TNT reported Monday its net profit grew 21.5 percent in 2010 to $480 million but Europe’s second largest post and express delivery company saw earnings pull back in the fourth quarter as the company prepares to spin off its profitable and fast growing express unit.
The full-year improvement over 2009 came as revenue grew 8 percent higher to $15.5 billion.
The mail business saw fourth quarter underlying operating profit shrink 19 percent to $253.5 million, however, while the express profit grew nearly 5 percent to $146.6 million in the last three months of the year.
The full-year mail division profit fell 22 percent to $658 million on a 2 percent rise in revenue, to $5.9 billion. Express earnings tripled to $247 million on a nearly 14 percent gain in revenue to $9.6 billion.
TNT said it expects mail volume to shrink 8 to 10 percent in 2011 due to increased competition in the second year of a fully liberalized Dutch postal market and ongoing substitution by electronic communication.
Mail volume declined 9.2 percent in 2010 due partly to the first postal strikes in 25 years and harsh winter weather in the Netherlands.
“The years 2011 and 2012 will be the most concentrated years of the [mail] restructuring, requiring substantial cash outflow and investment,” said CEO Peter Bakker. “Declining volumes will not be fully offset by savings from this redesign in these years.”
Express volumes recovered to pre-crisis levels in 2010 “although the mix and pricing environment has been challenging throughout.”
TNT is targeting express revenue of $10 billion to $10.3 billion this year and underlying operating profit between $548 million and $575 million.
Bakker said preparations to separate the mail and express units “are on schedule.”
“We expect to have the listings of the two companies ready by the end of May”, he said.
TNT plans to retain a 29.9 percent stake in the express business. FedEx and UPS are the most likely bidders for a majority shareholding.