UPDATE 2-PostNL shares hit by weak earnings, dividend doubt

Mon Nov 5, 2012 6:06am EST

* Dividend payment "difficult" due to weak cash position

* Q3 hit by cut in valuation of TNT Express stake

* Q3 op loss 128 mln euros vs f'cast EBIT 67.4 mln

* Sees FY mail volumes down 10 pct, top of 8-10 pct f'cast range

* Shares down more than 7 percent (Rewrites first paragraph, adds CFO comments and background, updates shares)

By Anthony Deutsch

AMSTERDAM, Nov 5 (Reuters) - PostNL NV warned that a drop in the value of its stake in TNT Express had sent it to a hefty loss and would make it tough to afford a dividend, sending its shares sharply lower.

The Dutch postal group had planned to make a payout using income from the sale of its 30 percent stake in TNT Express, an express parcel service, but the value of this had fallen 180 million euros ($231.2 million) from the second quarter to 1.3 billion euros, the company said on Monday.

And like other postal companies, PostNL is also suffering from declining mail volumes, which fell a sharper-than-expected 10 percent in the Netherlands in the latest quarter.

Shares in PostNL, still the largest shareholder in TNT Express, were down 7.6 percent at 2.879 euros by 1046 GMT. TNT Express shares fell nearly 4 percent.

The company said declining mail volumes and a lower valuation for its TNT Express stake would propel full-year underlying operating profit to the bottom half of analysts' forecast range of between 110 million euros and 160 million.

Chief Financial Officer Jan Bos said on a conference call a quick return to the payment of a cash dividend would be difficult due to the delay in the sale of the TNT Express stake to UPS.

In the third quarter, PostNL said it fell to an operating loss of 128 million euros compared with a profit of 66 million in the 2011 period. Analysts polled by Reuters had expected earnings before interest and taxation of 67.4 million euros.

The decline was caused by one-off costs of 188 million euros, mostly due to the declining value of its TNT Express stake, and a 10 percent drop in mail volumes - at the top end of the range of what it had said it expected.

The company had previously said in its 2012 outlook that mail volumes would fall between 8 percent and 10 percent.

United Parcel Service Inc has agreed to buy TNT Express, which was split from PostNL in 2011, for 5.2 billion euros ($6.7 billion), but the deal is being held up by European Commission objections.

The European Union's antitrust chief said last month UPS and TNT would have to offer concessions to secure regulatory approval.

As part of the UPS deal, PostNL has been able to sell or transfer its shares since September, but has held off because the current price of 7.81 euros is below the offer price of 9.50 euros per share.

PostNL lowered the book value of the TNT Express holding in line with a share price fall over the last quarter.

Bos also said capital expenditure for 2012 had been reduced to around 200 million euros ($257 million) from 240 million. ($1 = 0.7785 euros) (Editing by Mark Potter and David Holmes)

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