By Sara Webb
AMSTERDAM Feb 18 TNT Express, whose
$7 billion takeover by United Parcel Service was blocked
last month, reported a further loss on Monday, saying it would
sell units in Brazil and China and cut costs as it prepares for
a future alone.
The Dutch package delivery firm does not expect offers from
other rivals given regulators' concerns about competition in
Europe, and is not a break-up target, its interim chief
executive said on Monday.
"We've cleansed ourselves of all that speculation, all this
is now behind us," Bernard Bot told reporters on a conference
call, adding the company envisioned a "standalone future."
"We are keenly aware that further urgent improvements are
required," he said, adding that the company would announce its
strategy on March 25.
TNT Express faces an uncertain future. It has cut capacity
in Europe because of weak demand while continuing to struggle
with problems in its Brazilian and Chinese businesses. And its
chief executive quit soon after UPS made its offer in March
The takeover by UPS was intended to create a global express
delivery group with a strong market position in the United
States, Europe, Asia and Latin America.
The smallest of the four world leaders in the express
delivery of goods and documents around the globe - after UPS,
FedEx, and Deutsche Post DHL - the Dutch firm
had come under pressure from shareholders to improve on its
But with the collapse of the UPS deal, TNT Express now has
to confront a weak European market on its own, and has dusted
off some of the moves it had proposed before UPS made its offer
and which were put on hold during the year of negotations.
"There are many positive actions we can take to improve
profitability and we look forward to providing a full update on
25 March," Bot said in a statement.
The firm is also looking at cutting jobs and overheads, Bot
said, stressing that the outlook in Europe where TNT Express has
the bulk of its business, remains tough.
Many of its customers are switching to cheaper delivery
options, and a major customer in the UK fashion business did not
renew its contract when it expired recently.
The company reported a net loss for the final quarter of
2012 of 148 million euros ($198 million), down from a loss of
173 million euros a year ago on flat revenue of 1.86 billion
Analysts had on average forecast a net profit of 32.2
million euros on revenue of 1.886 billion euros but the company
said it had lost 120 million euros in one-off charges and
impairments, mainly on its domestic China and India businesses,
and on the value of its freight aircraft.
For the full year the company reported a net attributable
loss of 83 million euros, down from a 270 million deficit in
EXIT BRAZIL, CHINA
The company has now revived plans to sell some of its
long-haul aircraft in order to cut capacity on international
routes - a plan which was mothballed when UPS made its offer a
year ago and which is likely to net less money now because the
market for such aircraft has deteriorated since then, it said.
However, Bot said the company also plans to sell its
domestic operations in Brazil and China, with the outcome of the
China deal expected soon, while a sale of the Brazilian business
is expected by year-end.
The shares, which initially fell 2 percent, later rebounded
and traded up more than 4 percent, with analysts saying
investors were encouraged by the plan to bale out of the
problematic local businesses.
TNT Express declined to give financial details of the two
businesses but analysts have said in the past that its Chinese
business is too small to compete effectively.
The Brazilian business has been a burden for TNT Express for
several years, making an operating loss of 73 million euros last
year and a loss of 332 million euros in 2011, when the company
took impairment and restructuring charges on the business of 236
"They intend to divest the domestic Chinese activities and
are looking at what to do with Brazil," said Dieter Furniere, an
analyst at KBC in Brussels.
"Since both of these are loss-making, a potential sale could
really improve the underlying results whereas if they keep the
domestic Chinese business they will have to really invest in
it," he said.
TNT Express proposed a dividend of 3 euro cents and said its
dividend policy, paying out about 40 percent of normalised
income, was sustainable.
But it said shareholders, which include Dutch mail firm
PostNL with a near 30 percent stake, should not expect
a special dividend after UPS paid a 200 million euro break-up
fee this month.
TNT Express was split off from PostNL in May 2011 in an
attempt to better profit from development of the express
operations while the traditional mail business declined.
But TNT's ensuing weak performance quickly prompted other
shareholders to call for a management shake-up or an outright
sale, pushing it into the arms of UPS last year, only to have
the EU competition regulator block the marriage 12 months later.