TNT stock price falls following earnings warning

Just prior to announcing the board of TNT Express had approved its sale to FedEx, the company issued an investor alert warning shareholders that third quarter 2015 profits would be “materially lower” than in the third quarter of 2014.    TNT Express N.V. issued an investor alert Monday, warning shareholders that third quarter 2015 earnings would be “materially lower” than in the third quarter of 2014.
   The Netherlands-based logistics provider attributed the decreased adjusted operating profit primarily to economic volatility in Brazil, China and Australia, as well as competitive pressures in Australia, which were exacerbated by a drop in commodity markets and ongoing costs associated with modernizing the company’s infrastructure throughout the country.
   “The Domestics segment’s performance was also affected by substantially lower margins in TNT’s French operations,” TNT added.
   TNT reported an operating loss of 47 million euros (U.S. $41.8 million) and adjusted operating income – the figure quoted in its profit warning – of 50 million euros, in the third quarter of 2014.
   Last quarter, the company reported operating income and adjusted operating income of 19 million euros and 41 million euros, respectively, on revenues of 1.76 billion. At the time, TNT reiterated its current financial year and longer-term guidance, saying it anticipates restructuring charges associated with the FedEx merger of between 25 million euros and 30 million euros in the third quarter of 2015.
   The announcement came just before the company’s board and investors met in Amsterdam to discuss the pending public purchase offer from FedEx Corp., which TNT’s executive board and shareholders unanimously approved. The $4.9 billion takeover bid will still be contingent upon approval from European regulators, which may be more difficult than initially expected as recent reports claim the European Commission could seek concessions from FedEx such as asset sales as conditions for the deal.
   TNT’s stock dipped 1.2 percent to 6.76 euros (U.S. $7.58) per share on Monday, according to the Wall Street Journal, 15.5 percent lower than the FedEx offer valuation of 8 euros a share.