TNT Express: 2Q13 results – Challenging trading conditions continue, focus on operational improvements

Amsterdam, The Netherlands, 29 July 2013


  • Reported revenues €1,702m (-3.1%), reported operating income €(280)m (2Q12: €94m)
  • Adjusted revenues €1,736m (-1.1%), adjusted operating income €71m (2Q12: €97m)
  • Adjustments to operating income include €296m goodwill impairments and €53m fair value adjustments
  • Solid period end net cash position of €287m (1Q13: €280m)
  • Strong focus on operational improvements with Deliver! gaining momentum; accelerated reorganisation Italy announced
  • Brazil sales process on course, turnaround measures successful
  • Interim pro forma 2013 dividend of €0.022 per share declared representing 40% pay-out of 1H13 normalised net income; shareholders may choose to receive the dividend in stock or cash
  • Trading conditions continued to reflect generally challenging economic conditions
  • Europe Main (Benelux, France, Germany, Italy and UK/Ireland) profit decline as a result of pricing pressure, mitigated by volume growth and savings
  • Good performance Europe Other & Americas as a whole, but mixed picture by country, mostly depending on local economic conditions
  • Pacific (mostly Australia and New Zealand) operating income below prior year. Strong consignment growth but significantly lower weight per consignment and higher input costs
  • Asia Middle East & Africa profitability higher, despite weaker economic growth and negative effect introduction of VAT in China

Deliver ! update
TNT Express’ Deliver! programme was launched on 25 March 2013 and runs through 2015. The programme is built around four priorities: reshape the portfolio, focus on TNT Express’ distinctive service, execute better and invest in infrastructure and IT.  Highlights in the quarter include:

  • Closing of sale China Domestic expected in 2H13; sale process Brazil Domestic started – adjusted operating income losses reduced to €(5)m in 2Q13
  • Streamlined company-wide functions being established; consultation with employee representatives initiated
  • Start of implementation various operational improvement projects
  • Savings realised from central air linehaul optimisation
  • Accelerated reorganisation in Italy announced in June 2013


Commenting on this quarter’s developments, Tex Gunning, CEO said:

‘During my first two months, I have had the pleasure to meet with many employees and customers around the world. These meetings have strengthened my confidence about our future: we have attractive market positions that we continue to develop thanks to our highly committed employees.

But there are also many challenges – and trading conditions remain difficult. The Deliver! programme is therefore vital to improve our performance. We are making good progress in its implementation. We announced the restructuring of our Italian operations in June and will realise important milestones for our overhead and operational process improvement projects after the summer. We should start seeing benefits from Deliver! as the programme gains momentum.

While visibility of the economy remains limited, we reiterate our 2015 ambitions.’


2013 guidance

  • Challenging trading conditions foreseen for the rest of 2013, with continued negative development of operating results for Europe Main and Europe Other & Americas combined
  • Asia Middle East & Africa expected to perform better than the prior year
  • Pacific decline in operating profits
  • Unallocated around €(25)m (consists of unallocated costs and operating income from Fashion and Innight)
  • Brazil expected to reduce losses 

2015 ambitions

  • The economic climate remains uncertain with limited visibility on the future
  • Assuming a return to normal economic conditions in Europe (moderate economic growth and 2% annual inflation), ambition for Europe Main and Europe Other & Americas combined to achieve an adjusted operating income margin of around 8% and sales growth for the period of around 2% (CAGR)
  • All other segments to contribute to profitability
  • Other indicators:
    –  €220m improvements from Deliver!
    –  Unallocated around €(25)m
    –  ETR around 30%
    –  Capex 2-3% of revenues (excluding additional investments Deliver! programme)
    –  Trade working capital around 8% of revenues


New reporting segmentation

Previously, TNT Express operated its businesses through five reportable segments: Europe Middle East & Africa, Asia Pacific, Brazil, Other Americas and Other Networks.

This has now been replaced by a new structure based on business units and global functions, as presented on 25 March 2013. In line with IFRS requirements, this results in the following new reporting segments: Europe Main, Europe Other & Americas, Pacific and Asia, Middle East & Africa (AMEA).

The constituents of these segments are as follows:

Europe Main Benelux, France, Germany, Italy and UK & Ireland
Europe Other & Americas Other European countries and Americas
Pacific Australia, New Zealand and Rest of Pacific
AMEA Asia, Middle East and Africa

Brazil is reported as Discontinued Operations.

The year-to-date 2012 and 2013 figures have been restated accordingly and can be found on page 12*. The table on page 4* bridges total revenues and operating income between old and new segmentation for 2Q13.                 * pdf of full press release


Given their small relative size, the Other Networks activities TNT Innight and TNT Fashion outside the UK, as well as the Air Cargo Sales and Central Network activities (previously reported within Europe Middle East & Africa) are now reported in Unallocated.

Management will integrate TNT Fashion’s UK activities with the UK Express operations to capture the synergies between the two businesses.

Cash generating units (CGUs)

Following IFRS requirements, the CGUs for the purpose of goodwill testing have changed. Previously, the CGUs were: Northern Europe, Southern Europe & MEA, Asia Pacific, North America, Brazil, Other South America and Other Networks. The new CGUs correspond to operations in the business units and the nature of the services provided. They now are: Benelux, France, Germany, Italy, UK & Ireland, Europe Other, North America, Brazil, Other South Americas, Asia Middle East & Africa, Pacific and Other Networks.

The change in CGUs requires a reallocation of the goodwill previously allocated to the CGUs of the former reporting segments Northern Europe and Southern Europe & MEA to the respective new CGUs. This triggers an impairment test based on the present value of the estimated future cash flows of each CGU. The estimated future cash flows do not include the impact of future improvement programmes, such as Deliver!. If the present value of the estimated future cash flows is lower than the carrying value (including allocated goodwill) of the CGU, a goodwill impairment must be recognised.

The impairment test results in a total impairment of €296m, related to the former Southern Europe & MEA CGU (€159m), the former Northern Europe  CGU (€79m) and the former Other Networks CGU (€58m).

Worsening trading conditions in Southern Europe, in particular in Italy and France, the loss of a significant fashion contract and the decline in Innight results contribute to the impairments.

The increased granularity of the new CGUs also affects the impairment review. As each of the Europe Main business units now constitutes a separate CGU, the offsetting higher results of other units (which were previously part of the same CGU) no longer compensate for the lower values of these individual business units.

TNT Express reconfirms its 2015 ambitions.


28 October 2013  Publication 3Q13 results


Andrew Beh
Phone  +31 (0)88 393 9500

Michiel van der Harst
Phone  +31 (0)88 393 9500

Cyrille Gibot
Phone +31 (0)88 393 9390
Mobile +31 (0)65 113 3104


Some statements in this press release are “forward-looking statements”. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside of our control and impossible to predict and may cause actual results to differ materially from any future results expressed or implied. These forward-looking statements are based on current expectations, estimates, forecasts, analyses and projections about the industries in which we operate and management’s beliefs and assumptions about future events. You are cautioned not to put undue reliance on these forward-looking statements, which only speak as of the date of this press release and are neither predictions nor guarantees of future events or circumstances. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

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