UPDATE 3-TNT cuts express target, dividend to be unchanged

* Express unit's 2008 results seen lower than forecast

* 2008 dividend unchanged at 0.85 cents/share

* Shares end 3.2 pct down

(Adds CEO comment, closing share price)

By Foo Yun Chee

AMSTERDAM, Dec 4 (Reuters) - Dutch mail company TNT NV (TNT.AS) has cut the outlook for its key express delivery unit for the second time, hurt by the economic slowdown, and said it plans to pay an unchanged 2008 dividend, hitting its shares.

"Volumes, overall and in particular in the premium express market in Europe, continue to decrease and are now well below levels of the comparable period in 2007," the company, Europe's second-largest mail and delivery company after Deutsche Post (DPWGn.DE), said on Thursday.

TNT said the full-year results for its express unit, which accounts for 60 percent of its sales, will likely come in somewhat below the outlook given during its third-quarter results. It did not issue a 2009 outlook.

In October, TNT cut its full-year operating margin target for its express unit to 9 percent from a low double-digit objective, citing a recessionary trend fuelled by the credit crisis which hurt demand for its premium air delivery service.

TNT shares ended 3.2 percent lower at 14.95 euros, its lowest close in two weeks and underperforming a 0.8 percent lower DJ Stoxx industrial goods and services index .SXNP.

"TNT has refrained from giving a 2009 outlook, which some analysts may have expected and that is why the stock is down," said a trader at Keijser Capital. He said the company's decision to keep its dividend unchanged should limit the stock's downside.

TNT said it plans to pay an unchanged dividend of 0.85 euro per share for 2008 and reaffirmed its dividend policy of a 40 percent payout of normalised net profit by 2010. It said it was unlikely to start further share buyback programmes in 2009 or 2010.

In October, U.S. rival United Parcel Service (UPS.N) said it expected 2008 profit towards the low end of a range forecast in July. Last month, Deutsche Post said it expected its operating business to do better in 2009 than this year.

TNT kept its guidance for its mail operation, from which it makes a third of sales but half of its operating profits.

The company is targeting cost savings of 270-330 million euros in 2009-2010, with the bulk of the savings in its express unit. It will start another cost cutting plan at its mail unit from 2011 onwards, targeting 200 million euros.

TNT also plans to sell up to 200 million euros of properties in the next two years from a portfolio with an estimated market value of 1.2 billion euros.

It indicated a provision of 125-200 million euros between 2008-2010 for the cost measures and possible impairments of up to 150 million euros.

Asked about merger prospects in the current environment, Chief Executive Peter Bakker told Reuters that TNT and many of its peers were now more involved in cutting costs and rationalising their operations.

"I don't see any major happening in the short term," he said in an interview.

TNT has repeatedly been the subject of takeover speculation with media reports saying that U.S. rivals United Parcel Service and FedEx (FDX.N) might be interested in its European express operations.

TNT shares trade on 8 times its estimated 2009 earnings compared with 12 times for FedEx, 15.7 times for UPS and 8.3 times for Deutsche Post, according to Reuters data. (Editing by Simon Jessop and Greg Mahlich)