TNT reports mixed Q3 results

TNT has reported its financial results for the third quarter of 2015. It recorded revenues of €1.67bn which represented an increase of 2.26% year-on-year. For the same period, the company reported an operating loss of €27m which represented an improvement of 47.06% from a loss of €51m in Q3 2014. Consequently, margin stood at -1.61%.

The company stated that revenue growth was driven by higher volumes from SMEs particularly in the International Europe segment. However, economic volatility in Australia, China and Brazil weighed on TNT’s revenues and overall performance in these parts of the world. Revenue growth of 4.37% at the International Europe segment helped to drive overall growth. This was accompanied by an even stronger result from the slightly smaller International AMEA segment. However, this result was restrained by declining revenue in the Domestics segment which was largely driven by falling revenues in Brazil and Australia. Lower fuel surcharges also hit revenue.

The operating loss was attributed to pricing pressures as well as €23m of restructuring costs. The improvement seen in Q3 2015 is largely because of exceptional items reported in Q3 2014 relating to the French competition case. The International Europe segment recorded a slight decline in operating income due to transformational costs while the International AMEA segment recorded a slight improvement as a result of cost management initiatives. The primary cause for the loss came from the Domestics segment, which suffered from lower sales in Brazil and Australia and lower yields in France and Australia. TNT’s performance in France was affected by competitive pressures and higher B2C delivery cost. In Australia, TNT faced competitive pressures along with a drop in commodity prices and the ongoing cost of modernising the Australian infrastructure.

Tex Gunning, TNT’s Chief Executive Officer, said, “Substantial progress has been made in the recommended acquisition of TNT by FedEx: TNT shareholders have approved the resolutions of the Extraordinary General Meeting. We have been informed by the European Commission that it will not issue a Statement of Objections. We continue to support FedEx in obtaining all necessary approvals and expect the transaction to close in the first half of 2016. At the same time we remain focused on executing our Outlook strategy to transform and turn TNT around. Revenue growth from SMEs continued in the third quarter. Service performance and customer satisfaction further improved. Our investments in IT and productivity are on track. As said, time is needed for these profound transformations to influence the bottom line. 2015 is a transition year for TNT. We expect to see year-on-year margin improvements from 2016 onwards.”