Discussing the third-quarter and year-to-date results, TNT CEO Tex Gunning said that while the Outlook Strategy (instituted following the European Commission decision to block a takeover by UPS at the end of 2012) had begun to pay off in terms of improvement in adjusted operating income, both he and CFO Maarten de Vries were clear that the company needed to improve efficiency and service quality. They also both indicated that TNT’s focus over the next four years would be on improving its European road network. “Our competitors’ strengths are in their road networks,” said Mr de Vries as he announced a EUR185 million investment. “We will focus on 12 of our 19 international road transit hubs and will open a new hub in Madrid. The investment will be spent on software and tools for route planning, and trailers.”
Looking briefly at TNT’s five geographical reporting segments:
- Europe Main: Adjusted revenues in the company’s core European region were down slightly, impacted by the slower European economy, pricing pressures, and “contract pruning” in Italy.
- Europe Other & Americas: Operating income was unchanged from 3Q13 despite the impact of price pressure in some markets, and difficult trading conditions in Russia and Ukraine.
- Asia, Middle East & Africa (AMEA): TNT said “adjusted performance improved as planned, supported by better revenue quality.” The company also noted that if the results were further adjusted for the sale of the domestic China business, revenue would be up 9.7%.
- Pacific: TNT’s Pacific region, which is made up mostly of its Australia business, reported better performance as a result of higher volumes and indirect cost savings
- Brazil Domestic: Following its failure to sell the money-losing domestic Brazil business, TNT made it a separate reporting segment at the beginning of this year, and is finally seeing better results, with a second consecutive quarter of adjusted operational profit.