The Netherlands-based parcel carrier has made “substantial progress” toward clearing European regulatory hurdles related to its acquisition by FedEx Corp., according to CEO Tex Gunning.
TNT Express reduced its operating losses 47.1 percent in the third quarter of 2015, posting a negative operating income of 27 million euros (U.S. $29.8 million) compared with a 51 million-euro loss in the same quarter a year ago.
The Netherlands-based parcel carrier increase third quarter revenues 2.3 percent year-over-year to 1.67 billion euros, according to the company’s most recent financial statements.
TNT said adjusted revenues – excluding the negative impacts of currency exchange rates and lower fuel surcharges – grew 3.6 percent for the quarter, a reflection of higher revenues from small and medium enterprises (SMEs), particularly in the International Europe segment.
TNT said its operating result was affected by pricing pressures, Outlook-related transition and project costs of 8 million euros, and costs to enhance service capabilities, and the company “experienced lower margins in France in particular.”
Capital expenditures in the third quarter increased to 62 million euros (3.7 percent of revenues), up from 41 million euros (2.5 percent of revenues) in the same period of 2014. TNT noted it opened three new automated sorting facilities in Madrid, Spain; Swindon, United Kingdom; and Eindhoven, the Netherlands, while upgrading existing centers as part of its “Perfect Depot” project.
The company attributed the third quarter operating loss primarily to net one-off charges of 40 million euros, including restructuring charges of 23 million euros related to its pending sale to FedEx Corp. TNT, which agreed in April to a be acquired by the Memphis, Tenn.-based integrator for $4.8 billion, reported adjusted operating income of 13 million euros in the third quarter, down over 70 percent from 46 million euros in Q3 2014.
Both TNT and FedEx recently took issue with media reports that the European Commission planned to seek significant concessions from FedEx to allow the proposed takeover to go through. The companies said they have not received any correspondence from European Union regulators stating any objections to the tie-up, and that they still expect the deal to close in the first half of next year.
“Substantial progress has been made in the recommended acquisition of TNT by FedEx: TNT shareholders have approved the resolutions of the Extraordinary General Meeting. We have been informed by the European Commission that it will not issue a Statement of Objections,” CEO Tex Gunning said in a statement. “We continue to support FedEx in obtaining all necessary approvals and expect the transaction to close in the first half of 2016.
“At the same time we remain focused on executing our Outlook strategy to transform and turn TNT around,” he added. “Revenue growth from SMEs continued in the third quarter. Service performance and customer satisfaction further improved. Our investments in IT and productivity are on track. As said, time is needed for these profound transformations to influence the bottom line. 2015 is a transition year for TNT. We expect to see year-on-year margin improvements from 2016 onwards.”
TNT reiterated its current financial year and longer-term guidance, saying the company “expects 2015 to be a challenging year of transition marked by the progressive ramp-up of new and upgraded facilities and other transformation projects, such as the outsourcing of IT.”
TNT said it anticipates additional restructuring charges of about 10 million euros in the fourth quarter of 2015.
TNT posts smaller operating loss in Q3
