Bruce Barnard | May 04, 2010 9:24AM EDT
London – TNT’s net profit nearly doubled in the first quarter on strong gains in expedited shipping demand, but the Dutch express and mail carrier said it remains cautious about what it calls a fragile economic recovery.
TNT’s net profit jumped $190 million from $101 million, and the carrier showed and a 54 percent rise in operating profit to $334 million. But TNT officials believe a substantial part of the demand recover is from restocking of diminished inventories rather than from an improvement in underlying demand.
“We are a bit on the cautious side in our outlook,” TNT Chief Financial Officer Henk van Dalen said.
Revenue increased 12 percent to $3.65 billion, including $2.1 billion from the express division, which expanded sales 15 percent. The express unit’s operating profits rose to $100 million from $30.6 million.
CEO Peter Bakker said express volume in recent weeks has almost returned to levels seen in the first quarter of 2007, before the global economic recession, “though some customer feedback indicates that this is partly driven by re-stocking of supply chains.”
TNT expects express volumes, revenues and earnings to be “well above” 2009 levels, although TNT officials say pricing and yield remains under pressure and costs could expand.
Mail volume, which declined nearly 10 percent in the first quarter, is forecast to fall by 7-9 percent in the full year.
TNT last month unveiled plans to spin off its mail business prompting speculation of an eventual sale of its express unit.