Global express delivery firm TNT Express will present its third quarter results at the end of October 2011 yet, but it is already forecasting an operating performance for the period that reflects the negative impact of a slow demand, reduced capacity, and falling freight rates in the Asia-Europe trade.
TNT Express said that while trade in Europe, the Middle East, and Africa (EMEA) was relatively resilient, its Asia-Pacific profitability has suffered, and its China revenue was offset by general and wage cost inflation.
In the Americas, Brazil, though its operational quality continued to improve, posted revenue that was still “not sufficient to cover the past loss of major customers.”
Given the “challenging trading environment,” TNT revised its outlook for 2011. It predicts “muted growth” for its EMEA revenue, with an underlying operating margin of 8 percent to 9 percent.
For the Asia-Pacific market, the weak trend in the first half of the year is seen to carry over into the second half, and the company plans to expand its intercontinental capacity exposure to make up for the Asia-Europe slack.
The Americas’ continuing negative performance will be addressed “through a full range of corrective measures,” the company said.
Other networks are forecast to perform somewhat below the prior year.
TNT said it plans to support its cash flow by tightening capital expenditure, improving working capital management, and implementing cost savings.
Photo from TNT Express
