TNT To Shed Forwarding Unit

As it announced third-quarter profit from continuing operations rose 5% to €169 million ($214 million), TNT also disclosed it would sell its freight management business. Peter Bakker, CEO, refused to speculate on an expected sale price or timeframe for the sale.

The move is part of a long-term strategy TNT announced in 2005 that focuses on its mail and express business units. Bakker said the decision to buy Wilson Logistics, the U.K.-based freight forwarder which makes up the core of TNT’s freight management unit, was driven by extended supply chains and potential synergies with TNT’s Express business. It retained the freight management unit as part of that strategy when it announced in late 2005 that it would divest of its logistics operating unit.

Freight management has performed well as a standalone business within TNT, said Bakker, showing 8% revenue growth in 2006 (annualized). With consolidation in the logistics field continuing and given the unit’s solid financial performance, Bakker characterized the announcement as the right time to sell the unit.

The decision was prompted by a reevaluation which showed synergies between freight management and express are limited both on cost and revenue. As a business, it’s in great shape, said Bakker, with strong management, good systems infrastructure and a strong customer base. TNT had to make decisions on where to focus management time and finances, Bakker continued, and clearly that answer is in express and mail.

TNT purchased Wilson in 2004 for €257 million.

TNT had recently announced an agreement to sell its mailroom and data capture activities in The Netherlands. The Spanish group, Service Point Solutions S.A. agreed to purchase TNT’s Document Management business for €27 million. The business manages 150 large mailrooms and 48 reprographic centers and has annual revenues of around €70 million, according to TNT.

The company also announced its intention for its mail unit to cover 100% of German households before the end of 2007. It reached an agreement with German cartel authorities allowing it to take over Germany’s PostCon Deutschland AG and it expanded its own delivery network.

PostCon, based in Berlin, pre-sorts 1.3 million items of addressed mail each day. TNT Post operates two sort centers in Germany—one in Essen and one in Frankfurt.

Bakker pointed to the company’s acquisition of Speedex in India and steps to finalize an agreement with Hoau in China that provide ground transport networks in both developing markets.

Among the financial results TNT released, it claimed a 9% rise in third-quarter revenues to €2,398 million ($3,049 million) and a year-to-date increase of 7.9% to €7,293 million ($9,274 million). Profit from continuing operations was €169 million ($214 million) for the quarter and €592 million ($752 million) year to date.

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