TNT Express reported revenues of € 1,777m (1,787 kbcs, 1,766 css), EBIT of € 32m (15 kbcs), and underlying EBIT of € 43m (40 kbcs, 32.5 css). Restructuring charges came in at € 11m, whereas we anticipated € 25m. While EBIT was 17m higher than our forecasts, due to lower restructuring charges, net profit came in exactly in line at 5m. This stems from the delta between our tax forecast (-3m) and company's announced -16m, largely due to an unfavourable mix of income.
EMEA -Revenues came in at 1,083m (1,115 kbcs, 1,089 css), with Underlying EBIT incl. Fx at 72m (80 kbcs, 71.2 css). The company witnessed muted growth over the quarter at 1.1% (3% kbcs), with International Express volumes developing negative (bad for mix effect). Trend is worsening, but not that bad yet (Reasonable pricing environment +1.2% y/y, support from fuel surcharges, further base price increases international economy …).
Brazil - operational KPI's continue to improve, strong pipeline, but revenues development not yet sufficient to cover loss of major customers. Company re-iterated 2H12 turnaround for Brazil. Brazil 3Q revenues came in at € 116m (118 kbcs, 120 css), Underlying not Fx adj. EBIT € -30m (-25 kbcs, -27.5 css).
ASPAC - Revenues came in at € 460m (435 kbcs, 440 css). Underlying EBIT incl. Fx at € -8m (-9 kbcs, -9 css). Weak Asia-Europe express demand and lower volumes in Australia lead to a 3.2% decline in avg. consignments per day. China Domestic Day Definite service now represents 23% of turnover vs. 21% over 2Q11 and 13% 3Q10. Company is on track to make China Domestic profitable by 2013, which is in-line with earlier statements. Management says it witnesses price pressure in International, and sub-optimal capacity utilisation.
Other Networks - Revenues came in at € 120m (120 kbcs; 121 css) and Underlying EBIT incl. Fx at € 7m (4 kbcs, 6 css). Non-AllocatedUnderlying EBIT incl. Fx came in at € 2m (-10 kbcs) and shows the strongest beat vs. our forecasts as a result of tight indirect overhead cost control, reduced project-related costs, and beneficial phasing of certain costs.
Confirmation of guidance:
TNT Express re-iterates its FY11 goals provided in a trading update early October: i/ EMEA revenues to achieve muted growth, with an underlying operating margin of 8-9%; ii/ ASPAC 2H11 operating result to continue 1H11 trend, focusing on optimising intercontinental capacity exposure; iii/ Americas continuing negative performance being addressed through corrective measures; iv/ Other networks to perform somewhat below prior year.
Conclusion:
Results are merely a confirmation of the trading update provided in October, while especially Non-Allocated was better due to reduction in indirect costs, and some phasing of costs. Net debt at € 104m came in ahead of our € 77m, due to higher working capital and taxes paid.