TNT Express’ first-quarter results show a 4.5-percent drop in revenues to 1.7 billion euros ($2.2 billion) on weak performance in Europe, the Middle East and Asia.
In Europe and the Middle East, TNT saw increased price pressure leading to a revenue drop, but the decline could have been much worse had it not been for strong air cargo sales. Weight-per-consignment numbers showed a large decrease, leading to lower yield rates.
In China, there is a weak demand internationally, and price pressure is affecting profitability. In the Americas, Chilean and North American activity is improving.
For the rest of the year, officials see challenging trading conditions and a continued decline in European and Middle Eastern business. Flat growth is expected, year over year, in Asia and the Americas. The divestiture of TNT’s Brazilian domestic operations will help offset potential losses this year, officials said.
As the market gets more challenging, TNT will be pushing forward with its reorganization, which should be finished in 2015. Executives are currently looking over infrastructure-optimization plans and have already passed the first touchstones toward reorganizing their business units and saving 220 million euros ($287.9 million). The company’s domestic Chinese operation was sold on March 28.
“The implementation of our profit-improvement plan, Deliver!, is now underway. The initiatives to improve our margins, lower our cost base and reduce our exposure to loss-making activities have all been launched. We have also taken important steps in reorganising the company,” interim CEO Bernard Bot said in a statement. “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.” - Jon Ross