Press Release

TPG Annual Results 1999: Net income growth of 12.6% due to excellent Second Half of 1999

Publish Date : 27 March 2000 at 13:57 CET - TNT Post Group N.V. (TPG) announces a net income of EUR 419 million for the year 1999 which represents a growth of 12.6%, exceeding the outlook given at the time of the interim results on 31 August 1999.

Assuming stable exchange rates, the TPG Board of Management expects to achieve a net income growth in the year 2000 at least in line with the level of growth of 1999.

Operating revenue increased by 15.2 % for the full year 1999 (+6.9% in 1998). The organic business growth was 7.6% for 1999. The acquisitions have added 6.8% to TPG's revenue and foreign exchange effects contributed 0.8% compared to last year. EBIT increased by 10.9% for 1999 (10.1% growth in 1998). Acquisitions had a marginal dilutive impact on net income and EPS growth.

"No doubt a positive message for our shareholders," the Chairman and CEO of TPG, Ad Scheepbouwer commented. "Mail performed at the top end of the anticipated growth in both revenue and earnings and entered into strong alliances. Express started the year under pressure as a result of slow growth. Management actions taken on service performance and revenue quality, paid off and the second half of the year was excellent, with a very strong recovery of revenue and earnings. Logistics continued to strengthen its position following the acquisition and consolidation of Tecnologistica and showed significant underlying business growth. TPG has laid down the foundations for a strong start in the new millennium. We are more than ever ready to face the challenges of the ongoing changing environment in which we operate."


In addition to the interim dividend of NLG 0.30 already paid in September 1999, the Board of Management of TPG, in line with established policy, will pay a final dividend of NLG 0.50 per ordinary share, which shareholders may elect to receive either in cash or in ordinary shares. The value of the ordinary share dividend will be 2-5% lower than the value of the cash dividend. The election period starts on May 11, 2000, and ends on May 30, 2000. The dividend is payable as of June 8, 2000.

Business developments in 1999


Management's ambition of the Mail division is to have its operations recognized as the industry benchmark for quality, efficiency and customer service, for producing the best returns in the industry and for making optimal use of new technologies and liberalization. The changeover to automated sorting and new sorting centers resulted in a temporary setback in quality (as indicated under important events). Efficiency increased, which is evidenced in the Netherlands by the increase in productivity per FTE to 194,033 (192,777 in 1998) delivered mail items. The results of these developments are highlighted below.

The total revenue for the Mail division is summarized as follows:

The growth of 3.6% is a result of: Underlying organic business growth of 3.1%, net acquisitions contributing 0.4%, and a positive impact of currency effects of 0.1%.

For further details please refer to the separate business-lines below.

Domestic Mail

Domestic Mail includes collection, sorting, transport and distribution services for domestic mail, both in the Netherlands and within country borders abroad.

Underlying organic business growth in Domestic Mail was 2.6% and acquisitions (Rinaldi in Italy) accounted for a further 1.4%.

Domestic mail saw no major substitution effects from e-mail or other alternative means of communication during 1999. Business growth was only mildly effected by a reduction of letterbox mail, predominantly consumer-to-consumer.

Direct Mail

Direct Mail comprises all activities involving distribution of addressed mail and magazines, newspapers and periodicals and unaddressed advertising mail and newspapers within country borders. It also includes direct marketing initiatives and a number of database management and value-added direct marketing services.

Underlying organic business growth in Direct Mail was 4.8%, and acquisitions contributed 4.5%. Acquisitions included GFW, Tesselaar Marketing Services, Jepsen and the remaining 50% of the shares of Omnidata.

International Mail

TPG operates its International Mail business around the world, providing services for collection, sorting and distribution of international mail, parcels and valuables across national borders.

International Mail operating revenues increased by 3.1%, of which organic growth represents 2.5%, and foreign exchange effects contributed 0.6%. Of the total of revenue of International Mail, approximately euro 275 million will be transferred to the new joint venture company with British Post and Singapore Post.

Post Offices and Other

Post Offices and other operating revenues were in total 16.3% below last year's revenue, mainly as a result of the outsourcing of catering services late in 1998. The revenue of Post Offices was stable.

Mail: Earnings from Operations

The Mail division's earnings from operations increased by 6.6% or euro 46 million to euro 741 million (euro 695 in 1998). The volume growth of postal items, mainly Domestic and Direct Mail, together with added value services, contributed to these earnings from operations. Acquisitions contributed euro 4 million. Other effects include the net gain on the sale of various property, plant and equipment (euro 12 million). Foreign exchange effects were negligible.


The Express division improved its performance strongly in the 2nd half of the year, following a slow start in 1999, when results were below expectations. The managerial actions in the 2nd half of 1999 included focusing on changing the mix of shipments in the networks and concerted efforts to produce the fastest and most reliable service, all of which is crucial to the success of the company. At the same time the economies in Europe continued to strengthen, boosting overall trade. Successful outcomes in both revenue and earnings from operations during the second half of the year was apparent through improvements in performance over the second half of 1998 by 30.3% and 57.3% respectively.

Total revenues in Express are summarized as follows:

Of the total 19.8% increase in revenue, 9.4% was attributed to organic growth, 8.5% to net acquisitions and foreign exchange effects accounted for 1.9%.

For further details please refer to the separate business lines below.

Express Europe

Express Europe's underlying organic business growth was 10.5% (first half 1999 organic growth was 7.7%, second half 1999 organic growth was 13.3%). Acquisitions accounted for 8.2%, predominantly attributable to Jet Services in France, (including NVS in Germany), which was consolidated for 9 months in 1999. Foreign exchange effects accounted for 0.6%. All geographic areas in Europe contributed to the overall growth in revenue, with Scandinavia and the Iberian peninsular growing at a faster rate than the more mature markets in Germany and the UK.

Express International

Outside Europe, underlying business growth contributed 5.0% as a result of the recovering Asian markets and partly offset by slow growth in Australia. The acquisition of Ansett Air Freight added 9.7% and foreign exchange effects accounted for 7.2% of the growth. The latter was mainly due to the strengthening of currencies after the crisis in 1998 in Asia and a stronger Australian dollar.

Express: Earnings from Operations

Express earnings from operations increased by 17.1% or euro 22 million in 1999 to euro 151 million (euro 129 in 1998). The operating margin was 4.3%, so the very good second half performance brought us back to the returns achieved in 1998. Express operating margins in the second half of 1999 were 5.2% in comparison with 4.3% in the second half of 1998.


Logistics strategy is to continue building credible mass through sufficient geographic scale, customer leadership and economies of skills in target sectors and operational excellence. Throughout 1999, TNT Logistics continued to focus on pursuing growth in targeted industries, including automotive, tires, electronics, pharmaceuticals, and fast moving consumer products. During 1999 some 2,000 staff and 200 clients in the targeted industries were added to TNT Logistic services.

Total revenue in Logistics is summarized as follows:

From the total 43.9% pick up in revenue, organic revenue growth of Logistics was 21.5%. Acquisitions of Tecnologistica, Jet Services and the remaining 50% shares in Holland DistriCare contributed 22.3% of the increase, with foreign exchange effects accounting for 0.1% of the increase.

Logistics: Earnings from Operations

The earnings from operations of the Logistics division increased by 21.1% to euro 86 million (euro 71 million in 1998). The operational margin (5.7%) was impacted by the lower margin level of the most significant acquisition Tecnologistica, which was consolidated for 7 months in 1999, as well as the start up of some large inbound contracts.

Additional Information


In 1999 the average number of full time employees increased from 80,695 to 89,641 (+11.1%). The average number of FTE's in 1999 include an increase of 4,430 employees as a result of acquisitions. Total head count as of 31 December 1999 was 116,523 (104,833 at year end 1998).

Dividend Policy

The Board of Management of TPG intends to pursue a future dividend policy with a pay-out ratio in the range of 30 to 35% of profits, to reflect its expected growth and investment strategy. Therefore, in the next few years, TPG intends to pay a stable dividend of NLG 0.80 per ordinary share. During this period, as TPG expects to expand its business, the intended stable dividend of NLG 0.80 per ordinary share is expected to result in a pay-out ratio of 30 to 35%. This dividend policy will be pursued subject to the financial results of TPG and will be subject to annual review.

Board of Management

Mr Bert van Doorn, Group Managing Director Mail, will reach the retirement age and shall resign from the Board of Management on 1 July 2000. Further announcements will be made in due course.


Assuming stable exchange rates, the TPG Board of Management expects to achieve a net income growth in the year 2000 at least in line with the level of growth of 1999.

TPG expects capital expenditures in 2000 to be at or above the 1999 level. TPG may incur indebtedness to finance certain capital expenditures and business opportunities.

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995 Certain information contained in this press release is forward looking. By their nature, forward- looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. In addition, to the assumptions specifically mentioned in the above paragraphs, there are a number of other factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, the actual effects of recent and future regulatory changes and technological developments, mail and express usage levels, competition from alternative technologies, globalization, levels of spending in major economies, the economic climate in southeast Asia, levels of marketing and promotional expenditure, actions of competitors and joint venture partners, employee costs, future exchange and interest rates, changes in tax rates, uncertainties associated with developments related to the year 2000 problem and the introduction of the euro, unexpected costs of integrating recently acquired businesses and future business combinations or dispositions. Continuing investments in infrastructure (airplanes, depots and trucks) is important to maintain and increase market share. Infrastructure investment requires substantial lead time and involves significant fixed costs. Any mismatch between investments in infrastructure and actual market growth (or increase in TPG's market share) could result in costly excess capacity (if investment is too great) or losses of market share (if investment is insufficient).

Page publication date: 27 March 2000 at 13:57 CET