Boost for TNT as mail strike lures business

DUTCH parcel firm TNT, which is trying to cash in on the disruption caused by the UK&rsquo;s postal strikes, yesterday posted better-than-expected quarterly results due to cost-cutting and highlighted signs of revival in its business parcels arm.<br /><br />TNT, which has lobbied the government to allow it to launch a door-to-door postal service to challenge the strike-hit Royal Mail, said third quarter profits dipped 14.4 per cent to &euro;179m (&pound;162m), although margins recovered to nearly match last year&rsquo;s levels.<br /><br />The group uses the Royal Mail for the so-called &ldquo;final mile&rdquo; of its British postal network, but has been trialling its own door-to-door letter deliveries in several areas including Merseyside, using orange-clad postmen.<br /><br />TNT said UK business-to-business parcel volumes had increased about 10 per cent in the few couple weeks since the strikes by the Communication Workers Union&nbsp; kicked in, but a spokesman said the rise had come too late to affect the third quarter numbers.<br /><br />After the operating margin in its Express parcel division dropped to two per cent in the second quarter from 8.9 per cent a year earlier, TNT posted a margin of 5.1 per cent in the third quarter, on par with a six per cent margin a year earlier.<br /><br />The company cut &euro;128m from costs in the quarter. It has set a 2009 target of &euro;500m and has already achieved &euro;368m of that, the company said.<br /><br />&ldquo;TNT in the third quarter has delivered clearly better-than-expected results, primarily thanks to a solid execution of its cost-saving plans,&rdquo; Petercam analyst Thijs Berkelder said.<br /><br />The company has been trying for several quarters to improve the profitability of the Express business while attempting to slim down its Dutch mail unit.<br /><br />&ldquo;In this quarter, the trading environment has stabilised further, with some early signs of positive underlying developments,&rdquo; chief executive Peter Bakker said.