Admittedly, one-off items related largely to the express business’s demerger
from the TNT group made headline numbers look grim.
But even with these stripped out, operating profit was almost a third lower
than in 2010 at €230m, while revenues were less than 3 per cent higher at
€7.3bn. Flat earnings in Europe/Middle East/Africa were offset by losses in
Asia-Pacific and the Americas.
Share price
TNT executives did their best, emphasising expansion opportunities in
business-to-consumer deliveries – which might give the company a €38bn
European market to play in by 2015, compared with a €20bn sector today.
Outside Europe, there was talk of finding partners, while turnround targets
– including the second half of 2012 for Brazil – were reiterated.
But it is hard to see a strategy that will get the TNT Express share price –
just €6.30 a few days ago – to €9 without bid interest anytime soon. Clean
earnings per share in 2011 were about 20 cents, and might approach 30 cents
by 2012 and 45 cents in 2013. The current offer implies multiples of 30
times and 20 times respectively – compared with logistics sector averages of
about 19 and 17 times.
Antitrust issues
That, though, doesn’t mean UPS will get home at this price. TNT Express itself
is talking of €150m of fixed cost reductions in its Emea business, and
synergies overall for UPS could be anywhere up to €500m.
There may, of course, be antitrust issues to negotiate: TNT Express has 17 per
cent of the European B2B express market, compared with about 10 per cent for
UPS and 16 per cent for Deutsche Post/DHL. But these can probably be
remedied by limited disposals. For the moment, at least, TNT shareholders
should sit tight.
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