TNT (AMS:TNTE) today announced plans to slash about 4,000 jobs and increase its focus on Europe. The company’s decision follows the failed $7 billion takeover by United Parcel Service, Inc. (NYSE:UPS).
The Dutch package delivery firm will trim around two-thirds of the jobs in Europe as the continent is facing tough economic challenges. TNT express generates the bulk of its sales from the region. About 4.6 billion, or 63 percent, of 7.3 billion euros in 2012 revenue came from Europe, the Middle East and Africa.
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By 2015, the company expects to post an operating margin of nearly 8 percent and sales are expected to increase by approximately 2 percent by 2015.
“The business we have is the business we have, in terms of its geographic scope, and that’s where we are going to focus, improve, and try to get the best possible margins,” interim chief executive Bernard Bot said. Tex Gunning will replace Bot who will return to his chief financial officer job soon. He said that the TNT (AMS:TNTE) express is determined to move ahead as an independent company after a failed bid by United Parcel Service, Inc. (NYSE:UPS).
In February, the company announced plans to sell domestic units in Brazil and China. The process of the sales in China is under review and the company is prepping for the same in Brazil.
Rabobank analyst Philip Scholte said that the company cannot rely on the recovery of Europe as its margins are continuously deteriorating and they will have to look for other options to keep up their profit. In this context, the job trimming was the only thing left to do.
Analyst Andre Mulder at Kepler & Cheuvreux expressed his disappointment in a note regarding TNT (AMS:TNTE), which has not given any detail about the disposal in Brazil and China. He further stated that business in the United States was not profitable and that in China could only contribute a small profit.
In January, European Union Commission restricted United Parcel Service, Inc. (NYSE:UPS)’s bid to acquire TNT express, with rising concerns that UPS will have very commanding position in the market after this.
TNT (AMS:TNTE) express is also seeking opportunities to bring down its exposure to intercontinental capacity, which incorporates sharing agreements, subleases and lease termination. According to Bot, to save on the costs the company can drop five major aircraft. The company has 45 planes in its European network.