1.6 million of them from Latin America. In 2006, these immigrants sent in excess of 6.25 billion euros to their families in their countries of origin, according to the Bank of Spain. By joining the UPU’s international financial network, Spain will be better able to meet the needs of this Latin American population, and there is now the potential for opening exchanges with countries in North Africa.

The new service is being launched following an agreement signed last December between Spain and the UPU.

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New book on postal economics

Posted by | Jul 28, 2008 | |

Will postal services be the infrastructure of the 21st century? This is the question asked in a new book published by the UPU, and presented to delegates at the 24th Universal Postal Congress.

This book, which is the work of economists Joëlle Toledano, Chair of the UPU’s Postal Economics Group, and a member of the French Electronic Communications and Postal Regulation Authority, and Jose Anson of the International Bureau, broadens the terms of an economic debate which has hitherto focused overwhelmingly on the Posts of industrialized countries. The five chapters of the book provide a global overview of the factors driving the growth of postal markets, and some possible positive developments in the future.

At a press conference held last week to review the state of the worldwide postal sector, Jose Anson identified four challenges facing the postal sector in developing countries:

First, the switch from fee-paying delivery to delivery entirely at the sender’s expense: in many countries, particularly in sub-Saharan Africa, addressees’ mail is delivered not to their door, but to a rented post office box. Besides the fact that addressees should not have to pay to receive their post, this system tends to be detrimental to services like the water and electricity companies, as their bills cannot be delivered to all their customers by post. What is more, this system holds back the development of addressing systems which benefit not only Posts, but also other essential bodies, such as the emergency services.

Second, the move from an administrative to a commercial approach: postal operators should abandon the administrative principle in favour of a customer-focused approach.

Third, the physical infrastructure remains essential in the 21st century: as electronic services grow more and more important, one might think that postal services had become obsolete. However, it should not be forgotten that it is not physically possible to send parcels and money via the Internet. The postal infrastructure, with its 660,000 post offices, has a significant advantage in being able to use its network to implement a whole series of development policies, from offering financial services to people without access to banking services, to facilitating trade for micro, small and medium-sized businesses.

Finally, the importance of a regulatory framework: the presence of a very large number of players sharing in a market without clear regulation can be a significant brake on market development in a country, hence the importance of a regulatory framework that is sufficiently clear to make delivery economically viable.

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Omega United Announces Corporate Name Change to SkyPostal Networks, Inc.

Posted by | Jul 28, 2008 | |

Omega United, Inc. dba SkyPostal, an international mail distribution company specializing in hand delivery of commercial mail and periodicals to the Latin America-Caribbean region (LAC), announced that the Company will officially change it’s corporate name to SkyPostal Networks Inc effective Monday, July 28th. The company’s new trading symbol on the OTC Bulletin Board will be SKPN.

The name change to “SkyPostal Networks” better reflects the Company’s mission to be an international leader in the non-time critical mail and parcel post delivery market, and is expected to support the future promotion of a readily identifiable brand name for the Company’s products.

“We are very pleased to complete the name change to SkyPostal Networks, a name that we believe will enable us to be more marketable on a global scale with a cohesive, instantly-recognizable identity,” said Albert P. Hernandez, SkyPostal’s President and CEO. “Additionally, the name change comes at an opportune time when we are making significant expansions to our product and service offerings.”

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Are postal catalogues finished?

Posted by | Jul 28, 2008 | |

One respected industry analysis firm estimates that one in four UK mail order companies are now operating at a loss. Of nearly 900 mail order companies analysed, over 200 are currently rated by Plimsoll as being ‘in danger’. Jotham Danquah MD of Zmags (UK) explains more.

Many of the industry’s problems are converging at exactly the same moment – high inflation in raw materials, printing costs and transport are all combining with an economic downturn which was reflected in June’s record 3.9 per cent drop in retail sales (the highest drop ever recorded).

The key question therefore is whether postal mail order as a business model is doomed? Bloomingdales, the famous US retailer seems to think so. The company recently announced that it sees no future in postal mail order and is quitting it altogether in 2009. Given that Bloomingdales is owned by Macy’s, the second largest US retailer, such a move is not insignificant.

What has driven Bloomingdales’ decision? Online mail order. After all, why spend millions printing and distributing catalogues when the internet is readily available at a fraction of the cost? Bloomingdales expects USD 1 billion in internet sales this year alone which is not far behind its high street retail sales figure.

The internet is now transforming the mail order industry as demonstrated in the UK by Littlewoods Shop Direct (the UK’s market leader) where one in three sales are now made online. In fact, Littlewoods expects online orders to represent half of all sales by 2009. This is the future.

A key part of this transition to the internet is the growth of online digital page-turning software. These solutions, of which Zmags is one example, are downloaded quickly, are fully functional and offer a few advantages over postal catalogues. One example? Page-turning software can incorporate still photos that come to life and move as embedded video when clicked-upon.

Furthermore, catalogues are easily transferred online using pdf software conversions. It’s a straightforward process that transforms a postal catalogue into a digital page-turning version within the space of a few minutes. Free trials are readily available through most providers.

In short, digital catalogues offer an especially powerful way of tapping into the power of the internet and harnessing its ability to generate catalogue sales.

What are the cost advantages? Well that depends on factors such as list costs, email broadcast etc but as a rule digital catalogue versions cost 10 per cent of the postal catalogue costs. With the mail order industry working to 2% pre-tax margins that’s a critical cost saving.

The postal catalogue is not finished – far from it because people will always want to read a hard copy from the comfort of their sofa. However, postal mail order is coming under severe pressure from two sides: catalogue production/distribution inflation on one side and the rise in internet sales from the other. For the above reasons, I expect postal catalogues to continue their decline with digital catalogues taking their place.

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