TNT Profit Declines as Reorganization Prompts Writedowns
TNT Express NV (TNTE), the Dutch package-delivery company, said slower growth in Europe and a reorganization of local units weighed on profitability in the second quarter as the company booked impairments on goodwill.
The Hoofddorp, Netherlands-based company reported a loss of 304 million euros ($403 million), after a profit of 39 million euros last year, TNT said today. The company booked 296 million euros in charges related to reorganizing local units and slower business in countries including Italy and France. Sales declined 3.1 percent to 1.7 billion euros.
TNT Express is revamping after United Parcel Service Inc. (UPS), the biggest package-delivery company, terminated a 5.16 billion-euro bid in January amid opposition from European Union regulators. Tex Gunning, who took over as chief executive officer on June 1, said trading remains “difficult” and the stock dropped the most since Jan. 14, when UPS pulled out.
TNT Express reiterated a goal to generate 220 million euros in earnings improvements by 2015 to help lift the operating margin to about 8 percent in its main European markets by then.
TNT also maintained plans to dispose of a unit in Brazil this year, for which there is interest from private-equity investors as well as local delivery companies, according to Chief Financial Officer Bernard Bot. TNT is also selling its domestic road business in China.
The shares fell as much as 45 euro cents, or 7.3 percent, to 5.69 euros in Amsterdam. They traded at 5.77 euros as of 10:21 a.m., bringing the loss for the year to 31 percent, the worst on the 12-member Bloomberg Europe Transportation Index.
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