TNT considers sale of forwarding unit, 2nd-quarter profit flat
Netherlands-based postal, express and logistics group TNT N.V. Monday said it is considering whether to sell its freight forwarding division in addition to the contract logistics division that is already on the market.
The decision to sell is based on the outcome of an analysis of interdependencies between the freight forwarding and express divisions, TNT said.
TNT Freight Management was created by the acquisition of Sweden’s Wilson Logistics Group for $320 million in August 2004.
TNT also said it expects to announce the sale of its contract logistics group during the third quarter.
TNT has been shopping the capital intensive, low-growth logistics unit since December. Media speculation on possible buyers has centered on UPS and Deutsche Post, but many industry analysts dismiss the possibility of a logistics company taking on TNT Logistics. UPS officials make it clear they are not interested in an acquisition under the current structure.
According to the Financial Times, the leading candidates to acquire TNT are private investment funds Apollo Management in New York and PAI, a European buyout firm. An independent source and the Financial Times also say the Blackstone group has been closely involved in negotiations with TNT.
TNT reported second quarter net income of 209 million euros ($267 million), down 0.5 percent from 210 million euros in the same quarter 2005.
TNT’s results for 2005 have been adjusted to account for its “Focus strategy,” which covers the planned divestment of its logistics unit; the transfers of Innight from the logistics to express accounts and Cendris UK from mail to express; and the reporting of freight management as a separate business segment.
Operating income increased 10.7 percent for the second quarter to 342 million euros ($437 million), from 309 million euros. Revenue improved 5.8 percent to 2.64 billion euros ($3.37 billion), compared to 2.50 billion euros a year ago.
TNT Express saw its operating income rise 15.8 percent in the second quarter to 153 million euros ($195 million) compared to 133 million euros in the second quarter 2005. Express revenue rose 9.5 percent to 1.47 billion euros ($1.88 billion) from 1.35 billion euros.
Operating income for TNT’s mail segment rose 4 percent to 209 million euros ($267) after a 2.8 percent increase in revenue to 985 million euros ($1.26 billion).
TNT Freight Management posted operating income of 5 million euros ($6.4 million), up 66.7 percent compared to 3 million euros a year back. Revenue increased 7.2 percent to 208 million euros ($266 million) from 194 million euros.
“I am very satisfied with our strong performance in Q2 and the first half of 2006. Our ‘Focus on Networks’ strategy is delivering strong growth and record margins in Express, and robust performance in Mail,” said Peter Bakker, TNT’s chief executive officer. “All-in-all, 2006 is expected to be a strong year for TNT.”
For the year to date, TNT posted a net income of 414 million euros ($528.5 million), up 2.7 percent from 403 million euros after the first six months last year. Operating income was up 12.4 percent to 671 million euros ($856.6 million) with revenue improving 7.3 percent to 5.3 billion euros ($6.76 billion).