Earnings flat, TPG names new logistics chief

Earnings flat, TPG names new logistics chief

TPG, the Dutch global mail and express group, on Monday reported better-than expected second-quarter earnings as it unveiled fresh measures to turn round its underperforming logistics operations.

Net profit was broadly unchanged at 143 million euros ($ 164 million) against $166.8 million in the year-earlier period on revenues 5.8 percent higher at $3.38 billion. Operating profit was down 1.6 percent at $286 million.

TPG also announced that David Kulik, currently managing director of TNT Logistics North America, would head up the logistics division replacing Roberto Rossi, who is leaving the group. Kulik will oversee a series of cost-saving and restructuring measures in the division which has fallen further behind the mail and express operations in the first half of the year.

The company said it will take a one-time charge of $74.8 million for restructuring the logistics business in a bid to secure annual cost savings of $63 million. It might also take a goodwill charge of just over $200 million this year and write down assets by $23 million. " I am confident that major improvements will be made in the future," chief executive Peter Bakker said.

Operating profit at the logistics unit fell 43 percent in the first half to $47 million from $101 million last year as margins shrank from 5.4 percent to 3.6 percent. Logistics accounted for 29 percent of TPG revenues last year but contributed only 8 percent of operating earnings.

The express division, by contrast, boosted profit by nearly a fifth to $136 million in the six months to June 30 and operating margins are set to rise above 6 per cent for the first time this year.

The resilient second quarter boosted first half revenues by 5.7 percent to $6.7 billion and left operating profit broadly unchanged at $581 million against $589 million in the first half of 2002.

The company forecast its full-year net profit before pension costs will rise by five percent in line with earlier estimates.