TNT Express Increases Savings Target Amid Focus on EuropeRichard Weiss
TNT Express NV will concentrate more on Europe and customers in certain industries as the Dutch logistics company wrings more savings from an efficiency drive, including job cuts.
TNT will increase the contribution from clients in the automotive, industrial, health-care and high-technology industries and will focus more on small and medium-sized enterprises, the company said in a statement today. TNT raised its savings target by 20 million euros ($27.5 million) by 2015 and increased planned spending by 100 million euros to reduce staff and upgrade information technology in the period.
“This business has a lot to offer, it has a competitive position in the European road network, and good strategy is focusing on where your strengths are,” Chief Executive Officer Tex Gunning said on a conference call with journalists.
The company today announced the appointment of six executives to its management board, and said it will reorganize regional structures. Gunning will provide more details including financial targets for the Hoofddorp, Netherlands-based company in the second half of 2014. TNT also said it may sell its unit serving the Dutch fashion industry in the next few months.
The company’s shares rose 0.6 percent to 6.8 euros at 12:06 p.m in Amsterdam trading, taking the advance to 18 percent in a year.
TNT has suffered setbacks since United Parcel Service Inc., the biggest package-delivery company, terminated a 5.16 billion-euro bid 13 months ago amid opposition from European Union regulators. TNT today said it was unable to sell two freighter planes, after announcing in January that it would keep a Brazilian unit it had tried to sell.
“Further stranded loss-making assets suggest an inability to escape underperforming capital,” Damian Brewer, an analyst at RBC Capital Markets, said in a note to clients today. “The new focus areas represent the same niches every other competitor has targeted. TNT’s almost annual degree of restatement raises constant investor questions over reporting quality.”
TNT now targets 240 million euros in savings by 2015, up from an earlier goal of 220 million euros. The company will also spend about 200 million euros on redundancy payments, 50 million euros more than earlier planned, as it cuts some 4,000 jobs, and will incur about 50 million euros in costs for new IT systems. It reduced planned total capital expenditure by 25 million euros to 175 million euros for the next two years.
Fourth-quarter sales fell 4.6 percent to 1.7 billion euros, the lowest fourth-quarter number in four years, while operating profit was 88 million euros, compared with a loss of 52 million euros. Net income was 32 million euros, compared with a loss of 148 million a year earlier.
TNT today reiterated its target for operating income at about 8 percent of sales by 2015 for its European and Americas units.