TNT Express longer semi-trailer

UPS/ TNT Express – it’s over. Gone. Finito. Forget about it. Now we have to look at the future of TNT Express and that means turning the global business into a profitable one.

Back in January – TNT insisted its future was bright – despite the European Commission shunning UPS’ advances. But there is only one measure that counts in business, and that is profitability.

Today TNT said it finished 2012 with an operating margin of 1.2%. That’s an operating income of €89m (£77m) on turnover of €7.3bn.

Turnover is up on financial year 2012, albeit by 1.1%.

But where TNT makes money is a quirky issue. It’s in Europe. European turnover in 2012 grew to €4.6bn from €4.5bn a year ago. It has sizable businesses in Asia and Brazil – two of the parts of the world that are actually growing but it can’t get them to make a cent.

Turnover is down in both regions and both are loss making. And its European business continues to haemorrhage any kind of profit anyways (this graph is a shocking example of the profitability of logistics).

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The Hub notes that its international losses are shrinking in Brazil, but not in Asia. And interim CEO Bernard Bot says it is looking to divest its interests in both regions to focus on a European market where its volumes are growing.

It’s an apples and pears comparison, so we can only apologise, but the best data available to us at this stage: the year before these numbers from its parent, TNT UK saw turnover go up to £791m, according to its most recent results for the year ended 31 December 2011, from £758m in the previous year.

However, it suffered a 64% dip in year-on-year pre-tax profit to £3.49m (2010: £8m). We’ll be keeping a close eye on TNT UK’s pre-tax profit in 2012.

On 25 March the TNT board will announce its strategy. It says that given the challenging trading environment, management is developing a comprehensive profit improvement plan. It needs one.