[260212.EN.LOG] TNT Express Shifts From China And Brazil To Focus On European Business

TNT Express plans to reduce its financial exposure to China and Brazil this year through pursuing 'partnership opportunities' in these markets, and to focus instead on its European operations, says CEO Marie-Christine Lombard.

The new corporate strategy would be to connect Europe to the rest of the world with an asset light model, reducing its exposure to fixed intercontinental capacity through cooperation agreements with leading airlines, reports the UK's Transport Intelligence.

It said Ms Lombard did not provide further details in an statement made via a webcast about the company's exact plans for China and Brazil. However, the report said, "One interpretation could be that the disposal of the loss-making operations is on the cards, to be replaced by looser agreements with local players," she said.

Said Ms Lombard: "Medium to long term, I believe in Europe," pointing to the growing B2C market as being a major opportunity for the company, as well as the potential to develop more value-adding solutions for its customers.

The ultimate goal is to raise its operating margin in Europe to between 10 and 11 per cent, up from the present eight per cent. Outside Europe the CEO was targeting a return to profitability, the report said.

On the other hand, according to Ms Lombard, it is not yet clear whether the company will get the chance. According to her, the company can survive as a strong, independent, Europe-focused player. However, the report noted, that "most analysts believe that it is only a matter of time before the company acquiesces to an increased bid," it said. This is in light of the negotiations between TNT Express and UPS continuing.

The comments follow the company posting overall revenue growth of 2.7 per cent to EUR7.2 billion (US$9.6 billion) in 2011. Reported operating income was a loss of EUR105 million, although adjusted operating income (at constant foreign exchange and excluding one-offs) was a EUR228 million profit, a decline of 29.4 per cent compared to the previous year.

The company's performance last year was again impacted by its Brazilian operations. Overall the company saw modest revenue growth with operating income significantly impacted by impairment charges. The company also described the conditions on the Asia-Europe trade as being "challenging".

Source : HKSG, 24.02.12.