TNT Express today posted a significant drop in both turnover and operating profit, which it mainly put down to difficult trading in its Europe Main division, the loss of a major fashion retail contract in its UK business, and restructuring in Italy. But how far do the operator’s problems, especially within its UK business, stretch?
As part of its plan to recover after consecutive reports of falling turnover and operating profit since its deal with UPS fell though last year, TNT says it wants to restructure its worldwide operations.
Its UK business has already gone through a significant amount of organisational changes over the last 12 months. Some 237 jobs were lost when its administration and finance functions were restructured, 15 management redundancies were made in its operations and sales divisions in the summer, and there is now the possibility of 130 job losses when it plans to integrate its fashion arm into the wider TNT Express network.
At the same time, the parent company has been pushing on with its ‘Deliver’ profit improvement plan, which has now been integrated into a wider ‘Outlook’ strategy, which it hopes will help improve its performance. TNT Express said it had saved €25m (£20.6m) in the final quarter of 2013, just a fraction of what it wanted to save between its launch in March last year and the beginning of 2015. It revealed today that it is targeting €240m in savings from the Deliver plan by 2015, rather than the €220m previously reported.
Former parent PostNL also divested of its stake in the company at the end of last year.
TNT Express still remains hopeful about 2014 and 2015, expecting positive operating results in both its Europe Main and Europe Other & Americas divisions, despite “volatile and uncertain” trading conditions. But just what sort of an effect the restructuring of its business will have on both TNT Express and TNT UK’s finances remains to be seen.