Dutch package delivery company TNT Express NV (TNTEF, TNTEY), which is being acquired by U.S. peer FedEx Corp. (FDX), Monday reported a narrower net loss for the second quarter, with growth in revenues driven by continued improvement in revenues from SMEs in all markets. The company also reiterated its current financial year and longer-term guidance.
The company noted that profitability was affected by IT transition and Outlook project costs of 15 million euros, costs to introduce new services and facilities, as well as pricing pressures.
FedEx agreed in early April to acquire European peer TNT Express for an all-cash public offer of 8 euros per TNT share, in a deal valued at 4.4 billion euros or $4.84 billion. The deal is expected to close in the first half of calendar year 2016.
"TNT's turnaround is progressing well under our Outlook strategy. Service levels and customer satisfaction scores further improved. We are achieving good growth in the SME customer segment after years of decline," CEO Tex Gunning said.
The Amsterdam, The Netherlands-based TNT reported a loss attributable to equity holders of the parent of 1 million euros for the second quarter, narrower than 4 million euros in the prior-year quarter. Loss per share also narrowed to 0.2 euros from last year's 0.7 euros.
On a pre-tax basis, the company posted profit of 16 million euros, compared to a loss of 1 million euros in the prior year.
Operating income grew to 19 million euros from 3 million euros a year ago. Adjusted operating income, which excluded items, was 41 million euros, compared to last year's 7 million euros. Adjusted operating margin was 2.3 percent, lower than prior year's 4.2 percent.
Total revenues for the quarter increased 6.2 percent to 1.76 billion euros from 1.66 billion euros in the same quarter last year. Underlying revenue growth was 4.1 percent at constant currency, net of fuel surcharges and disposals, driven by the continued growth of revenues from small and medium enterprises or SMEs.
International Europe revenues increased 5.1% year-on-year to 719 million euros, despite lower fuel surcharges. Currency comparable revenue growth was 3.9 percent.
International AMEA revenues rose 16.3 percent in the quarter to 257 million euros, as a result of stronger local currencies. Currency comparable revenue declined 1.8 percent. The company said revenues were also affected by a sharp decline in China's exports.
In the Domestics segment, revenues increased 4 percent to 655 million euros. Currency comparable revenue growth was 1.1 percent. Revenues from SMEs improved year-on-year in all markets, supported by improved service quality.
Further, the company said no interim dividend is planned for first half of 2015.
Looking ahead for fiscal 2015, TNT Express reiterates its current financial year and longer-term guidance. It expects a continuation of adverse trading conditions, particularly in Western Europe.
TNT expects 2015 to be a challenging year of transition marked by the progressive ramp-up of new and upgraded facilities and other transformation projects, like the outsourcing of IT.
The company also continues to anticipate restructuring and other charges of between 25 million euros and 30 million euros in the second quarter of 2015.
"We have guided that we expect 2015 to be a transition year in terms of bottom-line performance, as we continue to invest in the transformation of TNT. As for the macro economic backdrop, we have experienced some positive developments in Western Europe, but we remain cautious given the economic volatility in China, Brazil, Australia and Greece," Gunning added.
In Amsterdam, TNT shares are trading in Monday's trading at 7.71 euros, down 0.03 euros or 0.43% on a volume of 29,164 shares.
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