TNT is pushing ahead with plans to complete the demerger of its express and mail businesses on 25th May despite volatile trading conditions in the express market in the first 12 weeks of the year.
Once shareholder approval has been obtained, TNT Express will be floated off as a separate business on NYSE Euronext Amsterdam, while TNT Post will be renamed PostNL. The group will retain a 29.9 per cent stake in TNT Express.
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The businesses are being separated owing to their increasingly divergent strategic profiles and the limited synergies. The group believes that separation will enable greater focus and transparency as well as facilitating participation in possible sector consolidation and acquisitions.
The group said that year-to-date trading conditions in the express market had been much more volatile than had been previously assumed.
“Volatility has been caused by a sharp increase in the oil price, social and political unrest and natural disasters. This was exacerbated by unforeseen effects from the integration issues in Brazil. The total underlying operating income for the first 12 weeks is around €25 million lower than last year.”
European activities were performing at satisfactory levels. However, the oil price increase had led to lower international express volumes with related under-utilisation of the air network as well as a lag in the recovery of higher fuel costs.
It now expects the EMEA revenue to grow modestly in 2011, with an underlying operating margin in line with last year – nine per cent or slightly above. It is looking for a partial recovery in Asia-Pacific on the back of now-improving intercontinental volumes. And it said Americas’ continuing negative performance was being addressed through a full range of corrective measures.