TNT returns to the black in the fourth quarter
16 / 02 / 2016
Express delivery firm TNT returned to the black during the fourth quarter of last year on the back of revenue growth and cost cutting measures.
The Amsterdam-headquartered company, which is the process of being taken over by FedEx, reported fourth-quarter revenues of €1.9bn, up 4.1% compared with the same period in 2014.
Operating income for the period improved from a loss of €53m in 2014 to a profit of €57m last year and it recorded a net profit of €19m in the fourth quarter of last year against a €137m loss in 2014.
It said revenues benefitted from foreign currency effects and an extra working day, but were negatively affected by lower fuel surcharges.
Excluding these affects, underlying revenue growth was 3% on the back of improved volumes from small and medium sized businesses, up 9.5%, and European customers, which generated a 9.1% increase in revenues on international shipments.
Meanwhile, demand decreases were registered with its Brazilian and Chinese customers.
The improvement in operating income is more impressive in the fact that it includes one-off charges of €39m, including restructuring costs of €11m.
Excluding one-off charges, TNT’s adjusted operating income almost doubled from a year earlier to €96m. Profitability was supported by revenue growth and successful efforts to reduce indirect costs.
TNT chief executive Tex Gunning said: “We saw growth accelerating, particularly in our International Europe express business, and we realised a significant improvement in operating income.
“Service has improved noticeably, as evidenced by record customer experience scores. We are quickly making up for the lost ground in operational excellence by accelerating capital expenditure and outsourcing our Global Business Services and IT infrastructure.
“We expect further year-on-year improvements in adjusted operating income in full year 2016. Good progress has also been made towards closing of the FedEx offer to acquire TNT. Pre-integration planning is well on track and we are all looking forward to a bright future with FedEx.”
While the express firm recorded a profit in the fourth quarter, this was not enough to drag its full-year results into the black.
Revenues for 2015 were up by 3.5% year on year to €7bn, operating income reached €38m compared with an €86m loss in 2014 and its net loss was €50m compared with a €195m loss in the previous year.
It said the profit performance was affected by a €309m investment in transport and IT infrastructure and new road and air connections. The transformations also triggered one-off restructuring charges that reduced full-year operating income by €113m.
Results were also affected by pricing pressure in several markets, particularly domestic ones.
Earlier this month, FedEx’s takeover of TNT took another step forward when Brazil’s competition authority gave its go-ahead to the acquisition.
Two weeks ago, ASL Aviation agreed to purchase TNT Airways and Pan Air Líneas Aéreas, which the express firm has agreed to sell as part of its takeover by FedEx, for an undisclosed sum.