PostNL ups cost savings and targets resumed dividend

AMSTERDAM Mon Feb 25, 2013 8:27am EST

The logo of TNT is seen in Hoofddorp, the Netherlands March 19, 2012. REUTERS/Robin van Lonkhuijsen/United Photos

The logo of TNT is seen in Hoofddorp, the Netherlands March 19, 2012.

Credit: Reuters/Robin van Lonkhuijsen/United Photos

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AMSTERDAM (Reuters) - PostNL (PTNL.AS) is to seek more cost cuts and is reviving efforts to sell its stake in TNT Express (TNTE.AS), aiming to resume dividends and battle back from a slump in its key mail markets.

Shares in the Netherlands-based group jumped more than 8 percent to their highest in more than a month.

The company, which announced higher-than-expected fourth-quarter earnings, said it will continue to reduce its headcount as it aims for an additional 70 million euros ($92 million) in annual costs savings by 2017 - taking total planned yearly savings to 400 million - to counter declining mail volumes.

It will also renew attempts to sell its stake in TNT Express after United Parcel Service (UPS.N) in January dropped its $7 billion planned takeover of the express parcels carrier, in which PostNL is the largest shareholder.

PostNL has gone through a year of upheaval, marked by management change, the collapse of the UPS bid and disappointing performance.

The country's former monopoly said between 2,700 and 3,500 jobs will be cut out of a total 33,000, of which between 450 and 650 would be forced redundancies, mostly at its headquarters in The Hague.

"The delay in the reorganization, combined with the expected volume decline of 8 to 10 percent to 2015, triggers the need for extra cost savings and a clear focus on our pricing policy," PostNL said in a statement.

NEW DEAL

Chief Executive Heerna Verhagen told journalists a new agreement between TNT Express and PostNL involved an easing in restrictions in when the TNT stake could be sold. Its stake would therefore be "more liquid and we can sell more easily when we want to," Verhagen said.

TNT had given an update on its own prospects as recently as last week, saying it would sell units in Brazil and China and cut costs as it prepares for a future alone.

To counter declines in traditional mail delivery services, PostNL also said it would raise prices for bulk mail by more than inflation, but didn't give any more specific detail.

PostNL reported a net profit of 155 million euros in the fourth quarter, beating analysts' average forecast of 82.4 million in a Reuters poll. Revenue rose 2.6 percent to 1.2 billion euros, also ahead of expectations.

The company repeated that it expects to make underlying cash operating income of between 300 million euros and 370 million by 2015 and would reinstate a cash dividend the year after.

PostNL's shares, which jumped more than 8 percent in morning trading in Amsterdam and were up 6.8 percent at 1.97 euros by midday, were trading at their highest since mid-January, when UPS dropped its bid after European anti-trust regulators said they would veto it.

According to Starmine SmartEstimates, PostNL shares are still at a substantial discount to those of its peers.

The stock trades on a forward price-earnings multiple of 3.3 and a ratio of enterprise value (EV) to EBITDA of 4.5. By comparison, for Germany's Deutsche Post (DPWGn.DE) the respective ratios are 12.2 and 5.2, while for Austrian Post (POST.VI) they are 13.8 and 6.2.

(Editing by Sara Webb and David Holmes)

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