Bruce Barnard, Special Correspondent | Feb 21, 2012 8:43AM EST
TNT Express, the Dutch express delivery company in takeover negotiations with UPS, plans to refocus on its core European market, trim international operations, and reduce its freighter fleet to stem rising losses and return to profitability.
The strategic U-turn came as TNT reported a $225 million net loss in the fourth quarter of 2011 against net income of $5.2 million a year ago.
TNT, which rejected an initial $6.4 billion offer from UPS, said it will reduce its long-haul cargo fleet and strike cooperation agreements with leading airlines to carry its parcels on intercontinental routes. The carrier will also seek partnerships to provide domestic express services in Brazil and China.
“Our franchise in Europe is unrivalled, with its unique service portfolio, dense networks and leading presence in all countries. This franchise gives us confidence for the future,” said TNT Express CEO Marie-Christine Lombard. “Our European cover and density enable us to transform our operating model and reduce fixed costs by $169 million by the end of 2013.”
TNT made an operating profit of $465 million in Europe in 2011 but lost $468 million in the Americas and $99 million in the Asia/Pacific region. European customers account for around two-thirds of TNT’s revenue.
The fourth quarter net loss was due to one-off charges of $209 million, including a $170 million impairment on its Brazilian operations. There was an operating loss of $135 million on revenue of $2.4 billion.
TNT sank to a full year net loss of $351 million from an $86 million profit in 2010. The company reported operating loss of $137 million on $9.41 billion in revenue, a 2.7 percent year-over-year increase. Underlying operating profit, excluding one-off charges and currency movements, fell 30 percent year-over-year to $296 million.
-- Contact Bruce Barnard at brucebarnard47@hotmail.com.