Press Release


4Q13 results: Higher adjusted operating income

Publish Date : 18 February 2014 08:00 CET -

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Amsterdam, The Netherlands

  • Reported operating income €88m (4Q12: €(52)m), reported revenues €1,704m (-4.6%)
  • Higher adjusted operating income €76m (4Q12: €58m), adjusted revenues €1,774m (-0.7%)
  • Better results in combined Europe Main, Europe Other & Americas and in AMEA; Pacific in line
  • Deliver! initiatives on track: €25m savings achieved in the quarter
  • Brazil Domestic no longer for sale as of 1Q14; improving trend continued
  • Boeing 747 freighters reclassified as Property, Plant & Equipment; 4Q13 depreciation charge €3m (FY13: €12m)
  • Period end net cash €472m (3Q13: €349m)
  • Proposed final dividend of €0.024, in line with dividend guidelines

Segments

  • Europe Main: profitability higher in all units except Italy and UK Fashion activities
  • Europe Other & Americas: continued strong performance with solid revenue growth
  • Pacific: some growth but revenue quality remains negative; results stabilised
  • AMEA: China Domestic disposal completed; growth and improved profitability core activities


Deliver!

Deliver! financials have been updated to reflect the latest programme status.

€ m 2013
2014
2015
Total
Annual savings
35
120
85
240
Restructuring
90
90
20
200
One-offs
  ~30
~20
~50
Capex
  110
65
175
  • 4Q13 savings €25m; €35m full year
  • 4Q13 restructuring provisions €49m; €90m full year



Other

  • In 4Q13, the Boeing 747 freighters were no longer held for sale and reclassified as Property Plant & Equipment. As a result, 4Q13 reported operating income includes €3m in quarterly depreciation related to these aircraft and €21m in catch-up depreciation for the period 1Q12 to 3Q13
  • The 4Q13 and FY13 adjusted operating income figures only include the depreciation costs related to the respective periods
  • For comparison purposes, the 4Q12 and FY12 adjusted operating income figures have also been amended to include depreciation of the Boeing 747 freighters over these respective periods


Strategy: Outlook

While implementing Deliver!, TNT Express further analysed the company’s strengths, weaknesses and market opportunities. This process was led by the new CEO, Tex Gunning, and was overseen by the Supervisory Board.

The result is Outlook, which will integrate Deliver!. Outlook targets substantial improvements in performance to meet TNT Express’ stakeholders’ needs:

  • Competitive products and services, delivered perfectly at competitive prices for customers
  • A secure and meaningful future for employees
  • Improving results and solid return on investment for shareholders

Outlook  builds on TNT Express' strengths, particularly the European Road Network and the company's large base of Small and Medium Enterprise (SME) customers. At the same time, Outlook acknowledges improvement potential in many areas and the need for a clearer line of sight on the distinct domestic and international businesses.

Outlook has three priorities:

  • Focus on profitable growth Outlook will sharpen the focus on TNT Express’ truly competitive services and on those customers for whom the company can provide the greatest value. This will be done by expanding the European Road Network to move more by road, by increasing the contribution from four priority industries (automotive, industrial, health care and high tech) and by serving more SMEs even better. Separate attention will be given to the profitability of TNT Express’ domestic operations in France, Italy, the UK, Brazil, Chile and in the Pacific, with the implementation of specific strategies tailored to each individual market.
  • Invest in performance – Realising the ‘Perfect Transaction’ is at the core of the company’s drive to improve end-to-end processes and to realise a step-change in service and reliability. The aim is to be the ‘fastest and most reliable’ and to provide an easy, hassle-free customer experience. Increased service reliability will also reduce avoidable costs. Alongside the Perfect Transaction, the company will optimise operational efficiency and productivity through process improvements and investments in automation and infrastructure. Transforming the IT function and expanding the scope of global business service centres will help drive productivity. A disciplined revenue management function will be developed, to optimise pricing and capacity use. Finally, regarding corporate responsibility, priority will be given to staff and subcontractor health and safety, with the accelerated roll out of recognised industry best practices.
  • Organise to win – The company will adjust its organisation in the second half of 2014, subject to applicable consultation procedures with employee representative bodies. One management team will lead the integrated international express activities across Europe (‘International Europe’). The other international activities will be managed by a separate leadership team, International Asia Middle East and Africa (‘International AMEA’). The domestic businesses in France, Italy, the United Kingdom and the entities in Brazil, Chile and Pacific will be managed within a separate cluster, ‘Domestics’. The new structure will facilitate greater focus and accountability. In addition to these organisational changes, the company will work to strengthen the performance and leadership culture of management and staff.

Implementation plans supporting the Outlook strategy will require further development over the coming period and will be presented in the second half of 2014. This will also allow development of the specific customer, employee and financial targets:

  • Realise leading customer 'Orange Experience Score'
  • Secure strong employee engagement
  • Continuously improve the financial performance of the company

The ambitions set by Deliver! for the year 2015 are confirmed.

New top leadership team

A new Management Board will lead the new organisation. The following six individuals will join Tex Gunning, CEO, and Bernard Bot, CFO, who will remain as the two statutory members of the Executive Board:

Marco van Kalleveen, Managing Director Domestics and Chief Transformation Officer
Strategy and turnaround specialist. Previously: McKinsey, Bain Capital

Ian Clough, Managing Director International Europe
20 years industry experience, most recently as DHL’s CEO North America

Michael Drake, Managing Director International Asia Middle East & Africa
20 years with TNT, most recently as MD International AMEA

Chris Goossens, Managing Director Customer Experience
25 years with TNT, most recently as MD Europe Other & Americas

Steven Scheers, Chief People Officer
20 years HR experience, most recently as Global HR Director

Martin Södergård, Managing Director Network Operations
25 years industry experience, including as DHL’s Group Director Global Networks

The existing reporting lines will not change until the second half of 2014.

_________________________________________________________________

Commenting on Outlook, Tex Gunning, CEO said:
‘We have taken the time to carefully assess the company’s competitive position, service to customers, productivity and organisational effectiveness. The conclusions are clear. We have distinct areas of strengths but also need to make substantial improvements. Building on our strengths, our vision is to be the ‘fastest and most reliable’ European road delivery company. With Outlook, we now have a detailed agenda to realise this vision and meet the expectations of our customers, employees and shareholders. Outlook has three priorities: an absolute focus on profitable growth, making a step-change in reliability and productivity, and organising ourselves to be more nimble and accountable. Specific initiatives have already started and we today announce our new Management Board. We have a lot of work ahead but together with this experienced top team and each and every one of our dedicated employees around the world, I am sure we will succeed.’
_________________________________________________________________

2014 guidance

  • Trading conditions remain volatile and uncertain; risk of continued negative FX impact
  • Assuming an improving external environment:

      Combined Europe Main and Europe Other & Americas operating results
         to show positive development
    –   Combined results Asia Middle East & Africa and Pacific expected to be stable
    –   Brazil to continue to improve, no longer reported as discontinued as of 1Q14
    –   Unallocated around €(25)m

  • Business as usual capex (excluding Deliver! investments) up to around 3% of revenues


Other

  • As of 1 January 2014, application of IFRS 11, 'Joint Arrangements' (equity method instead of proportionate consolidation). If applied in 2013, reported net sales €86m lower and operating income €7m lower. Profit attributable to shareholders constant.
  • Impact Outlook in 2H14 – Reporting segments to change, with related alignment of guidance

2015 ambitions confirmed

  • Assuming normal economic conditions in Europe, ambition for Europe Main and Europe Other & Americas combined to achieve an adjusted operating income margin around 8% and sales growth of around 2% per year (CAGR).
  • All other reportable segments to contribute increasingly to profitability.
  • Other indicators:

    –   €240m annual improvements from Deliver! by the year 2015, to be
         integrated in Outlook
    –    Unallocated around €(25)m
    –    ETR around 30%
    –    Capex 2-3% of revenues (excluding additional strategic investments)
    –    Trade working capital around 8% of revenues

Further details about Outlook will be provided in 2H14, including specifics of various initiatives and new reporting segments.

Full year performance commentary

In 2013, TNT Express’ adjusted revenues decreased by 1.9% and adjusted operating income declined by €34m. In Europe Main, the difficult trading environment continued to affect results, especially in Italy. Europe Other & Americas benefited from the positive effect of commercial measures and cost control. Pacific performance was significantly impacted by changes in product mix and higher wage and other cost inflation. Despite lower revenues, AMEA performed better. Brazil Domestic improving trend continued.

 

Download full Press release (pdf)
Download presentation (pdf)
Download Annual Report (pdf)
Download datasheets (xls)

 

For more information and inquiries, please contact:

INVESTORS

Andrew Beh

Phone: +31 88 393 9500
E-mail: andrew.beh@tnt.com


Michiel van der Harst
Phone: +31 88 393 9500
E-mail: michiel.van.der.harst@tnt.com


MEDIA

Cyrille Gibot
Phone: +31 88 393 9323
Mobile: +31 6 5118 9384 
E-mail: cyrille.gibot@tnt.com
 


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