Stronger-than-expected demand boosts revenue at TNT

Dutch parcel company TNT Express said that stronger-than-expected demand for deliveries is spurring revenue in its main European markets, months before FedEx completes a $4.8-billion takeover.

TNT is tapping “positive developments in Western Europe,” the Hoofddorp, Netherlands-based company said in a statement Monday, adding that there is also “double-digit growth” in Eastern and Southern Europe.

“We are making good progress in a very competitive market,” chief executive officer Tex Gunning said on a conference call. “The economy is doing better.”

European Union approval for FedEx's purchase of TNT may come as early as next week in the absence of antitrust issues, which caused a bid from United Parcel Service to fail 2 1/2 years ago.

FedEx is buying a business where second-quarter sales grew 6.2 per cent to €1.76 billion, the most since its mail and express units were split in 2011.

TNT, which posted a quarterly operating profit of €19 million versus a €3 million year-earlier loss, had cautioned in April that trading conditions remained “adverse,” especially in Western Europe.

Even now, the Greek crisis remains a black mark and China is experiencing great volatility in demand, as is Brazil, where a recession is squeezing prices, the company said.

TNT is now more focused on its European road distribution business and Gunning said a reorganization is “progressing well,” with analysts predicting a return to annual profit this year.

The company’s acquisition by FedEx seem set to succeed, according to Damian Brewer, an analyst at RBC in London.

“At this stage we have seen no counter-bids and, so far, less noise from the EU about the issues UPS had faced,” Brewer said in a note to clients. “We thus see a growing and strong likelihood the FedEx offer achieves its aim.”