Europe-based parcel and logistics operator TNT said that “economic volatility” in Brazil, China and Australia weighed on the takeover target’s third quarter performance.
TNT, which is the subject of a $4.8bn takeover bid by US parcels giant FedEx, said in its latest trading update that the management team “remains focused” on the group’s three to five-year Outlook turnaround and transformation strategy, as presented in February, this year.
Separately, the European Commission is investigating the FedEx-TNT deal and is expected to publish its recommendations before year end.
Commenting on the latest company results, Netherlands-headquartered TNT said: “During the third quarter, TNT made progress in implementing Outlook and continued to achieve underlying revenue growth. Customer satisfaction increased further, fuelled by service improvements and new services.
“However, the economic volatility in Brazil, China and Australia weighed on TNT’s performance in these parts of the world. In its domestics segment, TNT faced competitive pressures in Australia, compounded by the drop in commodity markets, and the ongoing costs of modernising the company’s Australian infrastructure.
“The domestics segment’s performance was also affected by substantially lower margins in TNT’s French operations.”
TNT remains on track to invest about €300m in its transport and IT infrastructure in 2015, in line with guidance. The main infrastructure investments will be completed by the end of 2016.
In view of these factors as well as Outlook-related transition costs, TNT “anticipates that third quarter adjusted operating income will be materially lower than in the same period of last year”.
Restating an earlier advisory that 2015 is a “challenging year of transition” for TNT, the operator said that it expects to achieve year on year improvements from 2016 onwards and to realise the full benefits of Outlook from 2018-2019.
As expected, and extraordinary general meeting of shareholders held today discussed the recommended public offer by FedEx.
The executive board and supervisory board of TNT Express restated their support and recommendation for FedEx’s offer, which is set to provide “compelling benefits and opportunities to TNT’s customers, employees and shareholders”.
TNT will provide more detail on its third quarter performance on October 26.
