Earnings Release • Oct 27, 2008
Earnings Release
Open in ViewerOpens in native device viewer
| As reported | At constant fx | ||||
|---|---|---|---|---|---|
| Key figures Q3 | Q3 2008 | Q3 2007 | Q3 2008 | ||
| € mil | % Change | € mil | % Change | € mil | |
| Group | |||||
| Revenues | 2,687 | 1.5% | 2,648 ## | 4.3% | 2,762 |
| EBITDA | 297 | -13.7% | 344 ## | -12.0% | 303 |
| Operating income (EBIT) | 209 | -19.0% | 258 ## | -18.2% | 211 |
| Profit from continuing operations | 113 | -31.9% | 166 ## | -31.9% | 113 |
| Profit from discontinued operations | 0 | 0 | 0 | ||
| Profit attributable to the shareholders | 113 | -32.3% | 167 ## | -32.3% | 113 |
| Net cash from operating activities | 104 | -28.8% | 146 ## | -20.5% | 116 |
| Dividend per share over the year (in € cents) Express |
|||||
| Revenues | 1,656 | 2.3% | 1,619 ## | 5.9% | 1,714 |
| EBITDA | 154 | -16.8% | 185 ## | -13.0% | 161 |
| Operating income (EBIT) | 99 | -23.8% | 130 ## | -21.5% | 102 |
| Revenues | 964 | -0.2% | 966 ## | 1.7% | 982 |
| EBITDA | 147 | -11.4% | 166 ## | -11.4% | 147 |
| Operating income (EBIT) | 116 | -14.7% | 136 ## | -14.7% | 116 |
| As reported YTD Q3 2008 |
YTD Q3 2007 | At constant fx YTD Q3 2008 |
|||
|---|---|---|---|---|---|
| Key figures YTD Q3 | € mil | % Change | € mil | % Change | € mil |
| Group | |||||
| Revenues | 8,219 | 2.6% | 8,013 ## | 5.3% | 8,439 |
| EBITDA | 1,088 | -9.0% | 1,196 ## | -7.2% | 1,110 |
| Operating income (EBIT) | 822 | -12.5% | 939 ## | -11.2% | 834 |
| Profit from continuing operations | 499 | -21.2% | 633 ## | -20.2% | 505 |
| Profit from discontinued operations | 0 | 206 ## | 0 | ||
| Profit attributable to the shareholders | 497 | -40.7% | 838 ## | -40.0% | 503 |
| Net cash from operating activities Dividend per share over the year (in € cen |
569 | 8.8% | 523 ## 77 77 |
11.7% | 584 |
| Express | |||||
| Revenues | 4,986 | 4.1% | 4,789 ## | 7.7% | 5,159 |
| EBITDA | 523 | -7.9% | 568 ## | -4.0% | 545 |
| Operating income (EBIT) | 358 | -12.9% | 411 ## | -10.0% | 370 |
| Revenues | 3,041 | -0.2% | 3,047 ## | 1.4% | 3,089 |
| EBITDA | 579 | -10.2% | 645 ## | -10.1% | 580 |
| Operating income (EBIT) | 483 | -11.9% | 548 ## | -11.7% | 484 |
"As we had already highlighted in our October 16 trading update the conditions in our European Express business have significantly worsened in September and the first weeks of October. Air volumes in September were down an unprecedented 10%, while Road volumes were showing low growth. We expect this pressure on volumes to persist at least in the current quarter.
On the positive side the Mail business has performed in line with our outlook. Also we refinanced our capital requirements in August, ahead of the deepening of the financial crisis in September and October. This, coupled with our robust cash flow, leaves us on a solid financial footing.
In these times management focus on efficient operations is even more essential. Our Master plans in Mail continue successfully, we are aggressively implementing the announced € 125 million cost optimisation programme in Express, we focus on improving air network efficiencies and we target all other cost areas for savings as well. At our analyst meeting on 4 December 2008, we will provide further details in this respect."
Trading conditions in TNT's European Express business have significantly worsened in September. The volumes in the premium International Express (air) product decreased around 10%. The Economy Express volumes (road) have continued to grow albeit well below levels of 2007. The Mail performance remained robust.
The mix of TNT's businesses led to overall revenue growth, but with a lower operating margin.
Under the current difficult economic environment, TNT has revised its outlook for 2008 for Express International & Domestic downward to a mid single digit revenue growth with an operating margin around 9%. All other lines of the outlook are reaffirmed, albeit that revenue growth in the Express Emerging Platforms is expected to be slightly lower at mid teens.
TNT's outlook for 2008 is based on constant average 2007 foreign exchange rates versus the Euro. The impact of the strengthening of the Euro against other currencies (mainly the UK Pound) was € 75 million for group revenue, with a € 2 million negative impact on operating income.
Group revenues increased by 1.5%, to reach € 2,687 million. At constant foreign exchange, the revenue increase was 4.3%. Operating income decreased by € 47 million at constant foreign exchange.
In Express the operational revenue increase at constant foreign exchange was 5.9% with core volumes declining by 0.2%. The yield was 5.2%, fully attributable to the fuel surcharge. Emerging Platforms grew by 13.7% operationally and showed further margin improvement. The operating margin for the division was 6.0% at constant rates of exchange (2007: 8.0%).
In Mail, revenues increased operationally by 1.7%. Emerging Mail & Parcels (excluding EMN Germany) increased 16.4% on the same basis.
Operating income in Mail reduced from € 136 million to € 116 million mainly because of the volume declines, in line with TNT's guidance, and price/mix changes, plus the fact that Q3 2007 benefited from net positive one-offs of € 4 million. The operating margin for the division was 11.8% at constant rates of exchange (2007: 14.1%).
Other Networks achieved 6.0% operational revenue growth while delivering € 5 million EBITDA and € 4 million EBIT, both figures the same as Q3 2007.
Non-allocated costs were € 10 million, in line with last year. The net financial expense was € 42 million, compared to € 29 million last year. The increase in interest expense was due to the issuance of the two new bonds, which were issued in November 2007 and August 2008 respectively. The tax charge was € 53 million compared to € 62 million in the prior year. The effective tax rate was 31.9%, somewhat higher than Q3 2007 due to mix effects.
The profit from continuing operations was € 113 million in this quarter versus € 166 million last year, mainly driven by lower operating income and higher financing costs.
Earnings per share from continuing operations amounted to 31.2 cents.
TNT's main defined benefit plan in the Netherlands, covering approximately 95% of TNT's pension obligations had a coverage ratio of 115% as calculated under the requirement of the Nederlandsche Bank per 30 September 2008. Due to the severe turbulence in financial and equity markets in October, the coverage ratio is expected to have dropped below 105%. If the coverage ratio remains at this level, TNT will have the obligation to increase buffers over time. This could lead to an additional cash contribution to the fund of around € 75 million in 2009. The factual outcome, however, is primarily dependent on developments in equity markets going forward and is reviewed regularly.
The net cash from operating activities decreased by € 42 million, from € 146 million in Q3 2007 to € 104 million in Q3 2008, mainly due to lower cash generated from operations of € 86 million partly offset by lower income taxes paid of € 45 million. The net change in overall working capital of -€ 41 million (2007: -€ 1 million) impacted the cash flow negatively. Trade working capital improved by € 21 million compared to last year, due to TNT's increased focus on trade receivables and trade payables. Other working capital impacted the cash flow negatively by € 62 million due to timing differences. The yearto-date contribution from working capital to cash flow is around € 40 million higher than in 2007.
At quarter end, net debt stood at € 2,039 million. Compared to the end of Q3 2007, net debt increased by € 436 million mainly because of TNT's share repurchase programme finalised at the end of June 2008.
In August, TNT announced that it had successfully placed a benchmark Eurobond offering of £ 450 million due August 2018. The £ 450 million proceeds have been swapped into € 568 million with a coupon of 7.14% and a maturity of 14 August 2018.
With this bond, TNT was able to substantially refinance its capital requirements in August, ahead of the deepening of the financial crisis in September/October.
"Trading conditions in TNT's European Express business have significantly worsened in September and, based on the volume patterns in the first two weeks of October, TNT expects this pressure to continue in the fourth quarter."
"TNT will present an updated outlook for 2008 in its Q3 publication on October 27. The margins in the Express "International & Domestic'' line of business are currently expected to develop around a solid 9% for the full year, with somewhat lower revenue growth."
At its annual analyst day, TNT will give an update on the progress of its strategy. This will include further cost savings targets in its businesses.
Economic conditions in Europe have worsened considerably in September and October. This has led and will continue to lead to a significant decrease in the premium air volumes in Europe.
TNT assumes the economy will remain under the same pressure for the rest of the year as witnessed in September / October. The outlook below is barring any further worsening of these trading conditions.
Express is expected to show a mid single digit organic revenue growth in International & Domestic, with an operating margin around 9% (previously: high single digit organic revenue growth at low double digit operating margin, at the low end of the range). The Express Emerging Platforms are expected to deliver organic revenue growth in the mid teens (previously: high teens), with a low single digit operating margin.
Mail is expected to show a low single digit organic revenue increase overall, with an operating margin around 16.5%. Emerging Mail & Parcels (excluding EMN Germany), as part of Mail, is expected to achieve a low double digit organic revenue increase, with a high mid single digit operating margin.
Other information:
TNT's outlook continues to be based on constant 2007 exchange rates.
The overall Express outlook excludes any charges associated with the earlier announced € 100 - € 125 million savings programme, as well as any possible charges related to further cost restructuring.
The overall Mail outlook includes expectations and assumptions on revenue development and operating margins for EMN Germany on an ongoing basis, which, due to the current legal and business environment, are more uncertain than usual.
The overall Mail margin outlook excludes possible further restructuring charges in the context of Master plans in the Netherlands and decisions on the future of EMN Germany.
| 5 August 2008 | • TNT successfully placed benchmark Eurobond of £ 450million |
|---|---|
| 18 August 2008 | • TNT completes integration of Speedage |
| 4 September 2008 | • TNT sustains leadership position in Dow Jones Sustainability Indexes |
| 22 September 2008 | • TNT captures 'can do' mentality in new strap line: 'sure we can' |
| 24 September 2008 | • Expanded International Express Network Strengthens TNT's Leading Position in China-Europe Services |
| 24 September 2008 | • Draft bill regarding value added tax in the German postal market: TNT Post demands improvements |
| 16 October 2008 | • TNT issues trading statement |
| 23 October 2008 | • TNT sets up new gateway at Osaka Kansai International Airport; transit time for deliveries from China and Vietnam is shortened by one day |
| Group Summary Q3 | Q3 2008 | Q3 2007 | % Change | ||
|---|---|---|---|---|---|
| € mil | € mil | Operational | Fx | Total | |
| Revenues | 2,687 | 2,648 | 4.3% | -2.8% | 1.5% |
| EBITDA | 297 | 344 | -12.0% | -1.7% | -13.7% |
| Operating income (EBIT) | 209 | 258 | -18.2% | -0.8% | -19.0% |
| Profit from continuing operations | 113 | 166 | -31.9% | -31.9% | |
| Profit from discontinued operations | - | ||||
| Profit attributable to the shareholders | 113 | 167 | -32.3% | -32.3% | |
| Net cash from operating activities | 104 | 146 | -20.5% | -8.3% | -28.8% |
| Earnings per share (in € cents) | 31.2 | 44.4 | -29.7% | ||
| Segment Summary Q3 | Q3 2008 | Q3 2007 | Operational | Fx | Total |
| Express | |||||
| Revenues | 1,656 | 1,619 | 5.9% | -3.6% | 2.3% |
| EBITDA | 154 | 185 | -13.0% | -3.8% | -16.8% |
| Operating income (EBIT) | 99 | 130 | -21.5% | -2.3% | -23.8% |
| Operating margin | 6.0% | 8.0% | |||
| Revenues | 964 | 966 | 1.7% | -1.9% | -0.2% |
| EBITDA | 147 | 166 | -11.4% | -11.4% | |
| Operating income (EBIT) | 116 | 136 | -14.7% | -14.7% | |
| Operating margin | 12.0% | 14.1% | |||
| Other Networks | |||||
| Revenues | 72 | 67 | 6.0% | 1.5% | 7.5% |
| EBITDA | 5 | 5 | |||
| Operating income (EBIT) | 4 | 4 | |||
| Non-allocated | (10) | (12) | |||
| Operating income (EBIT) | 209 | 258 | -18.2% | -0.8% | -19.0% |
| Group Summary YTD Q3 | YTD Q3 2008 YTD Q3 2007 | % Change | |||
|---|---|---|---|---|---|
| € mil | € mil | Operational | Fx | Total | |
| Revenues | 8,219 | 8,013 | 5.3% | -2.7% | 2.6% |
| EBITDA | 1,088 | 1,196 | -7.2% | -1.8% | -9.0% |
| Operating income (EBIT) | 822 | 939 | -11.2% | -1.3% | -12.5% |
| Profit from continuing operations | 499 | 633 | -20.3% | -0.9% | -21.2% |
| Profit from discontinued operations | 206 | ||||
| Profit attributable to the shareholders | 497 | 838 | -40.0% | -0.7% | -40.7% |
| Net cash from operating activities | 569 | 523 | 11.7% | -2.9% | 8.8% |
| Earnings per share (in € cents) | 136.1 | 217.3 | -37.4% | ||
| Segment Summary YTD Q3 | YTD Q3 2008 YTD Q3 2007 | Operational | Fx | Total | |
| Express | |||||
| Revenues | 4,986 | 4,789 | 7.7% | -3.6% | 4.1% |
| EBITDA | 523 | 568 | -4.0% | -3.9% | -7.9% |
| Operating income (EBIT) | 358 | 411 | -10.0% | -2.9% | -12.9% |
| Operating margin | 7.2% | 8.6% | |||
| Revenues | 3,041 | 3,047 | 1.4% | -1.6% | -0.2% |
| EBITDA | 579 | 645 | -10.1% | -0.1% | -10.2% |
| Operating income (EBIT) | 483 | 548 | -11.7% | -0.2% | -11.9% |
| Operating margin | 15.9% | 18.0% | |||
| Other Networks | |||||
| Revenues | 207 | 193 | 6.8% | 0.5% | 7.3% |
| EBITDA | 11 | 11 | |||
| Operating income (EBIT) | 9 | 9 | |||
| Operating margin | 4.3% | 4.7% | |||
| Non-allocated | (28) | (29) | |||
| Operating income (EBIT) | 822 | 939 | -11.2% | -1.3% | -12.5% |
| At constant fx | At constant fx | |||||
|---|---|---|---|---|---|---|
| Express Summary | Q3 2008 € mil |
Q3 2007 € mil |
% Change | YTD Q3 2008 € mil |
YTD Q3 2007 € mil |
% Change |
| Revenues | 1,714 | 1,619 | 5.9% | 5,159 | 4,789 | 7.7% |
| EBITDA | 161 | 185 | -13.0% | 545 | 568 | -4.0% |
| Operating income (EBIT) | 102 | 130 | -21.5% | 370 | 411 | -10.0% |
| Operating margin | 6.0% | 8.0% | 7.2% | 8.6% |
Express reported 5.9% operational revenue growth in the third quarter. Revenue growth was affected by a sharp decline in demand for premium (air) products in Europe, particularly accelerating in September, plus an overall softening across core markets. Year to date, operational revenues for the division grew by 7.7%, of which approximately 3% was due to higher fuel surcharges.
Core kilo development in the second quarter was -0.2%. International Express volumes deteriorated markedly in September. This worsening trend was partially seen in more customers shifting to economy products. TNT sees no evidence that it has lost any customers during the quarter. The growth rate in economy products remained positive for the quarter, although below Q3 2007 levels.
Revenue yield on core volumes was +5.2% – the thirty-seventh consecutive positive quarter, fully attributable to the fuel surcharge. The fuel surcharge lag reported last quarter has been recovered.
Volume growth in the economy products was lower than previously, but with a strong yield.
Operating income decreased by 21.5% year on year, at constant rates of exchange. Also at constant rates of exchange, the operating margin was 6.0%. EBIT was adversely affected by lower capacity utilisation mainly in the air network; adjusting that cost base could not keep pace with the rapid deterioration of premium volumes and the resulting less favourable price/mix impact, felt particularly in September.
The Network Optimisation programme is on track. Express performance in the short term will be supported by further cost control, including even stricter control over discretionary expenditures, headcount freezes and tighter holiday-season operational planning.
The last quarter of 2008 will benefit from various positive working day effects, such as All Saints' Day falling on a Saturday, and Christmas and Boxing day on a Thursday and Friday.
| At constant fx | |||||
|---|---|---|---|---|---|
| Revenue Analysis Q3 | Q3 2008 | Q3 2007 | % Change | ||
| € mil | € mil | Total | Organic | Acq | |
| International & Domestic | 1,391 | 1,335 | 4.2% | 4.2% | 0.0% |
| Emerging platforms* | 323 | 284 | 13.7% | 13.0% | 0.7% |
| Express | 1,714 | 1,619 | 5.9% | 5.8% | 0.1% |
| At constant fx |
| Revenue Analysis YTD | YTD Q3 2008 | YTD Q3 2007 | % Change | ||
|---|---|---|---|---|---|
| € mil | € mil | Total | Organic | Acq | |
| International & Domestic | 4,239 | 4,009 | 5.7% | 5.7% | 0.0% |
| Emerging platforms* | 918 | 780 | 17.7% | 14.9% | 2.8% |
| Express | 5,157 | 4,789 | 7.7% | 7.2% | 0.5% |
*Apac, India, China, LAM , M EA , Russia, Turkey
International & Domestic revenues grew 4.2%, at constant foreign exchange, despite core kilos declining by 1.1%.
Within International & Domestic, the large countries in Europe (UK, France, Benelux, Germany, Italy) saw moderating revenue growth on the back of lower volumes. In August and September, international volumes were particularly weak, though economy products remained positive in the quarter albeit at lower levels than were enjoyed last year.
Outside the large countries in Europe, Australia continues to perform well albeit at sequentially lower levels.
International Express (premium) revenue and volumes were lower than in the third quarter of 2007, down 1.3% and 6.4%, respectively. International Economy had relatively strong growth, achieving 9.7% revenue growth on 0.4% higher volumes. In Domestic Express, revenue was 4.4% up on 1.2% lower volumes.
Emerging platforms achieved operational revenue growth of 13.7%. The margin developed in line with the 2008 outlook.
China, the Middle East, Asia Pacific/India and Latin America all continued to grow revenues double digit at constant rates of exchange. TNT's unique economy product in China performed particularly well which, once again, vindicates TNT's emerging platforms strategy of focusing on developing strong domestic networks, first, and adding international connectivity later.
Revenue growth for Express Emerging Platforms for the year is expected to be slightly lower than previously indicated, at mid teens, which reflects current trading conditions.
| At constant fx | At constant fx | |||||
|---|---|---|---|---|---|---|
| Mail Summary | Q3 2008 | Q3 2007 | % Change | YTD Q3 2008 | YTD Q3 2007 | % Change |
| € mil | € mil | € mil | € mil | |||
| Revenues | 982 | 966 | 1.7% | 3,089 | 3,047 | 1.4% |
| EBITDA | 147 | 166 | -11.4% | 580 | 645 | -10.1% |
| Operating income (EBIT) | 116 | 136 | -14.7% | 484 | 548 | -11.7% |
| Operating margin | 11.8% | 14.1% | 15.7% | 18.0% |
Overall Mail revenues grew 1.7% at constant fx. Substantial revenue growth in Emerging Mail & Parcels (excluding EMN Germany) of 16.4% operationally offset revenue lost due to volume declines in Mail Netherlands.
The overall decline in Mail Netherlands addressed volumes was 4.0%, in line with TNT's guidance. Bulk mail decreased less than singleitem mail because of the success of retaining bulk mail volumes in the market.
Emerging Mail & Parcels (excluding EMN Germany) achieved operational revenue growth of 16.4% compared to last year. The Dutch parcel activities showed revenues up and a good EBIT development. TNT Post UK showed substantial growth with new client volume wins every month.
EMN Germany's revenue and operating margin are developing in line with TNT's outlook. The consolidator Postcon, in particular, performed well with revenue and operating margin improvements. Unaddressed business is under pressure. Strong revenue growth and better results were attained in addressed.
Overall Mail operating income decreased by 14.7%, with the operating margin at 11.8% (against 14.1% last year). The decrease in operating income was, on balance, due to the revenue decline in Mail Netherlands and the extra costs of the new collective labour agreement (effective 1 April 2008), not fully compensated by cost reductions, with Master plan savings in the quarter at € 13 million.
Emerging Mail & Parcels showed an increase in operating income.
TNT welcomes the fact that the German Government is revising the VAT regulation in the postal market. This is a necessary step because the current VAT exemption for Deutsche Post is contrary to EU law and impedes competition. However the present draft bill will not encourage competition in the postal market, as inexact phrasing, that is open to various interpretations, may enable Deutsche Post to maintain its VAT exemption.
In the Netherlands, TNT has started the first negotiations with the unions regarding the collective labour agreement that will take effect as of April 2009. The monthly payment of 0.5%, as agreed in the current collective labour agreement, will become a structural increase with retroactive effect to 1 April 2008 if agreement is reached by no later than 1 April 2009 on matters relating to market conformity going forward.
Mail is developing according to the outlook, producing a robust operating income and cash flow for 2008.
| At constant fx | |||||
|---|---|---|---|---|---|
| Revenue Analysis Q3 | Q3 2008 | Q3 2007 | % Change | ||
| € mil | € mil | Total | Organic | Acq | |
| Mail of which |
982 | 966 | 1.7% | 1.8% | -0.1% |
| Emerging Mail & Parcels | |||||
| (excl. EMN Germany)* | 320 | 275 | 16.4% | 16.8% | -0.4% |
| At constant fx | |||||
| Revenue Analysis YTD | YTD Q3 2008 | YTD Q3 2007 | % Change | ||
| € mil | € mil | Total | Organic | Acq | |
| Mail of which |
3,089 | 3,047 | 1.4% | 1.6% | -0.2% |
| Emerging Mail & Parcels (excl. EMN Germany)* |
946 | 815 | 16.1% | 17.0% | -0.9% |
*EM N + parcel activities of M ail in the Benelux
| € mil | Q3 2008 | Q3 2007 | % Change | YTD Q3 2008 |
YTD Q3 2007 |
% Change |
|---|---|---|---|---|---|---|
| EXPRESS | ||||||
| International & Domestic | ||||||
| Revenues | 1,341 | 1,335 | 4,106 | 4,009 | ||
| Growth % | 0.4% | 4.7% | 2.4% | 5.5% | ||
| Organic | 4.2% | 4.8% | 5.7% | 5.7% | ||
| Acquisition / Disposal | 0.0% | 0.0% | 0.0% | 0.0% | ||
| Fx | -3.8% | -0.1% | -3.3% | -0.2% | ||
| Emerging platforms | ||||||
| Revenues | 315 | 284 | 880 | 780 | ||
| Growth % | 10.9% | 105.8% | 12.8% | 97.5% | ||
| Organic | 13.0% | 34.7% | 14.9% | 31.9% | ||
| Acquisition / Disposal | 0.7% | 72.5% | 2.8% | 67.1% | ||
| Fx | -2.8% | -1.4% | -4.9% | -1.5% | ||
| Total Express | ||||||
| Revenues | 1,656 | 1,619 | 4,986 | 4,789 | ||
| Growth % | 2.3% | 14.6% | 4.1% | 14.2% | ||
| Organic | 5.8% | 8.0% | 7.2% | 8.2% | ||
| Acquisition / Disposal | 0.1% | 6.8% | 0.5% | 6.3% | ||
| Fx | -3.6% | -0.2% | -3.6% | -0.3% | ||
| Operating income (EBIT) | 99 | 130 | 358 | 411 | ||
| Operating margin | 6.0% | 8.0% | 7.2% | 8.6% | ||
| Other information Express | ||||||
| Working days | 64 | 64 | 188 | 188 | ||
| Core** consignments (mil) | 49.0 | 48.9 | 0.2% | 153.3 | 151.0 | 1.5% |
| Domestic core consignments (mil) | 37.7 | 37.4 | 0.8% | 118.0 | 116.0 | 1.7% |
| International core consignments (mil) | 11.3 | 11.5 | -1.5% | 35.3 | 35.0 | 0.8% |
| Core** kilos (mil) | 986.5 | 988.3 | -0.2% | 3,055.8 | 2,998.7 | 1.9% |
| Domestic core kilos (mil) | 701.2 | 703.6 | -0.3% | 2,167.3 | 2,132.6 | 1.6% |
| International core kilos (mil) | 285.3 | 284.7 | 0.2% | 888.5 | 866.1 | 2.6% |
| Core** revenue quality yield improvement | 5.2% | 1.0% |
** Core excludes Special Services, Hoau, M ercurio and Speedage.
| € mil | Q3 2008 | Q3 2007 | YTD Q3 2008 |
YTD Q3 2007 |
|---|---|---|---|---|
| Revenues | 964 | 966 | 3,041 | 3,047 |
| Growth % | -0.2% | 4.8% | -0.2% | 4.3% |
| Organic | 1.8% | 4.1% | 1.6% | 4.7% |
| Acquisition / Disposal | -0.1% | 0.8% | -0.2% | -0.4% |
| Fx | -1.9% | -0.1% | -1.6% | 0.0% |
| of which Emerging Mail & Parcels (excl Germany) | ||||
| Revenues | 303 | 275 | 902 | 815 |
| Growth % | 10.2% | 3.4% | 10.7% | 4.0% |
| Organic | 16.8% | -2.3% | 17.0% | -0.4% |
| Acquisition / Disposal | -0.4% | 4.9% | -0.9% | 4.1% |
| Fx | -6.2% | 0.8% | -5.4% | 0.3% |
| Operating income (EBIT) | 116 | 136 | 483 | 548 |
| Operating margin | 12.0% | 14.1% | 15.9% | 18.0% |
| Other information Mail | ||||
| Addressed Mail NL volumes | ||||
| (million pieces) | 998 | 1,040 | 3,302 | 3,440 |
| Growth % | -4.0% | -2.1% | -4.0% | -3.6% |
| Working days | 65 | 65 | 189 | 190 |
The interim financial statements have been prepared in accordance with IAS 34 'Interim financial reporting'.
TNT N.V. ("TNT" or the "Company"), a public limited liability company with its registered seat in Amsterdam, the Netherlands, and its head office in Amsterdam, the Netherlands, provides businesses and consumers worldwide with an extensive range of services for their express delivery and mail needs. TNT's services involve the collection, storage, sorting, transport and distribution of a wide range of items for the Company's customers within specific timeframes, and related data and document management services.
The information is reported on a year-to-date basis ending 27 September 2008. Where material to an understanding of the period starting 1 January 2008 and ending 27 September 2008 further information is disclosed.
The interim financial statements were discussed in and approved by the Board of Management. The Supervisory Board had mandated certain members of its committee to approve the second quarter results for 2008 and the accompanying press release. The interim financial statements should be read in conjunction with TNT's consolidated 2007 annual report as published on 18 February 2008.
The accounting policies applied in these interim financial statements are consistent with those applied in TNT's consolidated 2007 annual report.
The measure of profit and loss and assets and liabilities is based on the TNT Group Accounting Policies which are compliant with IFRS. The pricing of intercompany sales is done at arm's length.
The information in these interim financial statements is unaudited.
TNT operates its businesses through three reportable segments Express, Mail and Other networks.
The Express business provides on demand doorto-door express delivery services for customers sending documents, parcels and freight. The Mail business provides services for collecting, sorting, transporting and distributing domestic and international mail. The Other networks business provides time-critical deliveries to individually agreed service delivery points for business customers during the night.
Revenues and results are impacted by the seasonality of sales whereby Q4 is the strongest quarter in the financial year and Q3 is the weakest quarter, due to the holiday season.
In the following table a reconciliation is presented of the segment information relating to the income statement and total assets of the reportable segments for the first three quarters of 2008 and 2007:
| Other | Inter | Non | ||||
|---|---|---|---|---|---|---|
| € mil | Express | networks | company | allocated | Total | |
| YTD 2008 ended at 27 September 2008 | ||||||
| Net sales | 4,878 | 3,013 | 202 | 0 | 8,093 | |
| Inter-company sales | 4 | 8 | 3 | (15) | 0 | |
| Other operating revenues | 104 | 20 | 2 | 126 | ||
| Total operating revenues | 4,986 | 3,041 | 207 | (15) | 0 | 8,219 |
| Other income | 18 6 | 1 | 1 | 26 | ||
| Depreciation/impairment property, plant and equipment | (127) | (69) | (2) | (2) | (200) | |
| Amortisation/impairment intangibles | (38) | (27) | 0 | (1) | (66) | |
| Total operating income | 358 | 483 | 9 | (28) | 822 | |
| Total assets | 4,486 | 1,630 | 103 | 1,343 | 7,562 | |
| YTD 2007 ended at 29 September 2007 | ||||||
| Net sales | 4,702 | 3,022 | 190 | 4 | 7,918 | |
| Inter-company sales | 13 | 6 | 1 | (20) | 0 | |
| Other operating revenues | 74 | 19 | 2 | 95 | ||
| Total operating revenues | 4,789 | 3,047 | 193 | (20) | 4 | 8,013 |
| Other income | 53 6 | 1 | 0 | 60 | ||
| Depreciation/impairment property, plant and equipment | (123) | (79) | (2) | (1) | (205) | |
| Amortisation/impairment intangibles | (34) | (18) | 0 | 0 | (52) | |
| Total operating income | 411 | 548 | 9 | (29) | 939 | |
| Total assets | 4,444 | 1,561 | 96 | 864 | 6,965 |
| € mil | 27 Sep 2008 |
31 Dec 2007 |
|---|---|---|
| Goodwill | 1,830 | 1,828 |
| Other intangible assets | 274 | 291 |
| 1 Intangible assets | 2,104 | 2,119 |
| Land and buildings | 814 | 847 |
| Plant and equipment | 346 | 349 |
| Aircraft | 360 | 387 |
| Other | 159 | 163 |
| Construction in progress | 56 | 39 |
| Property, plant and equipment 2 |
1,735 | 1,785 |
| Investments in associates | 94 | 83 |
| Other loans receivable | 5 | 5 |
| Deferred tax assets | 203 | 203 |
| Prepayments and accrued income | 32 | 34 |
| Financial fixed assets | 334 | 325 |
| 3 Pension assets | 686 | 594 |
| Total non-current assets | 4,859 | 4,823 |
| Inventory | 27 | 30 |
| Accounts receivable | 1,698 | 1,656 |
| Income tax receivable | 40 | 35 |
| Prepayments and accrued income | 297 | 236 |
| Cash and cash equivalents | 632 | 295 |
| Total current assets | 2,694 | 2,252 |
| Assets held for sale | 9 | 10 |
| Total assets | 7,562 | 7,085 |
| Equity attributable to the equity holders of the parent | 1,781 | 1,931 |
| Minority interests | 22 | 20 |
| Total equity | 1,803 | 1,951 |
| Deferred tax liabilities | 318 | 298 |
| 3 Provisions for pension liabilities |
379 | 437 |
| 5 Other provisions |
171 | 200 |
| 4 Long-term debt |
1,844 | 1,294 |
| Accrued liabilities | 6 | 3 |
| Total non-current liabilities | 2,718 | 2,232 |
| Trade accounts payable | 362 | 336 |
| 5 Short term provisions |
134 | 162 |
| Other current liabilities | 1,294 | 1,188 |
| Income tax payable Accrued current liabilities |
83 1,168 |
69 1,147 |
| Total current liabilities | 3,041 | 2,902 |
| Liabilities related to assets classified as held for sale | 0 | 0 |
| Total liabilities and equity | 7,562 | 7,085 |
these refer to the notes to these interim financial statements.
| € mil | Q3 2008 | Q3 2007 | YTD Q3 2008 YTD Q3 2007 | |
|---|---|---|---|---|
| Net sales | 2,637 | 2,609 | 8,093 | 7,918 |
| Other operating revenues | 50 | 39 | 126 | 95 |
| Total revenues | 2,687 | 2,648 | 8,219 | 8,013 |
| Other income | 1 | 18 | 26 | 60 |
| Cost of materials | (125) | (104) | (355) | (299) |
| Work contracted out and other external expenses | (1,240) | (1,193) | (3,677) | (3,485) |
| Salaries and social security contributions | (854) | (849) | (2,634) | (2,598) |
| Depreciation, amortisation and impairments | (88) | (87) | (266) | (257) |
| Other operating expenses | (172) | (175) | (491) | (495) |
| Total operating expenses | (2,479) | (2,408) | (7,423) | (7,134) |
| Operating income | 209 | 258 | 822 | 939 |
| Interest and similar income | 17 | 21 | 48 | 80 |
| Interest and similar expenses | (59) | (50) | (162) | (140) |
| Net financial (expense)/income | (42) | (29) | (114) | (60) |
| Results from investments in associates | (1) | (1) | (2) | 4 |
| Profit before income taxes | 166 | 228 | 706 | 883 |
| Income taxes | (53) | (62) | (207) | (250) |
| Profit from continuing operations | 113 | 166 | 499 | 633 |
| Profit from discontinued operations | 0 | 0 | 0 | 206 |
| Profit for the period | 113 | 166 | 499 | 839 |
| Attributable to: | ||||
| Minority interests | 0 | (1) | 2 | 1 |
| Shareholders | 113 | 167 | 497 | 838 |
| Earnings from continuing operations per share (in € cents) | 31.2 | 44.1 | 136.1 | 163.9 |
| Earnings from continuing operations per diluted share (in € cents) | 31.1 | 43.7 | 135.5 | 163.0 |
| Earnings from discontinued operations per share (in € cents) | 0.0 | 0.3 | 0.0 | 53.4 |
| Earnings from discontinued operations per diluted share (in € cents) | 0.0 | 0.4 | 0.0 | 53.2 |
| Earnings per share (in € cents) | 31.2 | 44.4 | 136.1 | 217.3 |
| Earnings per diluted share (in € cents) Dividend per share over the year (in €cents) * Based on an average number of 365.2 million ordinary shares, including ADS (2007: 385.6 million). |
31.1 | 44.1 | 135.5 0.0 |
216.2 77.0 |
| Q3 2008 | Q3 2007 YTD Q3 2008 YTD Q3 2007 | |||
|---|---|---|---|---|
| € mil | € mil | € mil | € mil | |
| CASH FLOWS FROM CONTINUING OPERATIONS | ||||
| Profit before income taxes | 166 | 228 | 706 | 883 |
| Adjustments for: Depreciation, amortisation and impairments |
88 | 87 | 266 | 257 |
| Share based payments | 4 | 3 | 12 | 7 |
| Investment income: | ||||
| (Profit)/loss on sale of property, plant and equipment | 0 | (18) | (23) | (54) |
| Interest and similar income | (17) | (20) | (48) | (79) |
| Foreign exchange (gains) and losses | 1 | 6 | 8 | (1) |
| Interest and similar expenses Results from investments in associates |
58 1 |
43 1 |
154 2 |
140 (4) |
| Changes in provisions: | ||||
| Pension liabilities | (60) | (52) | (150) | (124) |
| Other provisions | (13) | (4) | (67) | (41) |
| Changes in working capital: | ||||
| Inventory | 1 | 2 | 1 | 0 |
| Trade accounts receivable Other accounts receivable |
23 (3) |
16 10 |
(39) (13) |
(10) 84 |
| Other current assets | 9 | (26) | (50) | (55) |
| Trade accounts payable | (2) | 10 | 21 | (4) |
| Other current liabilities excluding short term financing and taxes | (69) | (13) | 76 | (58) |
| Cash generated from operations | 187 | 273 | 856 | 941 |
| Interest paid | (31) | (30) | (105) | (119) |
| Income taxes paid | (52) | (97) | (182) | (299) |
| Net cash from operating activities | 104 | 146 | 569 | 523 |
| Acquisition of group companies (net of cash) | (1) | (10) | (4) | (276) |
| Disposals of group companies and joint ventures | 0 | 0 | 0 | 483 |
| Investment in associates | (6) | (5) | (12) | (21) |
| Disposals of associates | 0 | 0 | 0 | 7 |
| Capital expenditure on intangible assets | (17) | (24) | (55) | (67) |
| Capital expenditure on property, plant and equipment | (58) | (56) | (192) | (173) |
| Proceeds from sale of property, plant and equipment | 2 | 5 | 33 | 50 |
| Other changes in (financial) fixed assets | (1) | (2) | 2 | (1) |
| Changes in minority interests | 0 | 1 | 1 | 1 |
| Interest received | 14 | 16 | 41 | 51 |
| Dividends received | 0 | 0 | 0 | 13 |
| Net cash used in investing activities | (67) | (75) | (186) | 67 |
| Repurchases of shares | (28) | (230) | (308) | (519) |
| Other equity changes | 0 | 3 | 1 | 28 |
| Proceeds from long term borrowings | 562 | 1 | 562 | 14 |
| Repayments to long term borrowings | 0 | 0 | (2) | (18) |
| Proceeds from short term borrowings | 31 | 246 | 166 | 556 |
| Repayments to short term borrowings | (83) | 0 | (128) | (327) |
| Repayments to finance leases | (2) | (1) | (10) | (10) |
| Dividends paid | (122) | (115) | (324) | (298) |
| Financing relating to our discontinued operations | 0 | (10) | 0 | (17) |
| Net cash used in financing activities | 358 | (106) | (43) | (591) |
| Changes in cash from continuing operations | 395 | (35) | 340 | (1) |
| CASH FLOWS FROM DISCONTINUED OPERATIONS | ||||
| Changes in cash from discontinued operations | 0 | 0 | 0 | 1 |
| TOTAL CHANGES IN CASH | 395 | (35) | 340 | 0 |
| Cash at beginning of the period | 235 | 333 | 295 | 326 |
| Cash from divested business | 0 | 0 | 0 | (29) |
| Exchange rate differences | 2 | (3) | (3) | (2) |
| Total changes in cash | 395 | (35) | 340 | 0 |
| Cash at end of period as reported | 632 | 295 | 632 | 295 |
| € mil | Issued share capital |
Additional paid in capital |
Translatio n reserve |
Hedging reserve |
Other reserves |
Retained earnings |
Attributable to equity holders of the parent |
Minority interest |
To tal equity |
|---|---|---|---|---|---|---|---|---|---|
| Balance at 31 December 2006 | 203 | 1,245 | (5) | (21) | 0 | 561 | 1,983 | 25 | 2,008 |
| Profit for the period | 838 | 838 | 1 | 839 | |||||
| Gains/(losses) on cashflow hedges, net of tax | 9 | 9 | 9 | ||||||
| Currency translation adjustment | (36) | (36) | (36) | ||||||
| Total recognised income | 0 | 0 | (36) | 9 | 0 | 838 | 811 | 1 | 812 |
| Final dividend previous year | (183) | (183) | (183) | ||||||
| Appropriation of net income | 378 | (378) | 0 | 0 | |||||
| Interim dividend current year | (115) | (115) | (115) | ||||||
| Repurchases and cancellation of shares | (15) | (113) | (385) | (513) | (513) | ||||
| Share based compensation | 8 | 8 | 8 | ||||||
| Other | 4 | 35 | 39 | (6) | 33 | ||||
| Total direct changes in equity | (15) | (113) | 4 | 0 | 36 | (676) | (764) | (6) | (770) |
| Balance at 29 September 2007 | 188 | 1,132 | (37) | (12) | 36 | 723 | 2,030 | 20 | 2,050 |
| Balance at 31 December 2007 | 182 | 982 | (82) | (22) | 0 | 871 | 1,931 | 20 | 1,951 |
| Profit for the period | 497 | 497 | 2 | 499 | |||||
| Gains/(losses) on cashflow hedges, net of tax | (7) | (7) | (7) | ||||||
| Currency translation adjustment | (25) | (25) | (25) | ||||||
| Total recognised income | 0 0 | (25) | (7) | 0 | 497 | 465 | 2 | 467 | |
| Final dividend previous year | (202) | (202) | (202) | ||||||
| Appropriation of net income | 669 | (669) | 0 | 0 | |||||
| Interim dividend current year | (122) | (122) | (122) | ||||||
| Repurchases and cancellation of shares | (5) | (106) | (195) | (306) | (306) | ||||
| Share based compensation | 12 | 12 | 12 | ||||||
| Other | 0 | 3 | 3 | 0 | 3 | ||||
| Total direct changes in equity | (5) | (106) | 0 | 0 | 489 | (993) | (615) | 0 | (615) |
| Balance at 27 September 2008 | 177 | 876 | (107) | (29) | 489 | 375 | 1,781 | 22 | 1,803 |
The movements in the intangible assets are as follows:
| 2008 | 2007 | |
|---|---|---|
| € mil | € mil | |
| Balance at 1 January | 2,119 | 1,785 |
| Additions | 62 | 283 |
| Disposals | 0 | (2) |
| (De)consolidations | 1 | 68 |
| Exchange rate differences | (12) | 0 |
| Amortisation and impaiments | (66) | (51) |
| Balance at end of period | 2,104 | 2,083 |
The comparative figures relate to the nine month period ended 29 September 2007
The closing balance of the period as at 27 September 2008 relates to Goodwill for an amount of € 1,830 million and Other intangible assets of € 274 million. No significant acquisitions have occurred during Q3 2008.
The movements in property, plant and equipment are as follows:
| 2008 | 2007 | |
|---|---|---|
| € mil | € mil | |
| Balance at 1 January | 1,785 | 1,678 |
| Capital expenditures | 193 | 289 |
| Acquisitions | 1 | 31 |
| Disposals | (9) | (7) |
| Exchange rate differences | (34) | (13) |
| Depreciation and impairments | (200) | (206) |
| Transfers to assets held for sale | (1) | (2) |
| Balance at end of period | 1,735 | 1,770 |
The comparative figures relate to the nine month period ended 29 September 2007
Capital expenditures of € 193 million include expenditures within Express of € 147 million and within Mail of € 42 million. These relate mainly to investments in depots and hubs, vehicle replacements and sorting machinery.
Included in depreciation and impairments are impairment charges of € 7 million relating to the impairment of assets of "Postkantoren B.V." as reported in Q1 2008.
On the balance sheet, the pension assets and pension liabilities of the various defined benefit pension schemes have been presented separately. The positive net movement in the pension assets of € 92 million and pension liabilities of € 58 million amounted to € 150 million, mainly due to contributions to the pension fund and contributions for the early retirement plan.
The net debt is specified in the below table.
| 27 Sep | 29 Sep | |
|---|---|---|
| 2008 | 2007 | |
| € mil | € mil | |
| Short term debt | 831 | 640 |
| Long term debt | 1,844 | 1,286 |
| Total interest bearing debt | 2,675 | 1,926 |
| Cash and other interest bearing assets | (636) | (323) |
| Net debt | 2,039 | 1,603 |
| * Net debt do es not include adjustments for o perating leases and pension liabilities that |
are incorporated in the def initio n o f to tal debt used f or credit rating purposes. In the first three quarters of 2008, the net debt position increased with € 250 million compared to 31 December 2007 (€ 1,789 million). This increase was mainly the result of higher long term debt following the issue of the £ 450 million bond in August 2008, dividend payments and the share repurchases. The net debt position as of December 2007 included the € 650 million bond which was issued in November 2007.
The provisions consist of long term and short term provisions for restructuring, claims and indemnities and other employee benefits. Total provisions decreased from € 362 million as per 31 December 2007 to € 305 million at 27 September 2008. The withdrawals of € 86 million mainly relate to restructuring payments of € 27 million within the Mail division (due to outflow at delivery), settlement of the exit fee of € 20 million relating to the transfer to Parcelnet Ltd. of the contract underlying the terminated UK parcel operations of the Mail division and payments relating to other employee related obligations of € 8 million and settlement of insurance claims with clients of € 9 million.
The increase in provisions from 29 September 2007 to 1 January 2008 relates almost entirely to the € 110 million Master plan provision added in Q4 2007.
| 2008 | 2007 | |
|---|---|---|
| € mil | € mil | |
| Balance at 1 January | 362 | 250 |
| Additions | 43 | 53 |
| Withdrawals | (86) | (65) |
| (De)consolidations | (1) | 2 |
| Other/releases | (8) | (14) |
| Exchange rate differences | (5) | 0 |
| Balance at end of period | 305 | 226 |
The comparative figures relate to the nine month period
ended 29 September 2007
The share repurchase programme of € 500 million as announced on 30 July 2007 has been fully completed in Q3 2008. In Q3 2008, the remaining shares with a total value of € 8 million (340,393 shares) were repurchased. The total value of shares repurchased in 2008 amounted to € 306 million (12.2 million shares).
All shares repurchased have already been cancelled.
| Aggregated averages and numbers at period end (in millions) |
27 Sep 2008 |
29 Sep 2007 |
|---|---|---|
| Number of issued and outstanding shares | 360.0 | 391.8 |
| Shares held by the company to cover share plans | 1.1 | 1.7 |
| Shares held by the company for cancellation | 12.6 0 | |
| Average number of shares | 365.2 | 385.6 |
| Average number of diluted shares | 1.7 | 2.0 |
| Average number of shares on a fully diluted basis | 366.9 | 387.6 |
The headcount at the end of the quarter as well as the average number of full time equivalents is specified in the table below:
| 2008 | 2007 | |
|---|---|---|
| Express | 75,521 | 74,249 |
| 83,526 | 81,319 | |
| Other Networks | 1,391 | 1,406 |
| Non-allocated | 262 | 237 |
| Employees at period end | 160,700 | 157,211 |
| Express | 70,748 | 70,376 |
| 42,284 | 41,870 | |
| Other Networks | 1,130 | 1,237 |
| Non-allocated | 255 | 226 |
| Average FTE's up to and incl. the period | 114,417 | 113,709 |
The average number of full time equivalent working with TNT Express as at 27 September 2008 was 70.748 being an increase of 372 staff (0.5%) compared to the same period in 2007. The highest increases have occurred to support the business growth and expansion.
The average number of full time equivalents working with TNT Mail as at 27 September 2008 was 42,284 being an increase of 414, the result of a decrease of 565 in Mail NL staff at Operations due to declining volumes and efficiency improvement in Operations, helped by stimulated outflow at delivery and an increase due to expansion in EMN Germany and UK.
On 16 October 2008, TNT issued a trading statement: trading conditions in TNT's European Express business have significantly worsened in September and, based on the volume patterns in the first two weeks of October, TNT expects this pressure to continue in the fourth quarter.
Monday 16 February 2009 Publication of 2008 fourth quarter and full year results
Wednesday 8 April 2009 Annual general meeting of shareholders
Monday 4 May 2009 Publication of 2009 first quarter results
Monday 27 July 2009 Publication of 2009 second quarter and half year results
Monday 2 November 2009 Publication of 2009 third quarter results
Additional information available at http://group.tnt.com
Director Investor Relations Phone +31 20 500 62 41 Email [email protected]
Andrew Beh Deputy Director Investor Relations Phone +31 20 500 8717 Email [email protected]
Manager Investor Relations Phone +31 20 500 8514 Email [email protected]
Group Director Communications Phone +31 20 500 6141 Email [email protected]
Senior Press Officer Media Relations Phone +31 20 500 6224 Email [email protected]
Cyrille Gibot Senior Press Officer Media Relations
Phone +31 20 500 6223 Email [email protected]
TNT N.V. Neptunusstraat 41-63 2132 JA Hoofddorp P.O. Box 13000 1100 KG Amsterdam Phone +31 20 500 6000 Fax +31 20 500 7000 Email [email protected]
Some statements in this press release are "forward-looking statements". By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside of our control and impossible to predict and may cause actual results to differ materially from any future results expressed or implied. These forward-looking statements are based on current expectations, estimates, forecasts, analyses and projections about the industries in which we operate and management's beliefs and assumptions about future events. You are cautioned not to put undue reliance on these forward-looking statements, which only speak as of the date of this press release and are neither predictions nor guarantees of future events or circumstances. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.