Dutch mail company TNT posted a 37% drop in fourth-quarter operating profit, cut its dividend, and said it did not expect any real improvement in economic conditions in 2009.
Europe's second-largest mail and express delivery company after Deutsche Post forecast business volumes would continue declining sharply for the rest of the year.
“I do not look at this economic crisis as a temporary blip,” chief executive Peter Bakker told reporters on Monday. “Some of the changes in behavior that we see occur amongst our customers might well stick.”
“Many customers have decided to use road instead of air transport, accepting that delivery will take one day longer but at reduced cost. The speed and the global nature at which the crisis hit us all will make people more prudent going forward.”
TNT, which has expressed interest in a stake in Britain's state-owned Royal Mail, said earnings before interest and tax (EBIT) came in at €160 million ($207 million) in the three months to end-December, hit by a downturn in demand for its express delivery services.
The company cut its final 2008 dividend to €0.71 per share, after saying in December it would pay an unchanged €0.85. It also said it would pay the dividend in shares. Both moves disappointed analysts.
TNT said it had experienced sharp volume declines in the second half of 2008 at its express delivery unit, with its exposure to global trade flows, and expected the trend to continue in 2009 and weigh on the division's revenues.
“Express remains the problem at this moment and the company needs to adjust its costs more than previously anticipated,” said SNS Securities analyst Danny van Doesburg.
TNT's mail business performed robustly in 2008 but it expected addressed volumes in the Netherlands to show an increasing rate of decline in 2009.
The firm said it was targeting cost savings of about €400 million in 2009, that would involve the reduction of about 1,000 jobs globally in its express delivery service, which it said it had been gradually announcing.
TNT also said on Monday it had acquired LIT Cargo, an express delivery company in Chile, as it seeks to expand in South America.
TNT competes with US rivals United Parcel Service and FedEx. Its peers are also suffering from the downturn, with UPS, an economic bellwether, saying in February that the global economic decline had hit package volumes.
Shares in TNT trade at 8.4 times estimated 2009 earnings, compared with 12.8 times for FedEx, 15.3 times for UPS and a 10.5 multiple for Deutsche Post. (Reuters)