TNT intends to sell its logistics business, representing approximately €3.4 billion in annual revenues, subject to shareholder approval.
The intended sale is expected to be completed in the second half of 2006. The group will retain a limited amount of the logistics activities that clearly fits its core network strategy. These businesses include the In-Night and hi-tech spare parts operations, which together represent approximately €300 million in annual revenues.
TNT Freight Management, representing approximately €800 million in annual revenues, is an essential element of TNT's global network, connecting in particular Asia and Europe, and therefore is not part of the activities to be sold.
The announcement is one of TNT’s initiatives to sharpen its strategic focus on its mail, express and freight management businesses. The company also plans to return €1 billion to shareholders through a share buyback program that begins today.
CEO Peter Bakker said that designing, implementing and running delivery network businesses is TNT’s core competency. “We have very strong network platforms to build on - particularly our fast growing Express and European Mail Networks (EMN) businesses and our profitable Mail Netherlands business. To underline this, we revise our revenue growth expectations for our Express division upwards to the 10% - 15% range over the medium term versus ‘high single digit’ previously. Additionally, we believe total revenues of our EMN businesses will amount to approximately €1.7 billion, at an operating margin of 10%, in 2012.”
He said that while TNT’s logistics business is a strong operation, it no longer fits with the company’s strategic focus going forward. “Given industry consolidation, we announce today our intention to sell our logistics business. The focus on networks and the exit of logistics will allow simplification of our organisation. In the next few months a plan aimed at further cost reductions will be put together.”
Three new business development initiatives further support TNT's network focus: the announced acquisition of TG+ and advanced negotiations for the acquisition of Hoau Logistics [refer TNT to acquire Chinese Logistics and Spanish express companies] and the start of Phase I of its previously announced Asia Road Network roll-out [refer TNT Express invests in Abu Dhabi and Al Ain, launches road network in Asia]
Together with the recently announced China domestic Express network and the launch of the China/Europe air lane, these initiatives further position TNT as the leading integrated transport provider in this region.
