Press Release

TNT update on 'Focus on Networks' strategy

Publish Date : 6 December 2007 at 14:00 CET - Amsterdam, During its annual meeting with analysts, today in London, TNT will make two announcements. Firstly, a full closure has been brought to all tax investigations dating back from the 2004 announcements, with the settlement of all UK tax matters, with no additional liabilities beyond what we have accrued for. The €100-250 million contingent liability is no longer required, which significantly improves the risk profile of the Group. Secondly, TNT gives an update on its 'Focus on Networks' strategy initiated on 6 December 2005. TNT successfully completed the first phase of the implementation, which focused on transforming the Group's foundations, and now starts a second phase named 'Grow and Build Value', covering the period 2008-2012.

Key announcements by the Board of Management include:

  • The outlook for the year 2007 is confirmed;
  • The Express business segment sharpens its growth objectives for the period 2008-2012 and enhances transparency by adding objectives for its emerging platforms;
  • The Mail business gives an update on the negotiations with the unions regarding the restructuring in Mail Netherlands and refines the objectives for its emerging businesses to include Parcels and European Mail Networks;
  • TNT indicates restructuring charges in a range of €125-175 million in Mail for the period 2007-2009, following earlier announcements, leading to €150 million savings in 2008/2009, growing to €360 million annually as of 2015;
  • The indicated range includes all charges for the earlier announced Master plans and restructuring of Parcels UK;
  • The recent protectionist developments on postal liberalisation in Germany have led to a full revision of TNT's position in the German mail market, with further restructuring as a possible outcome;
  • TNT has notified the appropriate Government authorities in The Netherlands about its concerns that there is clearly no level playing field in Germany and the UK;
  • The Group has begun to investigate further accelerated growth in the shifting competitive environment of delivery networks;
  • As for the financial strategy, TNT makes various announcements, of which the main ones are:
    • Sharper and more transparent financial objectives for all businesses;
    • The objective to reduce the effective tax rate from 32% in 2006 to a range of 25-26% by 2010;
    • The intention to grow the dividend pay-out from today's ~35% of normalised net income to ~40% by 2010. Including the underlying growth of TNT's earnings, this will further fuel the growth of cash returns per share;
    • An additional tranche of €100 million of share buybacks, under the earlier announced €500 million programme, on top of the €200 million currently underway.

In its financial strategy, TNT will continue to drive value aimed at its shareholders and other stakeholders in the short, medium and long term. This will include incidental share buybacks from excess cash going forward.

In a comment, TNT's CEO Peter Bakker said: 'We can look back with pride at the accomplished transformation of the foundations of our business during the first phase of the 'Focus on Networks' strategy. The next phase aims to ‘Grow and Build Value'. On top of strengthening our established businesses, we strive to build value from our emerging Express and Mail growth platforms. This is inherently more entrepreneurial and sometimes influenced by unexpected political interference, as shown by the latest developments in the German postal market. Focusing on new strategic growth opportunities in delivery networks will allow us to establish a strong company going forward. We have set ourselves a set of challenging objectives for the period 2008-2012, and we are confident of its realisation. I am excited by the potential of our Group and great people to create value for all our stakeholders.'

Warning about forward-looking statements
Some statements in this press release are "forward-looking statements". 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. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside of our control and impossible to predict and may cause actual results to differ materially from any future results expressed or implied. These forward-looking statements are based on current expectations, estimates, forecasts, analyses and projections about the industries in which we operate and management's beliefs and assumptions about future events. You are cautioned not to put undue reliance on these forward-looking statements, which only speak as of the date of this press release and are neither predictions nor guarantees of future events or circumstances. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

The presentations of today's Analyst Meeting are an integral part of this press release. They are available on TNT's website: . For your convenience, you will find attached a selection of key slides.

About TNT
TNT provides businesses and consumers worldwide with an extensive range of services for their mail and express delivery needs. Headquartered in the Netherlands, TNT offers efficient network infrastructures in Europe and Asia and is expanding operations worldwide to maximize its network performance. TNT serves more than 200 countries and employs around 159,000 people. Over 2006, TNT reported €10.1 billion in revenues and an operating income of €1,276 million. TNT is publicly listed on the stock exchange of Amsterdam. TNT recognizes its social responsibility, and has formed partnerships with the United Nations World Food Programme and the United Nations Environment Programme to fight hunger and pollution in the world.

Page publication date: 6 December 2007 at 14:00 CET