Bruce Barnard, Special Correspondent | Oct 07, 2011 9:42AM EDT
TNT Express issued a profit warning this week because of weak demand on Asia-Europe routes, the continued losses in the Americas and rising cost inflation in its key Chinese market.
The Amsterdam-based delivery company trimmed its outlook for Europe, the Middle East and Africa to muted revenue growth with an underlying operating margin of 8 to 9 percent from modest growth and a margin of at least 9 percent forecast in August.
Weakening Asia-Europe demand has resulted in spare aircraft capacity and lower freight rates, TNT said in an unscheduled trading update ahead of the release of third quarter earnings on October 31.
The troubled Brazilian unit improved its performance but revenue didn’t cover the loss of major customers following a bungled integration of two acquisitions. Progress has been made toward turning the Brazil operation around by the second-half of 2012 and a value assessment will be made in the fourth quarter of 2011.
TNT said planned cost savings of $65 million a year are under way and it expects related charges and write-offs of $58.5 million-$84.5 million.
TNT, which listed in Amsterdam after splitting from Post NL, the former Dutch state mail company, in May, booked second quarter profit of $5.7 million, down from $45 million in the 2010 period. Operating profit was 8.1 percent lower at $112 million on revenue of $2.9 billion.
--Contact Bruce Barnard at brucebarnard47@hotmail.com.