TNT reports fourth quarter and full year 2015 results

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The FINANCIAL — TNT on February 16 reported fourth quarter 2015 revenues of €1,861 million, up 4.1% year-on-year, and an operating income of €57 million, compared to an operating loss of €53 million in the same period of 2014.

Revenues benefited from foreign currency effects and from a working day effect, but were negatively affected by lower fuel surcharges. Excluding all three items, underlying revenue growth was 3.0%. The improvement is due to higher revenues and volumes overall, particularly from SMEs. Revenue growth in Europe more than offset the decreases in Brazil and China, according to TNT.

Fourth quarter operating income absorbed net one-off charges of €39 million, including restructuring charges of €11 million.

Excluding one-off charges, TNT’s adjusted operating income almost doubled from a year earlier to €96 million. Profitability was supported by revenue growth and successful efforts to reduce indirect costs. Outlook-related transition and project costs were €8 million during the period.

Capital expenditures amounted to €73 million (3.9% of revenues) compared to €86 million (4.8% of revenues) in the prior year.

The company’s net cash position at the end of December was €231 million compared to €449 million one year earlier. The decrease reflects the investments made as part of the Outlook strategy.

Tex Gunning, TNT’s Chief Executive Officer, said: “I am very pleased with our Q4’15 results. The implementation of the Outlook strategy is gaining momentum. We saw growth accelerating, particularly in our International Europe express business, and we realised a significant improvement in operating income. Service has improved noticeably, as evidenced by record customer experience scores. We are quickly making up for the lost ground in operational excellence by accelerating capital expenditure and outsourcing our Global Business Services and IT infrastructure. We expect further year-on-year improvements in adjusted operating income in full year 2016. Good progress has also been made towards closing of the FedEx offer to acquire TNT. Pre-integration planning is well on track and we are all looking forward to a bright future with FedEx.”

International Europe segment

Revenues in International Europe rose by 9.1% to €789 million. Underlying revenue growth, adjusted for currency effects, working day effect and the negative impact of lower fuel surcharges, was 8.2%, with the following business highlights: revenues from SMEs grew 9.5%; revenues from strategic accounts rose by a double digit figure; all operating units in Europe posted revenue growth during the quarter. 

Consignment volumes and average weight went up 6.6% and 8.1%, respectively. But revenue per consignment and per kilo slightly decreased due to lower fuel surcharges.

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The segment’s adjusted operating income more than doubled year-on-year to €52 million. The improvement is mainly explained by revenue growth and the reduction in indirect costs. Fourth-quarter 2014 operating income was influenced by the brand re-launch (€13 million for International Europe out of a group investment of €22 million)

International AMEA segment

Revenues in International AMEA increased 4.7% year-on-year to €270 million, supported by positive currency effects.

Currency comparable revenue growth was -3.5%. Underlying revenue growth, adjusted for currency effects, working day effect and the negative impact of lower fuel surcharges, was -1.6%. 

This reduction is explained by the year-on-year decline in China’s exports to Europe. Revenue decrease in China and Hong Kong was partly offset by growth in India and Middle-East & Africa. Revenues from SMEs grew faster than those from large customers and now represent a bigger proportion of the segment’s overall revenues.

Service quality further improved, with on-time delivery performance higher than in the fourth quarter of 2014. 

Revenue per consignment rose by a healthy 6.9% year-on-year. International AMEA transported fewer but heavier consignments than in the prior year. Daily weights increased 6.2%.

International AMEA’s adjusted operating income increased by €5 million (+23.8%) to €26 million, supported by good cost control. All operating units posted a higher operating income than in the prior year.

Domestics segment

Revenues in the Domestics segment were €690 million, flat with the fourth quarter of 2014, as revenue growth in Europe balanced the decrease in Brazil and Australia.

Underlying revenue growth, adjusted for currency effects, working day effect and the negative impact of lower fuel surcharges, was 0.9%.

Revenues from SMEs improved year-on-year in all units, supported by better service quality. Average daily consignments increased 0.9%. Revenue per consignment declined 2.6% year-on-year due to pricing pressures, lower fuel surcharges and customer mix effects.

The fourth quarter saw good progress from a profitability standpoint. Despite the flat revenues, the segment’s adjusted operating income increased by €23 million to €31 million as a result of cost reductions. 

Adjusted operating income improved in all European units. The Pacific unit started to benefit from productivity improvements brought by the new hubs in Sydney, Melbourne and Brisbane. Profitability in Brazil declined year-on-year due to lower sales attributable to the recession. Management pursued cost reductions to mitigate the decrease.

Unallocated segment

The Unallocated segment consists of Other Networks (TNT Innight), Central Networks and corporate head office functions.

The segment’s revenues were €115 million, down 4.2% year-on-year. Adjusted operating income was minus €13 million, compared with minus €1 million in the fourth quarter of 2014. The decrease is attributable to higher pension costs.

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Considering FedEx’s offer to acquire TNT, the Executive Board of TNT has decided, with the approval of the Supervisory Board, not to pay a dividend for 2015. If TNT were to pay a dividend, the dividend amount would be subtracted from the offer price upon FedEx’s actually purchasing the shares from TNT’s shareholders.


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 €10 million in the first quarter.

Closing of the FedEx Offer to acquire TNT is anticipated in the first half of calendar year 2016.

Full year 2015 highlights 

During 2015, TNT took structural measures to rebuild a sustainable future. Revenues increased by 3.5% to €6,914 million. Operating income was €38 million compared to an operating loss of €86 million in 2014. 

Progress was made on many fronts. The company returned to revenue growth despite economic volatility in some of its markets, notably Brazil and China. Revenues from small and medium-sized companies (SMEs) grew even quicker at 5.1%, accelerating as the year went by. Underlying revenue growth in the largest segment, International Europe, gained momentum quarter by quarter. 

2015 saw the ramp up of new and upgraded facilities and the start of wide-ranging projects, such as the outsourcing of TNT’s IT infrastructure services and the establishment of Global Business Services. 

The company invested €309 million (4.5% of revenues) to modernise its transport and IT infrastructure, compared to €190 million (2.8% of revenues) in the prior year. Furthermore, TNT launched new road and air connections, expanded network coverage and improved on-time delivery performance globally. 

The transformations implemented in 2015 triggered restructuring and other one-off charges that reduced the full year operating income by €113 million. 

Adjusted operating income decreased by €58 million to €151 million. Most of the decrease is explained by Outlook-related transition and projects costs, which totaled close to €45 million. The remainder of the decrease was due to pricing pressures in several markets, particularly the domestic ones.


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