Dutch package delivery company TNT Express NV(TNTEF.PK,TNTEY.PK), whose $6.77 billion merger offer with United Parcel Service Inc. (UPS) failed recently, Monday reported a surge in profit for the first quarter, helped by the termination fee received from the U.S. package delivery giant.
TNT Express noted that European performance continued under pressure and that year-on-year performance comparison was distorted by negative working day impact.
It was on January 31 that UPS withdrew its offer for TNT Express, after the European Commission formally prohibited the deal, citing competitive concerns. The European Commission said UPS had not offered enough concessions to allay fears that consumers' interests would be impacted.
Following this, TNT Express, in March, revealed its profit improvement plan for 2013 to 2015, which included elimination of 4,000 positions. The company also announced the sale of China Domestic on March 28 and sale process for Brazil Domestic is underway.
Updating on the program, TNT today said Functional/Business unit reorganisation passed first milestones and that projects to optimize operating model and realise 220 million euros improvements all underway.
Profit attributable to equity holders of the parent for the quarter surged to 144 million euros from 15 million euros in the prior year. The latest results included 200 million euros of termination fee received from UPS. The prior-year results have been restated to reflect the adoption IAS 19R.
Adjusted operating income from continuing operations decreased 16 percent to 38 million euros.
Total revenues decreased to 1.666 billion euros from 1.744 billion euros. Net sales dropped to 1.626 billion euros from 1.715 billion euros in the prior year.
Revenue slipped 2 percent in Europe & MEA to 1.124 billion euros. Consignment volumes from the region grew in the quarter, but yields declined amid challenging trading conditions.
Asia Pacific revenue declined over 9 percent to 391 million euros due to targeted reductions in large customer volumes in the backdrop of weak demand.
According to TNT, results in Brazil are improving due to further turnaround measures, including yield actions and cost savings.
The Other networks reported revenues of 111 million euros, down around 12 percent from last year, amid worsening trading conditions in Innight.
Looking ahead, TNT expects challenging trading conditions in 2013 with negative development of operating results in Europe & MEA. While Asia Pacific and Other Americas are expected to perform in line with prior year, Brazil is expected to reduce losses.
In the Other Networks business, profitability is expected to be affected by discontinuation of major Fashion contract and worsening trading conditions in Innight.
Bernard Bot, interim CEO, said, "We reiterate our view that trading conditions in 2013 will continue to be challenging, especially in Europe. This underscores the need to optimise our market position and improve our productivity. We expect to start seeing a positive impact from Deliver! in the second half of the year.''
The stock is losing 1.06 percent in early morning trade in Amsterdam at 5.80 euros.
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