(Removes goodwill from 1st paragraph, adds full details of
write-off in 4th paragraph)
AMSTERDAM, July 29 TNT Express said on
Monday tough trading conditions in southern Europe contributed
to a 350 million euro ($464 million) write-off that pushed the
Dutch delivery group to a second-quarter loss.
The company is restructuring to bounce back from the
collapse of a 5.2 billion euro takeover by rival United Parcel
Service, which was blocked by European regulators in
January on competition grounds.
But its express delivery business has been hit by
overcapacity and an economic downturn in Europe, with many
customers choosing cheaper delivery options, putting pressure on
TNT Express said the adjustments consisted of 296 million
euros of goodwill impairments and 53 million euros of fair value
About half the goodwill write-offs were due to worsening
trade conditions in southern Europe, particularly Italy and
France, Bernard Bot, chief financial officer, told a conference
call. He said even without the group's reorganisation, TNT
Express would have had to take impairments.
"We probably would have taken a different impairment, we
still would have taken a hit, probably on our southern Europe
activities," Bot said.
The Dutch firm's write-offs and other one-offs for the
second quarter were related to restructuring following the
collapse of the UPS deal. TNT Express said it remained on track
with planned divestments and cost-cuts to meet turnaround
TNT Express has already announced 4,000 job cuts and asset
sales to improve profitability.
It has agreed to sell Hoau, its Chinese parcel business, to
private equity funds in March, and has put its troubled
Brazilian unit up for sale.
Bot said on Monday there had been "good interest" in the
Brazilian business from international and local transport
companies, as well as from private equity firms, but did not
TRADITIONAL POST IN DECLINE
TNT Express was spliced off from PostNL two years
ago to ring fence the express delivery operations from a
traditional post business that was in decline because of the
growth in electronic mail. Both companies have struggled to
In Britain, the government is planning to sell off a
majority stake in the country's postal service Royal Mail, which
is also trying to shift its business away from falling letter
volumes towards parcels, where demand is growing because of
TNT Express reported a second-quarter operating loss of 280
million euros on revenue of 1.7 billion euros.
Adjusted operating income fell 26 percent to 71 million
euros in the second quarter from 97 million euros a year ago,
broadly in line with analysts' forecasts.
"Although the outlook is confirmed, it still flags that the
second half will remain challenging," Dieter Furniere, analyst
at KBC Securities, said.
Bot said while the outlook for southern Europe was bleak,
eastern Europe was doing well, with TNT Express focusing on
higher-margin business from small- and mid-sized customers as
well as the lifestyle and healthcare sectors which have shown
TNT Express shares fell 6.27 percent to trade at 5.756 euros
by 0836 GMT.
($1 = 0.7539 euros)
(Reporting by Sara Webb. Editing by Jane Merriman)