International Europe segment
International Europe’s revenues were €693 million, up 4.4% from last year’s third quarter.
Currency comparable revenue growth was also 4.4%. Adjusted for the negative impact of lower fuel surcharges (-2.1%), the segment’s underlying revenue growth was 6.5%, driven primarily by higher revenues from SMEs, but revenue growth remains uneven across Europe. Average daily consignments grew 6.3%. Revenue per consignment was down 1.3% due to lower fuel surcharges and price pressures in some markets.
International Europe’s adjusted operating income for the third quarter of 2015 was €14 million, down from €22 million a year ago. The decrease reflects transition and Outlook project costs (€2 million), the costs of introducing new services or upgrading existing ones, such as the expansion of TNT’s air network coverage and pre-noon delivery service in the Nordic countries. The stronger US dollar led to higher air network costs than prior year.
International AMEA segment
International AMEA revenues rose 6.1% to €242 million, mainly due to favourable currency effects. Currency comparable revenue growth was -3.9%. Adjusted for positive currency effects and the negative impact of lower fuel surcharges (-4.0%), the segment’s underlying revenue growth was roughly flat compared with last year.
The segment’s revenues were affected by the drop in China’s exports, especially to Europe, as exports products make up for more than 70% of TNT’s revenues in Greater China, the segment’s largest unit. Service quality continued to improve over last year, with on-time delivery performance 6 percentage points higher than in the third quarter of 2014. The segment also continued to grow revenues from SMEs.
As in the first half of 2015, International AMEA transported fewer but heavier consignments compared to the prior year. Average daily weights rose by 6.2%, which reflects the growth of higher weight Economy freight shipments and a continued trend of falling document volumes. Revenue per consignment rose slightly year-on-year (1.1%).
Adjusted operating income increased by €7 million to €14 million, supported by cost management initiatives.
Domestics segment
The Domestics segment reported revenues of €615 million, down 2.7% from last year, as lower revenues in Brazil and Australia more than offset revenue growth in Europe. Underlying revenue growth, excluding currency effects and the negative impact of lower fuel surcharges, was 0.6%.
Revenues from SMEs improved year-on-year in all units, supported by better service quality. On-time delivery performance was 2 percentage points higher than in 2014. Domestics average daily consignments increased by 2.5%. Revenue per consignment improved sequentially, but declined 3.0% year-on-year due to pricing pressures, lower fuel surcharges and customer mix effects.
Adjusted operating income decreased by €26 million to €(3) million. The decline is attributable to lower sales in Brazil and Australia, lower yields -particularly in France and Australia- and Outlook-related transition and project costs. To adjust to the economic recession, Brazil management took cost-reduction measures, which helped protect margins. TNT’s performance in France was affected by competitive pressures and higher B2C delivery cost. TNT also faced competitive pressures in Australia, compounded by the drop in commodity markets, and the ongoing cost of modernising the Australian infrastructure. During the fourth quarter, TNT will ramp up activities at two new hubs in Melbourne and Brisbane to enhance service to customers and productivity.
Unallocated segment
The Unallocated segment consists of Other Networks (TNT Innight), Central Networks and corporate head office functions. The segment’s revenues were up 8.5% year-on-year to €127 million. Adjusted operating income was minus €12 million, compared with minus €6 million in the third quarter of 2014. This result includes transition costs of €4 million related to the establishment of Global Business Services, a three-year, strategic Outlook project.
