The Netherlands-based express carrier said it expects 2015 to be a “challenging year of transition” after reaching a tentative $4.2 billion purchase agreement with FedEx.
TNT Express reported an operating loss of 11 million euros (U.S. $11.95 million) for the first quarter 2015 on revenues of 1.62 billion, a 1.3 percent increase from the first quarter 2014. According to the company’s latest financial statements, TNT’s revenues were down 1.5 percent for the quarter when adjusted for disposals and foreign currency exchange.
The Netherlands-based global express carrier recently agreed to a tentative $4.8 billion purchase offer from FedEx. The acquisition was also supported by the Dutch postal service Post NL, which previously owned TNT and now controls 14.7 percent of its shares, but is still pending regulatory approval.
TNT said the operating loss reflected “costs related to the execution of the Outlook strategy (€20 million), lower volumes from international accounts and pricing pressures, particularly in Western Europe.”
The company increased investments to 78 million euros (4.8% of revenues) in the first quarter, compared with 26 million euros (1.6% of revenues) the previous year, with the majority of capital expenditures being allocated to sorting equipment, hubs, depots, vehicles and IT.
TNT said its on-time delivery service performance “continued to improve in all segments.”
Adjusted operating income from the company’s international Europe segment fell a staggering 74.2 percent to 8 million euros on a 1.3 percent year-over-year drop in revenues. TNT attributed the decline primarily to “disappointing” sales in Western Europe, which were offset slightly by growth in other markets.
TNT’s international AMEA unit, on the other hand, increased adjusted operating income 80 percent to 9 million euros on revenues of 233 million euros, a 17.1 percent increase compared with first quarter 2014. The company noted “positive currency effects caused by the appreciation of local currencies against the euro more than offset the drop in fuel surcharge revenue and adverse trading day effect.”
In its domestics segment, TNT posted an operating loss of 4 million euros, down from an adjusted operating profit of 15 million euros the previous year. Revenues for the unit increased 4.4 percent year-over-year to 621 million euros thanks to increased revenues from small and medium-sized enterprises the company’s UK domestic business, offset by a decrease in revenues in its Pacific unit.
The company’s unallocated segment, which includes Other Networks (TNT Innight), Central Networks and corporate head office functions, saw revenues fall 22.5 percent to 107 million euros, as a result of the 2014 sale of TNT’s fashion business and higher pension costs.
Tex Gunning, TNT’s Chief Executive Officer, said of the results, “Good progress is being made with the execution of the Outlook strategy. Service performance and revenues from SMEs further improved, supported by ongoing investments in infrastructure and IT.
“During the FedEx offer process, we will continue to focus on our customers and operational efficiency,” Gunning added. “The first quarter results were impacted by transition costs associated with the Outlook strategy. Our guidance is unchanged: we expect 2015 to be a challenging year of transition, followed by year-on-year improvements from 2016 onwards.”
The company said it expects “a continuation of adverse trading conditions, particularly in Western Europe,” in 2015 as well as “restructuring and other charges of between €25 million and €30 million in the second quarter of 2015.”
TNT posts $11.96m operating loss
