TNT Express Posts Loss on Restructuring, Provision in France
TNT Express NV reported a quarterly loss as restructuring measures and a provision to cover potential costs from an investigation into alleged anti-competitive behavior in France bit into the Dutch logistics company’s earnings.
The operating loss, the first in five quarters, amounted to 47 million euros ($60 million), after the Hoofddorp-based company booked a charge of 50 million euros related to the French probe, the company said in a statement today. It also incurred 46 million euros in restructuring costs in the quarter, mainly to cut jobs in France.
“We are losing market share, we have a competitive challenge,” Chief Financial Officer Maarten De Vries said on a conference call. “We need to catch up. We must improve our service quality, out IT, our brand, our efficiency and productivity.”
TNT has been struggling to stabilize earnings by focusing on its European overland network after United Parcel Service Inc. terminated a 5.16 billion-euro bid for the Dutch company last year amid opposition from European Union regulators.
Last month, TNT abandoned a target to lift adjusted operating profit as a percentage of sales to 8% next year, after postponing a strategy update two months earlier. TNT said it expects full-year restructuring costs of 185 million euros as it plans to cut 4,000 jobs.
The company’s European markets remain “chronically weak” and the level of restructuring charges are “eye-watering,” analyst Robin Byde of Cantor Fitzgerald said in a note to clients.
Third-quarter sales fell 2% to 1.65 billion euros, while the net loss amounted to 55 million euros, compared with a profit of 6 million euros last year. The company’s saving efforts yielded 28 million euros in the quarter, and will result in a benefit of 120 million euros for the full year.
Atlanta-based rival UPS on Oct 24 said international exports rose 9.4%, with Europe showing “strong growth.”
FedEx Corp. CEO David Bronczek on Sept. 14 said Europe was performing “very well.” Deutsche Post AG will report third-quarter earnings Nov. 12.
“Markets in western Europe have deteriorated in the third quarter, which lead to price pressure, particularly in our domestic market,” De Vries said.
TNT plans to spend 185 million euros over four years to improve its road network, the company today said. The efforts include buying more automation and sorting equipment for road transit hubs, adding facilities, route planning software and new trailers. The majority of the spending will occur next year, De Vries said.
