TNT Updates on Strategy and Outlook

Dec. 12, 2007
Netherlands-based TNT has gone to battle for an open market opportunity in the German mail system. "The recent protectionist developments on postal liberalization

Netherlands-based TNT has gone to battle for an open market opportunity in the German mail system. "The recent protectionist developments on postal liberalization in Germany have led to a full revision of TNT's position in the German mail market, with further restructuring as a possible outcome," said the company. It has addressed concerns to the appropriate authorities in the Netherlands that there is no level playing field in Germany and the UK.

Restructuring charges in the range of €125 million to €175 million ($183 million to $257 million) in Mail for 2007-2009 will lead to €150 million ($220 million) in savings in 2008/2009 and annual savings of €360 million ($528 million) as of 2015, says the company.

TNT's exit of the logistics and freight management markets are complete following the successful sale of non-core businesses in those areas. The company says it has also optimized its capital structure with over €3 billion ($4.4 billion) of cash returns to shareholders via buybacks and dividends since December 2005. During the period from fourth quarter 2006 to the third quarter of 2007, TNT's focus on networks returned a compound annual growth rate (CAGR) of 13% in Express and a 3% CAGR in Mail.

This has created a strong platform for growth, the company says. Strengthening its number one position in national and intra-European express should provide an indicative revenue growth of 5% to 10%. Building a leading position in selected intercontinental flows would provide over 25%. Becoming number one in select emerging markets and copying the European road express strategy globally could provide over 20% revenue growth. And expanding TNT's position in broader markets through special services could provide 10% to 15% revenue growth.

Summarizing TNT's outlook for 2007, revenue growth should be around 15% in Express and operating margins should range from 9% to 10%. Mail will show single-digit revenue growth but with a margin of around 17.5% (excluding the impact of possible provisions).

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