TNT said 2015 will continue to be a year of transition for the company after reporting third quarter turnover of €1.6bn (£1.2bn), up 2.3% year-on-year, and a €27m operating loss, compared with an operating loss of €51m for the third quarter of 2014.
Tex Gunning, TNT’s chief executive, said the company would start to see improved performance next year as it continues to drive through changes to the business under its Outlook strategy. He added: “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.”
In the UK both the Domestic and International divisions reported year-on-year turnover growth in Q3, driven by a growing SME market and a strengthening UK economy.
The company declined to give figures on the UK divisions but a TNT spokesman said turnover was up “strongly” in the Domestic division year-on-year with the International division also showing growth in the same period.
The results follow major changes to the UK’s International division earlier this year which saw a management cull and the appointment of TNT veteran Tony Jakobsen as head of the division.
The UK business is also benefitting from the company’s drive to overhaul its depots, the spokesman added, with the opening of a new depot in Swindon and the refurbishment of existing UK depots under the company’s Perfect Depot strategy, which is overhauling processes and investing in new machinery.
TNT’s results come just days after the company revealed that its proposed €4.4bn sale to US rival FedEx has moved one step closer with the European Commission confirming it will not issue a Statement of Objections to the proposition.
The sale would make the combined company Europe's second-biggest delivery services business, ahead of UPS and behind Deutsche Post's DHL.
The rise in TNT’s Q3 turnover is attributed largely to growth in its SME business particularly in Europe. However the company said economic volatility in Australia, China and Brazil impacted on TNT’s revenues and overall performance in these parts of the world. Operating income includes net one-off charges of €40m, including restructuring charges of €23m.
TNT’s adjusted operating income was €13m in the third quarter, compared with €46m for the same period of last year. The company said operating income was affected by pricing pressures, Outlook-related transition and project costs (€8m), and costs to enhance service capabilities.
TNT experienced lower margins in France in particular. Capital expenditures increased to €62m (or 3.7% of turnover) in the third quarter of 2015 from €41m (2.5% of turnover) in the same period of 2014.
During the quarter, TNT opened three new automated sorting facilities in Madrid, Swindon and Eindhoven, while upgrading existing ones as part of its Perfect Depot project. The company said the net cash position of €223m at quarter-end (second quarter 2015: €26m) reflects the investments made as part of the Outlook strategy.
Turning to the proposed acquisition by FedEx, Gunning said: “Substantial progress has been made in the recommended acquisition of TNT by FedEx,” adding that he expected the transaction to close in the first half of 2016.
