TNT Express said the sale of its Chinese business is expected “imminently” and reiterated its intent to sell its Brazilian arm in a strategy update two months after the collapse of a planned takeover by
UPS.
The Dutch express delivery group fleshed out plans announced with its results last month to divest its global operations and refocus on its core European market. Investors had been awaiting the company’s strategy as a standalone company after
UPS’s takeover bid was blocked by European competition authorities.
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TNT Express unveils post-UPS strategy - FT.com
TNT Express said it expected to cut 4,000 jobs over the next three years and reduce annual costs by €220m by 2015. It said it was exploring options for further reducing its fleet of aircraft, which it expanded in an attempt to compete globally with FedEx, DHL and UPS.
Bernard Bot, interim chief executive, declined to give any details of the prospective buyer of the company’s Chinese business but said “an announcement is expected imminently”. It was unclear how much the sale might fetch, as the Chinese arm recorded a net loss of €13m on €260m revenue in 2012.\
TNT Express’s Brazilian business is also unprofitable but Mr Bot said the first two months of 2013 showed a substantial reduction in losses.
Mr Bot will return to his previous position as chief financial officer when
Tex Gunning takes over as chief executive in June.
In a statement, Mr Bot said TNT Express “faces difficult market conditions and strategic challenges” but cited the company’s “unrivalled European network”.
TNT Express and DHL vie for the largest share of the European delivery market, with the leading company varying depending on how the market is measured. But TNT Express’s truck fleet and road hub network is larger than DHL’s, allowing it to offer express delivery by road, including delivery of heavier freight than is possible by air.
“Our air network in Europe is [comparable to DHL’s] but then we have the combination with road, which nobody else can offer,” Mr Bot said.
The company said it targeted an operating margin in Europe, the Middle East and Africa of 8 per cent by 2015, up from 6.3 per cent last year, assuming a return to 2 per cent gross domestic product growth in Europe.
The 4,000 job cuts will involve attrition and a reduction in the numbers of outside consultants as well as terminations, Mr Bot said. The company expects to spend €150m on redundancy and other payments.
In a note, Maarten Bakker of ABN Amro said the new strategy “likely fails to inspire investors” as it mainly reiterated earlier statements.
Shares were up 0.2 per cent to €5.91 in morning trading on the Amsterdam exchange, against a 0.6 per cent rise in the AEX index.