TNT today reported second-quarter revenues of €1,757 million, up 6.2% year-on-year, and an operating income of €19 million, compared with €3 million in the second quarter of 2014.
Adjusted for positive currency effects, which increased revenues by 4.1%, the negative impact of lower fuel surcharges, which lowered revenues by 1.3% and disposals (-0.6%), TNT’s underlying revenue growth for the period was 4.1%, driven by the continued growth of revenues from SMEs.
Operating income for the second quarter of 2015 includes €22 million of restructuring and other charges.
Adjusted operating income was €41 million in the second quarter, €29 million below last year. Profitability was affected by IT transition and Outlook project costs (€15 million), costs to introduce new services and facilities, as well as pricing pressures.
Capital expenditures rose to €96 million (or 5.5% of revenues) in the second quarter, compared with €37 million (2.2% of revenues) in the same period of last year. During the second quarter, TNT continued to invest in sorting machinery, vehicles and IT. Next to investing in Liege, the company is completing new sorting facilities in Madrid, Eindhoven, Swindon (UK), Brisbane and Melbourne, all of which will enter operations during the second half of this year.
"TNT’s turnaround is progressing well under our Outlook strategy. Service levels and customer satisfaction scores further improved. We are achieving good growth in the SME customer segment after years of decline. Operational excellence investments in infrastructure and Global Business Services are being implemented according to plan and we continue to attract top industry talent. We have guided that we expect 2015 to be a transition year in terms of bottom-line performance, as we continue to invest in the transformation of TNT. As for the macro economic backdrop, we have experienced some positive developments in Western Europe, but we remain cautious given the economic volatility in China, Brazil, Australia and Greece. During the quarter, FedEx announced its intention to acquire TNT. The management team believes this is a very positive development for all our stakeholders."
International Europe revenues increased 5.1% year-on-year despite lower fuel surcharges. Currency comparable revenue growth was 3.9%.
Adjusted for positive currency effects, which increased revenues by 1.3%, and the negative impact of lower fuel surcharges, which lowered revenues by 1.9%, the segment’s underlying revenue growth was 5.7%.
Adjusted operating income in the second quarter of 2015 was €28 million, compared to €43 million in the second quarter of 2014. The main factors for the decrease were IT transition and Outlook project costs (€8 million) and costs of introducing new road and air connections, such as the flights to Tel Aviv and Malta.
The segment also experienced higher air network costs associated with the stronger US dollar (€7 million).
International AMEA revenues rose 16.3% in the second quarter to €257 million, as a result of stronger local currencies. Currency comparable revenue growth was -1.8%. Adjusted for positive currency effects (18%) and the negative impact of lower fuel surcharges (-2.4%), the segment’s underlying revenue growth was flat.
Revenues were affected by a sharp decline in China’s exports.
RService quality continued to show marked improvements year-on-year, with on-time delivery performance 5 to 6 percentage points higher than in 2014. The segment also experienced continued revenue growth from SMEs in the second quarter.
As in the first quarter, the segment transported fewer but heavier consignments compared to the prior year.
AAverage daily weights rose by 10.3%, which reflects the growth of higher weight Economy freight shipments. Revenue per consignment rose slightly year-on-year (0.8%).
Adjusted operating income increased by €3 million to €21 million, supported by ongoing Outlook improvement initiatives.
In the Domestics segment, revenues increased 4% year-on-year to €655 million. Currency comparable revenue growth was 1.1%. Adjusted for positive currency effects (2.9%) and the negative impact of lower fuel surcharges (-0.6%), the segment’s underlying revenue growth was 1.7%.
Revenues from SMEs improved year-on-year in all markets, supported by improved service quality. On-time delivery performance was 3 to 4 percentage points higher than in 2014.
TNT delivered 5.3% more consignments per day than in the second quarter of 2014. However, revenue per consignment declined 3.8% due to pricing pressures.
Domestic France was affected by lower yield and higher B2C delivery cost. Performance in Pacific and Brazil remained under pressure due to downtrading and pricing pressures in challenging macroeconomic environments.
Adjusted operating income decreased by €21 million to €(1) million, reflecting the pressure on yields, especially in France, Brazil and Australia, as well as €5 million of costs related to the execution of the Outlook strategy (IT transition and Outlook project costs).
The segment continues to execute plans to increase productivity through new or upgraded facilities and to reduce indirect costs further.
The Unallocated segment consists of Other Networks (TNT Innight), Central Networks and corporate head office functions.
The segment’s revenues were up 5.8% year-on-year to €128 million. Adjusted operating loss was €7 million, compared with €11 million in the second quarter of 2014.
TNT anticipates restructuring charges of between €25 million and €30 million in the third quarter of 2015.
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