* Q4 operating loss 104 mln euros, hit by impairments
* Q4 underlying EBIT 57 mln euros vs forecast 61 mln
* Seeking buyers, partners for Brazil, China units
* Analysts see less chance of hike in UPS offer, counterbid
* TNT shares down 2.4 pct
By Sara Webb
AMSTERDAM, Feb 21 Dutch freight and
delivery group TNT Express posted weaker-than-expected
results and highlighted a bleak economic outlook, undermining
its attempts to extract a higher price from suitor United Parcel
Service and attract others.
TNT, which said on Friday it was still in talks with UPS
after rejecting a 4.9 billion euro ($6.5 billion) bid, swung to
a fourth-quarter operating loss, hit by an impairment charge at
its troubled Brazilian business, where it has struggled to
TNT said on Tuesday it would look for buyers or partners for
both Brazil and its Chinese unit in order to focus on Europe.
At 1050 GMT, its shares were down 2.4 percent at 9.9 euros.
That is still above the 9 euros per share offered by UPS, but is
below Monday's peak of 10.24 euros, reached amid speculation UPS
might have to offer much more to clinch a deal or that U.S.
rival Fedex might make a counterbid.
"The dip in this morning's share price reflects prudent
profit-taking but also a nervousness that unless FedEx enters
the fray, TNT may struggle to solicit much more than 10.50 euros
from UPS," said Alex White, corporate finance partner at
"There seems little new information TNT can leverage in its
price negotiations with UPS."
TNT, under fire from activist shareholders to improve its
performance, reported a fourth-quarter operating loss of 104
million euros, after a profit of 24 million in the 2010 period,
as it took an impairment charge of 104 million euros on its
business in Brazil and a 45 million impairment on aircraft.
Adjusted underlying earnings before interest and tax (EBIT)
were 57 million euros on quarterly revenue of 1.87 billion
euros. Analysts in a poll commissioned by Reuters had forecast a
fourth-quarter underlying operating profit of 61.2 million euros
and revenue of 1.85 billion euros.
TNT chief executive Marie-Christine Lombard has staked her
reputation on turning round the troubled operations in Brazil,
where TNT has struggled to integrate Expresso Mercurio, which it
bought in 2007, and its delivery partner Expresso Aracatuba,
acquired in 2009.
But on Tuesday, Lombard said TNT was now looking for
"commercial partnerships, joint ventures, or a sale" for both
Brazil and China.
"It's a complete volte face," Gert Steens, analyst at SNS
"The only reason to buy TNT is the European business.
They've been diluting the value of the European business by
spending so much time and money elsewhere. This just confirms no
one is going to pay" for Brazil and China, he added.
On a conference call with journalists, Lombard declined to
comment on the talks with UPS, and would not say whether TNT had
been approached by any other potential buyers, including FedEx.
She warned the economic environment remained very uncertain,
with a risk of a recession in Europe and a slowdown in Asia, and
said TNT would continue to reduce costly fixed capacity on
intercontinental routes in favour of more flexible arrangements
like subleasing planes and sharing capacity.
TNT said it planned to cut 150 million euros in costs by the
end of 2013, while taking 150 million euros of restructuring
expenses and writeoffs.
"We ... do not expect the UPS proposal to increase
significantly and we doubt TNT could deliver the value
implied by the UPS proposal for several years due to the
depressed economic climate in the EMEA (Europe, Middle East and
Africa) region that is key to profitability and the difficult
issues still to be resolved in the Brazilian and Chinese
markets," Citi analyst Roger Elliott said in a research note.