TNT today reported revenues of €1,587 million and operating income of minus €1 million for the first quarter of 2016. Both were negatively influenced by fewer working days. Underlying revenue growth, adjusted for currency effects, lower fuel surcharges and working-day effect, was 4.2%. During the first three months of 2016, TNT continued to grow revenues from SMEs (+6.5%) and increased revenues in most countries, including China. Operating income was minus €1 million, a €10 million improvement over the prior year. This result included one-off charges of €10 million, of which €4 million related to the FedEx offer. Excluding one-off charges, TNT’s adjusted operating income was €9 million, up €8 million year-on-year. TNT continued to execute its strategic Outlook initiatives, such as ‘Global Business Services’ and ‘Simplify & Transform’, and booked Outlook-related transition and project costs of €9 million during the quarter. Capital expenditures amounted to €51 million (3.2% of revenues) compared to €78 million (4.8% of revenues) in the prior year. TNT finished the first quarter with a net cash position €145 million, compared to €330 million one year earlier.
“In the first quarter, TNT again delivered solid underlying revenue growth. Adjusted operating income improved despite fewer working days and continued investments in the Outlook strategy. The Outlook strategy is on track and delivers good growth from SME customers. Our customer satisfaction scores hit new records in Q1. Investments in operational excellence have started to pay off and were €51 million during the quarter. We made good progress with the roll-out of the Global Business Services and Simplify & Transform initiatives. Meanwhile, we spent significant time and effort towards the completion and preparation of the intended acquisition by FedEx, which we expect to complete in the first half of 2016.”
In the first quarter, the International Europe segment made further progress in improving revenues and service. Reported revenues rose by 2.4% to €679 million. Underlying revenue growth, adjusted for currency effects, lower fuel surcharges and working-day effect, was 7.8%. The segment was able to generate an 8.3% year-on-year increase in revenues from SME customers. From a geographic standpoint, all operating units posted underlying revenue growth, with the exception of North America. Service quality and customer satisfaction both improved year-on-year. Consignment volumes and average weight went up 11.9% and 10.3%, respectively. Revenue per consignment and per kilo decreased, however, due to lower fuel surcharges and the proportionally higher demand for Economy Express products than for premium services. The segment’s adjusted operating income of €(2) million was impacted by fewer working days as well as a drop in revenues and operating income in North America, which stems from the anticipation of the acquisition of TNT by FedEx. The segment also continued to invest in sales, marketing and capabilities to support service improvements, such as the continued expansion of the road network towards Eastern Europe.
The International AMEA segment had a strong first quarter. Currency-comparable revenue growth was 4.3%, while underlying revenue growth, adjusted for currency effects, lower fuel surcharges and working-day effect, was 8.3%. Revenue growth from SME customers was 12.1%. In contrast with recent quarters, China achieved revenue and volume growth. Revenue per consignment rose by 6.2% year-on-year. Daily weights increased 16.3% from a year earlier, reflecting the trend toward heavier consignments observed in 2015. International AMEA’s adjusted operating income increased by €6 million to €15 million, driven by revenue growth and strict cost management.
eported revenues in the Domestics segment were €575 million, down 7.4% from a year earlier. Underlying revenue growth, adjusted for currency effects, lower fuel surcharges and working-day effect, was slightly positive (+0.7%). Underlying revenue growth in Europe more than offset the revenue declines in Australia and Brazil, where trading conditions remain challenging. Average daily consignments increased 2.3% compared with the first quarter of 2015. Revenue per consignment and per kilo was comparable to that of last year. During the first quarter, the segment managed to improve its customer mix and pricing discipline, enabling a sequential increase in RPC and RPK. As in the fourth quarter of 2015, the segment’s profitability improved as a result of operational efficiencies and reduced indirect costs. Adjusted operating income increased by €13 million year-on-year to €9 million. Management continued cost-tightening measures to mitigate the decline in Brazil and Australia, while performance in European units again improved.
The Unallocated segment consists of Other Networks (TNT Innight), Central Networks and corporate head office functions. The segment’s revenues were €102 million, down 4.7% from a year earlier. Adjusted operating income was minus €13 million, compared with minus €12 million in the first quarter of 2015.
TNT reiterates its Outlook agenda and guidance for 2018/19, as presented during the capital markets day on 18 February 2015. The company expects to achieve structural improvements from 2016 onwards and to see the full benefit of the Outlook strategy from 2018/2019. TNT expects continued economic volatility in some markets outside Europe, especially in Brazil. TNT anticipates restructuring charges of about €30 million in the second quarter. Closing of the FedEx Offer to acquire TNT is anticipated in the first half of calendar year 2016.
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