TNT, the Dutch postal and express delivery business, said it remained cautious but expected a “modestly improving” business environment as it reported a recovery in first-quarter net profit and higher sales.
The jump in net profit to €143m ($189m), compared with €76m a year earlier, came as the group continued to cut costs and was partly the result of increased working days in the period. Adjusted for the differing holiday periods, volumes of mail in its postal business fell almost 10 per cent – faster than the 7-9 per cent decline forecast for the full year.
TNT’s domestic and European postal operations have been put under pressure by the shift to digital communications and, in its home market, a full year of competition from lower-cost rivals following the liberalisation of the Dutch market. Its express delivery business is growing, but also suffered in the recession.
The group last month said it would spin off its mail operations with a view to a possible tie-up with a rival or listing of the business. The process of internally “carving out” the postal business was expected to take several months, Henk van Dalen, chief financial officer, said on Monday. He also said the group still expected the decline in postal volumes to remain in the 7-9 per cent range for the full year.
In spite of the improved results, which beat analysts’ expectations, TNT struck a cautious note in its outlook.
“Although TNT assumes a modestly improving business environment in 2010, the global economic recovery remains fragile,” Peter Bakker, TNT’s chief executive, said. “A continued focus on costs and cash will therefore remain essential.”
Group revenues rose 12 per cent to €2.75bn in the quarter, of which €1.6bn came from the express division, where sales rose 15 per cent. TNT said its express volumes in March had returned to levels seen in the first quarter of 2007, before the financial crisis, although it believed that part of this was driven by the re-stocking of supply chains.
TNT shares were trading 1.5 per cent lower at €22.74 in morning trading in Amsterdam.
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