TNT mail unit losses rise ahead of split

 
City A.M. Reporter
DUTCH delivery group TNT yesterday reported a worse-than-expected performance in its mail unit, adding to the woes in its global express division, in what are set to be its last earnings before it splits the units into two companies.

The company’s postal unit missed first-quarter operating profit estimates, disappointing investors already worried about the express division.

First quarter profits before tax for the mail division were down 33 per cent to €120m (£107m), while express profit fell by 31 per cent to €49m. Europe’s second-largest mail and delivery group after Deutsche Post first issued a profit warning on 8 April after a poor first quarter.

TNT will split into two listed units at the end of May subject to a shareholder vote. The company’s express division has so far struggled to implement price hikes to offset higher fuel costs.

This is in contrast to rivals such as UPS, which last week said there was little resistance from its customers to higher rates brought on by higher fuel costs, allowing it to beat quarterly earnings estimates.

In December 2008, TNT was revealed as a possible bidder in a part-privatisation of the UK’s Royal Mail, after a report by former-Ofcom deputy chair Richard Hooper recommended that the postal service look for strategic partnerships to help modernise its operations.