TNT Posts Higher Quarterly Net, Forecasts Dutch Mail Slump

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TNT NV, the Dutch mail carrier that’s planning to spin off its express business, reported higher fourth-quarter profit and forecast Dutch addressed mail volumes will decline as much as 10 percent in 2011.

Net income reached 127 million euros ($174 million), compared with 23 million euros a year earlier, the Hoofddorp, Netherlands-based company said today in a statement. Sales, which now exclude contribution from the express unit, were almost unchanged at 1.2 billion euros.

TNT, which had a legal monopoly on letter delivery in its home country until 2009, aims to eliminate 11,000 jobs as customers turn increasingly to domestic competitors or e-mail. The mail unit’s addressed volume in the Netherlands will probably drop by a range of 8 percent to 10 percent this year, due to substitution and competition, TNT said today.

“The years 2011 and 2012 will be the most concentrated years of the restructuring, requiring substantial cash outflow and investment,” Chief Executive Officer Peter Bakker said in the statement. “Declining volumes will not be fully offset by savings from this redesign in these years.”

TNT fell as much as 70 cents, or 3.4 percent, to 19.76 euros and traded at 19.97 euros as of 12:15 p.m. in Amsterdam, valuing the company at 7.5 billion euros.

Snow, Strikes

“The trading outlook is still uncertain, but early on in the year,” Andy Chu, a London-based Deutsche Bank AG analyst, wrote in a note today. The forecast of 8 percent to 10 percent still is a large decline, although explained by the impact of the second year of full postal liberalization, he added.

Fourth-quarter underlying earnings before interest and taxes at the mail division dropped 18 percent to 184 million euros. Business in the three months ended Dec. 31 was hurt by snowy weather and walkouts by postal workers before Christmas.

The express business, Europe’s second-largest after Deutsche Post AG’s DHL division, said Ebit on that basis rose 1.1 percent to 95 million euros. Express aims for full-year underlying operating income of as much as 420 million euros and sales of as much as 7.5 billion euros, TNT said.

TNT began internally dividing the express unit from the postal business in April 2010. Bakker reiterated today that TNT plans to establish two separate listed companies rather than seek buyers for the express business.

’On Schedule’

“Preparations for the separation are on schedule,” Bakker told reporters today. “We expect to have the listings of the two companies ready by the end of May, after the shareholders meeting” on May 25.

The 430 million-euro savings target will be reached but maybe a bit later than planned, the CEO said. “I can’t give you an exact timeline on that.”

TNT proposed a dividend of 29 cents a share, bringing the full-year pay-out to 57 cents. Mail’s dividend guidelines for the next few years will include a pay-out of around 75 percent of underlying net cash income, with a minimum of 150 million euros a year, TNT said.