TNT suffers unexpected decline in Q4 earnings
TNT NV, Europe's second-biggest express-delivery service, posted an unexpected drop in fourth-quarter profit because of the costs of reorganization.
Net income fell 22 percent to 148 million euros, or 40 cents a share, from 189 million euros, or 46 cents, a year earlier, Hoofddorp, Netherlands-based TNT said yesterday.
TNT announced a plan in April to freeze wages and cut as many as 7,000 jobs in the Netherlands as rising competition and the substitution of personal letters by e-mail hurts business at its domestic mail operations. The company booked a 110-million euro provision for reorganizing the Dutch mail business in the fourth quarter, TNT said.
"2007 was a year of heavy underperformance for TNT," as fuel costs rose, the express unit's growth in Europe slowed and doubts about mail-market liberalization in the region, Thijs Berkelder, an analyst at Petercam Bank with a "buy" recommendation on the stock, said in a note to investors.
TNT shares rose as much as 31 cents, or 1.1 percent, to 27.55 euros and were up 0.6 percent at 27.41 euros as of 9:27 am in Amsterdam. The stock has fallen 2.9 percent this year.
Earnings before interest and taxes declined 29 percent to 253 million euros.
Discussions with the labor unions in the Netherlands on a new collective labor agreement are "ongoing in a constructive manner", Chief Executive Officer Peter Bakker said in the statement.
Profit was also hurt by a 28 million-euro charge for exiting parcel operations in the United Kingdom, TNT said.
"So far, TNT sees no evidence of a major slowdown in its business, which primarily is focused on European markets," the company said. While aware of the risks stemming from a possible recession in the United States, the Dutch company "is strongly positioned to respond as appropriate and is confident about its performance for the year 2008".
The express division is expected to generate "high single-digit organic revenue growth" and a "low double-digit operating margin" this year, TNT said.
The mail unit is forecast to produce "low single-digit organic revenue" growth and an operating margin of about 16.5 percent.
TNT plans to increase the 2007 dividend by 16 percent to 85 cents a share from 73 cents a year earlier.
Agencies
(China Daily 02/19/2008 page16)
