Chillin' out till it needs to be funded
Even as the Dutch company created after a split from Dutch Post was expected to report weaker Q4 Financials, the losses were a little higher than expected as TNT Express stuck to annual revenues of EUR 7.25 bln without virtually any sequential growth in the four quarters and a below 3% growth on year, the Brazilian Business mirrored its 60 mln Euro loss for the quarter in the consolidated group financials. Brazil and China assets, presented as fait accompli could actually discourage markets from supporting a higher bid by UPS on the rebound. TNT reported annual EBIT Loss of 105 mln Euros against a Eur 180 mln profit in 2010 for the year as a whole, battling the same problem as FEdex, who despite profits of $250 mln per quarter generateds low Operating Cash.
The Americas generated a 360 mln operating loss (EBIT) and Europe a 356 mln profit, while APAC made a hefty ( for the rregons volumes) 76 mln Euro loss. Q3 revenues were Euro 1.77 bln and Q4 Euro 1.87 bln
The company has a 20% share in the 2007 acquired Brazil ops and is planning to generate a third of its 150 mln Euro savings by pruning the 50 odd fleet by 10-12 planes and reducing inter continental capacity by half, riding other preferred suppliers internationally to claw back profitability according to the Bloomberg team closely following the results and running analyst opinion for a Fedex bid.
The company also plans 150 mln in restructuring and write offs this year.
The Prospect of a counter bid from Fedex,, thus is more of a wish from TNT than a fait accompli. Fedex has made astring of acquisitions in Emerging markets as
well, incl Mexico where TNT Express made two purchases and India in 2007 and many others such as AFL and Unifreight in 2010 (India) and Multipacj (Mexico), though none of the dozen odd acquisitions more than $100 mln, though they did spend $400 mln on Tianjin Datian in China. In this scenario it seems more likely Fedex will not increase the debt load preciously balanced in this sector at less than 10% of equity, and stay with a carve out bid for Brazil and China operations despite tehir loss making result.
However evena fter the losses, TNT Express shares tradd near the Friday ADS/aDR closing of $12.60 at Euro 10/- Deutsche Post DHL is actually at a lower market share in parcels only in Europe though it has extensive frieght businesses wway ahead of the US leader, UPS with an integrated 17% market share in the continent