TNT Express warns it is unlikely to hit 2015 profit target

TNT Express has admitted that it is unlikely to hit its profit improvement target for 2015, following an increase in competitive pressures and poor trading conditions in Europe.

In a trading update today, the express parcel carrier admitted that it is likely to take three to five years for its Outlook performance improvement strategy to show its full benefit.

The Outlook strategy, which aims to improve group turnover and profit, was put into place earlier this year and incorporates its Deliver! profit improvement plan. The Deliver! plan was launched in 2013 and included plans to improve adjusted operating margin to 8% for its Europe Main, Other Europe and Americas businesses by the end of 2015.

TNT admitted that it had seen an increase in competition since the end of July, while overall trading conditions in Europe “deteriorated further”.

CEO Tex Gunning said: “The implementation of the Outlook program, which includes ongoing Deliver! savings, has started and is solid, but it will realistically take 3-5 years for the full benefits to come through.”

The company plans to accelerate its investment and cost-reduction programmes, Gunning added, and TNT remains confident that it is “on the right track to create a sustainable business”.

It also wants to move more volume through its European road network, specifically targeting SMEs in the industrial, automotive, high tech, healthcare and lifestyle  sectors.

Last year, adjusted turnover  in its Europe Main business fell 2.7% to €3.3bn (£2.6bn), mainly due to the loss of a contract with a major fashion retailer in 2013. Adjusted operating profit in the division also fell 8% to €41m.