TNT Express has a better quarter but problems remain

TNT Express’ fourth quarter results provide some cause for optimism but the Netherlands-based Express company is still faced with significant problems both in terms profits and growth.

The top-line numbers saw higher ‘adjusted’ operating profit for the fourth quarter at €76m, up from €58m in Q4 2012, whilst ‘adjusted’ revenue was more or less flat. In un-adjusted terms this produced an operating profit of €88m for the quarter in contrast to the loss made in the same period last year. This was despite an unadjusted revenue 4.7% lower than Q4 2012.

Digging down however, the operational picture shows that revenue per kilo fell by 3.3% year-on-year in the key European market with 5.2% fewer consignments but 2.1% higher revenue per consignment.

For the full year, the annual report also published yesterday shows a loss for the year of €122m.

Fundamental to future increases in profit in such an environment will be the reductions in TNT Express’ cost base. On an annual basis cost reductions have resulted in €35m of savings in 2013 with a projected €120m in 2014 and €85m in 2015 which is impressive. However re-structuring costs alone will counter-balance this by €90m in 2013 and by the same amount in 2014. It is also worth noting that TNT Express appears to have given-up trying to sell its Boeing 747 freighters and has resumed depreciation charges for them on its accounts.

The company also announced a next stage in its corporate strategy. Called ‘Outlook’ it is a more positive policy than the existing ‘Deliver’ programme which is largely focused on cost-reduction. ‘Outlook’ is attempting to grow TNT Express’ market potential by identifying key customer segments which offer potential as well as looking at other market opportunities.

The new CEO, Tex Gunning has also restructured the company at a management board level, with two new directors joining four existing managers alongside Mr Gunning and Bernard Bot, the Chief Financial Officer. In parallel the company has been restructured to focus around domestic European business, international European and ‘International Asia, Middle East and Africa’ business divisions.