TNT Express published the Agenda of its 2012 Annual General Meeting of Shareholders (AGM 2012), which will be heldon 11 April 2012. In view of the intended Offer of € 9.5/sh by UPS, the Supervisory Board of TNT Express has reviewed the Agenda of the AGM 2012. It has been decided to withdraw the appointment of two new Supervisory Board Members. In addition the proposed € 0.004/sh final dividend 2011 can be paid without any adjustment of the Offer price of € 9.50/sh. Any additional dividends would need to be deducted from the Offer price. Given the anticipated timing of the intended transaction with UPS, the Executive and Supervisory Boards have decided not to pay an interim 2012 dividend. If the Offer is not successfully completed, the Executive and Supervisory Board intend to propose to pay the 2012 dividend on a full year basis in line with TNT Express’ reserve and dividend guidelines.
Trading update
TNT Express said that since the start of 2012, it has continued to experience mixed economic conditions in Europe and slowing Asia-Europe trading volumes.
In EMEA pricing pressure and a decline in international Express volumes have negatively impacted operating results. A fixed-cost optimisation programme, with the aim of reducing fixed costs by € 150m by the end of 2013, has been initiated.
Results in Asia-Pacific, while under pressure because of lower Asia-volumes, have benefited from the strong performance of the Australian operations. TNT Express’ exposure to fixed intercontinental air capacity will be reduced as of 2Q12 through the code-share and block-space agreement signed with Emirates Sky Cargo (announced 8 March 2012).
Americas’ performance to date has been in line with the prior year, with Brazil performing according to plan.
Conclusion
The trading update is in-line with earlier guidance and our own view that EMEA performance will continue to be tough over the first quarters of 2012, while management needs to tackle (international) air overcapacity. We were banking on a continued loss in ASPAC over 1Q12 while seeing Americas Underlying EBIT coming in at € -32m over 1Q12 vs. € -32m over 1Q11, thus in line with the company’s view of a similar performance vs. last year. We expect Americas to remain slightly loss making over the second half of 2012, with Brazil breaking even during the fourth quarter.
We change our rating on TNT Express to Accept the Offer (from Hold) and stick to our TP of € 9.5/sh, which equals the bid price made by UPS.