TNT Express NV (TNTE), the Dutch express- delivery company that United Parcel Service Inc. (UPS:US) is bidding to buy, reported second-quarter profit that was double analyst estimates as cost-saving measures took effect and sales rose.
Net income surged 10-fold to 40 million euros ($49 million) from 4 million euros a year earlier, Hoofddorp, Netherlands- based TNT said in a statement today. The average estimate of three analysts surveyed by Bloomberg was 20.3 million euros. Revenue increased 1.7 percent to 1.83 billion euros.
“Results are much better than expected, especially in Europe, but also in Asia-Pacific,” Andre Mulder, an Amsterdam- based analyst at Kepler Capital Markets who recommends buying TNT shares, said by phone. “I had expected them to be a bit distracted due to the takeover process, but that happened not to be the case.”
European Union antitrust regulators are reviewing UPS’s $6.8 billion offer for TNT and will rule by Dec. 12. The combined company will about match the size in Europe of Deutsche Post AG’s DHL, the regional market leader. Atlanta-based UPS, the world’s biggest (UPS:US) package-delivery company, reiterated on July 27 that it expects the purchase to be completed in the fourth quarter.
TNT rose as much as 0.9 percent to 8.89 euros and was trading up 0.4 percent at 9:02 a.m. in Amsterdam. The stock has gained 53 percent this year.
“In Europe, good volume growth underscores the strength of our diversified product portfolio,” Chief Executive Officer Marie-Christine Lombard said in the statement. “Cost savings and revenue-enhancement initiatives also supported profits. Performance in Asia-Pacific and Americas continued to improve as a result of business development and restructuring measures.”
TNT has a target of reducing fixed costs by 150 million euros by the end of 2013, the Dutch company said in February. The program, focused on contracting out some air-shipment capacity and group administration, will include reorganization costs and write-offs of 150 million euros. The timing of some reorganization projects has been “temporarily adjusted” because of the UPS bid, TNT said today, without giving details.
Earnings before interest and taxes in Europe, the Middle East and Africa fell 14 percent to 88 million euros. The Asia- Pacific division posted a 16 million-euro operating profit compared with a year-earlier loss of 8 million euro. The Americas unit’s loss narrowed to 23 million euros from 45 million euros.
Global air-freight prices fell to at $3.60 per kilogram in the second quarter, their lowest in at least two years, according to the Drewry Air Freight Price Index, which analyzes average prices along major trade routes.
European air-freight volume declined the most since 2009 in the second quarter, while in Asia it fell for a sixth consecutive quarter, according to the International Air Transport Association. Declines in trade volume between the two regions prompted TNT Express to say in May that it would consider further reductions of air-freight capacity on those routes.
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