TNT Express posts 85% decline in third-quarter earnings

TNT Express NV posted an 85 per cent decline in third-quarter earnings as trading remained difficult in main European markets, prompting the Dutch package-delivery company to intensify efficiency measures.

Operating income fell to €9 million from €62 million in the quarter ended September 30th. Sales declined 6.6 per cent to €1.62 billion, with unfavourable currency swings depressing revenue by €83 million.

The firm said it will step up restructuring efforts, without providing further details. "Overall trading conditions remain demanding and visibility limited," chief executive Tex Gunning said. TNT is revamping after United Parcel Service, the biggest package-delivery company, terminated a €5.16 billion bid in January amid opposition from European Union regulators. The overhaul includes the disposal of a unit in Brazil and the company's domestic road business in China, and may also result in disposal of its fashion-logistics unit.

TNT reiterated a forecast to lift the company’s operating profit margin to 8 per cent by 2015. The company’s efficiency programme, which targets profit improvement of €220 million by then, will generate €30 million in savings this year.

The Italian unit will "turn the corner" in the next quarters, Mr Gunning said.

Sales in the company's Europe Main region fell an adjusted 3.4 per cent in the quarter, with operating income declining by 25 per cent, on weaker profitability in Italy and the loss of a major fashion contract in the UK.

United Parcel Service, the world’s largest package-delivery company, on October 25th posted third-quarter earnings that beat analysts’ estimates after carrying more US shipments at higher rates.

FedEx beat profit estimates in its most recent quarter after moving lower-priority packages to cheaper transportation methods, such as ocean shipping. – (Bloomberg)