RNS Number:9381H
TNT Post Groep NV
27 March 2000
TPG Annual Results 1999
TPG: NET INCOME GROWTH OF 12.6% DUE TO EXCELLENT SECOND HALF OF 1999
TNT Post Group N.V. (TPG) announces a net income of EUR 419 million for
the year 1999 which represents a growth of 12.6%, exceeding the outlook
given at the time of the interim results on 31 August 1999.
Assuming stable exchange rates, the TPG Board of Management expects to
achieve a net income growth in the year 2000 at least in line with the
level of growth of 1999.
Operating revenue increased by 15.2% for the full year 1999 (+6.9% in 1998). The
organic business growth was 7.6% for 1999. The acquisitions have added 6.8% to
TPG's revenue and foreign exchange effects contributed 0.8% compared to last
year.
EBIT increased by 10.9% for 1999 (10.1% growth in 1998). Acquisitions had a
marginal dilutive impact on net income and EPS growth.
1999 1998 %
Revenues 8,536 7,409 15.2
Earnings from Operations 978 895 9.3
EBIT 734 662 10.9
Net Income 419 372 12.6
Earnings per share (EUR) 0.88 0.79 11.4
in euro million, unless otherwise stated
"No doubt a positive message for our shareholders," the Chairman and CEO
of TPG, Ad Scheepbouwer commented. "Mail performed at the top end of the
anticipated growth in both revenue and earnings and entered into strong
alliances. Express started the year under pressure as a result of slow
growth. Management actions taken on service performance and revenue
quality, paid off and the second half of the year was excellent, with a
very strong recovery of revenue and earnings. Logistics continued to
strengthen its position following the acquisition and consolidation of
Tecnologistica and showed significant underlying business growth. TPG has
laid down the foundations for a strong start in the new millennium. We
are more than ever ready to face the challenges of the ongoing changing
environment in which we operate."
Dividend
In addition to the interim dividend of NLG 0.30 already paid in September
1999, the Board of Management of TPG, in line with established policy,
will pay a final dividend of NLG 0.50 per ordinary share, which
shareholders may elect to receive either in cash or in ordinary shares.
The value of the ordinary share dividend will be 2-5% lower than the value of
the cash dividend. The election period starts on May 11, 2000, and ends
on May 30, 2000. The dividend is payable as of June 8, 2000.
TPG with its two brands TNT and PTT Post, is a global provider of mail,
express and logistics services. It employs more than 115,000 people in 60
countries and serves over 200 countries. The company had sales of EUR 8.5
billion in 1999. TPG is publicly listed on the Stock Exchanges of
Amsterdam, New York, London and Frankfurt.
Notes to the Editors:
For further information, please contact:
TPG,
Debbie de Wagenaar
Director Press Office & PR
Tel.: + 31 20 500 6171
Mobile: + 31 6 53 41 86 25
Debbie.de.wagenaar@tntpost.com
IMPORTANT EVENTS 1999
Corporate TPG
At corporate level, TPG instituted some important changes in 1999.
Following the departure of John Fellows in June 1999, appointments were made to
the Board of Management of Alan Jones as Group Managing Director Express and
Roberto Rossi as Group Managing Director Logistics were announced.
Acquisitions and alliances
In March and May 1999 respectively, we completed the previously announced
acquisitions of Jet Services in France (including NVS in Germany), and
Tecnologistica based in Italy.
The combination of our Mail and Express businesses formed the basis of alliances
with China State Post in October and with Swiss Post in November. Likewise, our
Express and Logistics capabilities facilitated an alliance with Kintetsu of
Japan, the world's third largest airfreight forwarder.
The strive to strengthen our leadership in international business mail resulted
in the signing of a heads of agreement on 9 March 2000 with the British Post
Office and Singapore Post to establish a global joint venture in cross border
mail.
The acquisition of Ansett Air Freight in July 1999 expanded our domestic express
network in Australia and also led to an agreement with Ansett Airlines to
provide Australian domestic airline services.
Integration
Following integration work carried out in Italy, Germany, the Benelux countries
and Australia the company started to integrate international and domestic
express operations in the United Kingdom, involving the further sharing of
operational infrastructures and more efficient use of resources such as people,
depots and vans.
Briefpost 2000
The continued volume growth at Royal PTT Post created increased pressure on
sorting activities. Additional volumes combined with new sorting procedures and
new machines not yet operating at full capacity caused a decline in 1999 in the
rate of mail delivered next day.
This decline in service quality triggered managerial focus and actions to
restore 95% next day delivery performance in 2000.
The euro and the millennium
During 1999 we took the decision to introduce the euro in all our external
reporting as of 1 January 2000.
TPG has actively worked on the millennium (Y2K) issue since 1997. The millennium
date change passed without any disruption to the business. On the first day of
normal operations (3 January 2000) all business units reported business as usual
and the additional issue of potential problems on 29 February 2000 (leap year)
was resolved with similar success.
AWAS
The negotiations on the sale of our non-core activity in AWAS continued during
1999 and on 23 February 2000 we signed an agreement to sell our 50% stake in
AWAS to MSDW Aircraft Holdings, a subsidiary of Morgan Stanley Dean Witter & Co.
Business developments in 1999
MAIL
Management's ambition of the Mail division is to have its operations
recognized as the industry benchmark for quality, efficiency and customer
service, for producing the best returns in the industry and for making
optimal use of new technologies and liberalization.
The changeover to automated sorting and new sorting centers resulted in a
temporary setback in quality (as indicated under important events). Efficiency
increased, which is evidenced in the Netherlands by the increase in productivity
per FTE to 194,033 (192,777 in 1998) delivered mail items. The results of these
developments are highlighted below.
The total revenue for the Mail division is summarized as follows:
Mail 1999 1998 % org. acq. fx
Total Revenue 3,651 3,523 3.6: 3.1 0.4 0.1
in euro million, unless otherwise stated
The growth of 3.6% is a result of:
Underlying organic business growth of 3.1%, net acquisitions contributing 0.4%,
and a positive impact of currency effects of 0.1%.
For further details please refer to the separate business-lines below.
Domestic Mail
Domestic Mail includes collection, sorting, transport and distribution services
for domestic mail, both in the Netherlands and within country borders abroad.
Revenue 1999 1998 % org. acq. fx
Domestic Mail 1,699 1,633 4.0: 2.6 1.4 0.0
in euro million, unless otherwise stated
Underlying organic business growth in Domestic Mail was 2.6% and acquisitions
(Rinaldi in Italy) accounted for a further 1.4%.
Domestic mail saw no major substitution effects from e-mail or other alternative
means of communication during 1999. Business growth was only
mildly effected by a reduction of letterbox mail, predominantly
consumer-to-consumer.
Direct Mail
Direct Mail comprises all activities involving distribution of addressed mail
and magazines, newspapers and periodicals and unaddressed advertising mail and
newspapers within country borders. It also includes direct marketing initiatives
and a number of database management and value-added direct marketing services.
Revenue 1999 1998 % org. acq. fx
Direct Mail 1,050 961 9.3: 4.8 4.5 0.0
in euro million, unless otherwise stated
Underlying organic business growth in Direct Mail was 4.8%, and acquisitions
contributed 4.5%. Acquisitions included GFW, Tesselaar Marketing Services,
Jepsen and the remaining 50% of the shares of Omnidata.
International Mail
TPG operates its International Mail business around the world, providing
services for collection, sorting and distribution of international mail, parcels
and valuables across national borders.
Revenue 1999 1998 % org. acq. fx
International Mail 660 640 3.1: 2.5 0.0 0.6
in euro million, unless otherwise stated
International Mail operating revenues increased by 3.1%, of which organic growth
represents 2.5%, and foreign exchange effects contributed 0.6%.
Of the total of revenue of International Mail, approximately euro 275 million
will be transferred to the new joint venture company with British Post and
Singapore Post.
Post Offices and Other
Revenue 1999 1998 % org. acq. fx
Post Offices and other 242 289 (16.3): 1.3 (17.6) 0.0
in euro million, unless otherwise stated
Post Offices and other operating revenues were in total 16.3% below last year's
revenue, mainly as a result of the outsourcing of catering services late in
1998. The revenue of Post Offices was stable.
Mail: Earnings from Operations
The Mail division's earnings from operations increased by 6.6% or euro 46
million to euro 741 million (euro 695 in 1998). The volume growth of postal
items, mainly Domestic and Direct Mail, together with added value services,
contributed to these earnings from operations. Acquisitions contributed euro 4
million. Other effects include the net gain on the sale of various property,
plant and equipment (euro 12 million). Foreign exchange effects were negligible.
EXPRESS
The Express division improved its performance strongly in the 2nd half of the
year, following a slow start in 1999, when results were below expectations. The
managerial actions in the 2nd half of 1999 included focusing on changing the mix
of shipments in the networks and concerted efforts to produce the fastest and
most reliable service, all of which is crucial to the success of the company. At
the same time the economies in Europe continued to strengthen, boosting overall
trade. Successful outcomes in both revenue and earnings from operations during
the second half of the year was apparent through improvements in performance
over the second half of 1998 by 30.3% and 57.3% respectively.
Total revenues in Express are summarized as follows:
Express 1999 1998 % org. acq. fx
Total Revenue 3,538 2,953 19.8: 9.4 8.5 1.9
in euro million, unless otherwise stated
Of the total 19.8% increase in revenue, 9.4% was attributed to organic growth,
8.5% to net acquisitions and foreign exchange effects accounted for 1.9%.
For further details please refer to the separate business lines below.
Express Europe
Revenue 1999 1998 % org. acq. fx
Express Europe 2,826 2,369 19.3: 10.5 8.2 0.6
in euro million, unless otherwise stated
Express Europe's underlying organic business growth was 10.5% (first half
1999 organic growth was 7.7%, second half 1999 organic growth was 13.3%).
Acquisitions accounted for 8.2%, predominantly attributable to Jet Services in
France, (including NVS in Germany), which was consolidated for 9 months in 1999.
Foreign exchange effects accounted for 0.6%.
All geographic areas in Europe contributed to the overall growth in revenue,
with Scandinavia and the Iberian peninsular growing at a faster rate than the
more mature markets in Germany and the UK.
Express International
Revenue 1999 1998 % org. acq. fx
Express International 712 584 21.9: 5.0 9.7 7.2
in euro million, unless otherwise stated
Outside Europe, underlying business growth contributed 5.0% as a result of the
recovering Asian markets and partly offset by slow growth in Australia. The
acquisition of Ansett Air Freight added 9.7% and foreign exchange effects
accounted for 7.2% of the growth. The latter was mainly due to the strengthening
of currencies after the crisis in 1998 in Asia and a stronger Australian dollar.
Express: Earnings from Operations
Express earnings from operations increased by 17.1% or euro 22 million in 1999
to euro 151 million (euro 129 in 1998). The operating margin was 4.3%, so the
very good second half performance brought us back to the returns achieved in
1998. Express operating margins in the second half of 1999 were 5.2% in
comparison with 4.3% in the second half of 1998.
LOGISTICS
Logistics strategy is to continue building credible mass through sufficient
geographic scale, customer leadership and economies of skills in target sectors
and operational excellence. Throughout 1999, TNT Logistics continued to focus on
pursuing growth in targeted industries, including automotive, tires,
electronics, pharmaceuticals, and fast moving consumer products. During 1999
some 2,000 staff and 200 clients in the targeted industries were added to TNT
Logistic services.
Total revenue in Logistics is summarized as follows:
Logistics 1999 1998 % org. acq. fx
Total Revenue 1,522 1,058 43.9: 21.5 22.3 0.1
in euro million, unless otherwise stated
From the total 43.9% pick up in revenue, organic revenue growth of Logistics was
21.5%. Acquisitions of Tecnologistica, Jet Services and the remaining 50% shares
in Holland DistriCare contributed 22.3% of the increase, with foreign exchange
effects accounting for 0.1% of the increase.
Logistics: Earnings from Operations
The earnings from operations of the Logistics division increased by 21.1% to
euro 86 million (euro 71 million in 1998).
The operational margin (5.7%) was impacted by the lower margin level of the most
significant acquisition Tecnologistica, which was consolidated for 7 months in
1999, as well as the start up of some large inbound contracts.
Additional Information
Employees
In 1999 the average number of full time employees increased from 80,695 to
89,641 (+11.1%). The average number of FTE's in 1999 include an increase of
4,430 employees as a result of acquisitions.
Total head count as of 31 December 1999 was 116,523 (104,833 at year end 1998).
Dividend Policy
The Board of Management of TPG intends to pursue a future dividend policy with a
pay-out ratio in the range of 30 to 35% of profits, to reflect its expected
growth and investment strategy. Therefore, in the next few years, TPG intends to
pay a stable dividend of NLG 0.80 per ordinary share. During this period, as TPG
expects to expand its business, the intended stable dividend of NLG 0.80 per
ordinary share is expected to result in a pay-out ratio of 30 to 35%. This
dividend policy will be pursued subject to the financial results of TPG and will
be subject to annual review.
Board of Management
Mr Bert van Doorn, Group Managing Director Mail, will reach the retirement age
and shall resign from the Board of Management on 1 July 2000. Further
announcements will be made in due course.
Prospects
Assuming stable exchange rates, the TPG Board of Management expects to achieve a
net income growth in the year 2000 at least in line with the level of growth of
1999.
TPG expects capital expenditures in 2000 to be at or above the 1999 level. TPG
may incur indebtedness to finance certain capital expenditures and business
opportunities.
Safe Harbor statement under the Private Securities Litigation Reform Act
of 1995
Certain information contained in this press release is forward looking.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will occur in the
future. In addition, to the assumptions specifically mentioned in
the above paragraphs, there are a number of other factors that could cause
actual results and developments to differ materially from those expressed or
implied by these forward-looking statements. These factors include, but are not
limited to, the actual effects of recent and future regulatory changes and
technological developments, mail and express usage levels, competition from
alternative technologies, globalization, levels of spending in major economies,
the economic climate in southeast Asia, levels of marketing and promotional
expenditure, actions of competitors and joint venture partners, employee costs,
future exchange and interest rates, changes in tax rates, uncertainties
associated with developments related to the year 2000 problem and the
introduction of the euro, unexpected costs of integrating recently acquired
businesses and future business combinations or dispositions. Continuing
investments in infrastructure (airplanes, depots and trucks) is important to
maintain and increase market share. Infrastructure investment requires
substantial lead time and involves significant fixed costs. Any mismatch between
investments in infrastructure and actual market growth (or increase in
TPG's market share) could result in costly excess capacity (if investment is too
great) or losses of market share (if investment is insufficient).
Consolidated statements of income
Year ended December 31,
1999 1998
EUR EUR
Net sales 8,468 7,314
Other operating revenues 68 95
Total operating 8,536 7,409
revenues
Cost of materials (339) (344)
Work contracted out and other external expenses (3,398) (2,801)
Salaries and social security contributions (2,974) (2,736)
Depreciation, amortization and impairments (247) (208)
Other operating expenses (844) (658)
Total operating (7,802) (6,747)
expenses
Operating income 734 662
Interest and similar income 20 39
Interest and similar expenses (67) (79)
Financial income and expenses (47) (40)
Income before income 687 622
taxes
Income taxes (264) (247)
Results from investments in affiliated companies (1) 0
Net income before minority 422 375
interests
Minority interests (3) (3)
Net income 419 372
Basic net income per ordinary shares and per ADS (1) 0.88 0.79
Diluted net income per ordinary share and per ADS (2)0.88 0.79
Amounts in millions, except per
share data
(1) Based on the average amount of 476,612,498 Ordinary Shares, including
shares represented by ADSs.
(2) Based on 476,748,143 Ordinary Shares, including shares represented by ADSs.
Consolidated cash flow statements
After proposed appropriation of net income
Year ended December 31,
1999 1998
EUR EUR
Net income 419 372
Depreciation, amortization and impairments 247 208
Changes in provisions (140) (78)
Changes in deferred taxes (17) 35
Changes in working capital:
Inventory (4) (5)
Accounts receivable (177) (141)
Other current assets (15) 17
Current liabilities (excluding
short-term financing) 133 238
Net cash provided by operating activities 446 646
Acquisition of group companies (397) (44)
Disposal of group companies (1) 15
Acquisition of affiliated companies (20) 8
Disposal of affiliated companies (20) 7
Capital expenditure on intangible assets (1) 0
Disposals of intangible assets 0 0
Capital expenditure on property, plant
and equipment (363) (427)
Disposals of property, plant and equipment 49 41
Changes in other financial fixed assets 19 (49)
Changes in minority interests (1) 1
Net cash used in investing activities (735) (448)
Changes in shareholders' equity (127) 532
Long-term liabilities acquired 294 81
Long-term liabilities repaid (70) (252)
Changes in short-term bank debt 32 (409)
Net cash used in financing activities 129 (48)
Changes in cash and cash equivalents (160) 150
Cash and cash equivalents at beginning of
financial year 404 255
Exchange rate differences on cash items 12 (7)
Cash and cash equivalents from acquisition
and disposal of group companies 18 6
Changes in cash and cash equivalents (160) 150
Cash and cash equivalents at
end of financial year 274 404
Amounts in millions
Consolidated balance sheets
After proposed appropriation of net income
At At
December 31, December 31,
1999 1998
Assets EUR EUR
Fixed assets
Intangible assets
Goodwill 1,973 1,476
Property, plant and equipment
Land and buildings 839 701
Plant and equipment 328 288
Other property, plant and equipment 466 403
Construction in progress 85 79
Idle property, plant and equipment 0 1
1,718 1,472
Financial fixed assets
Investments in affiliated companies 147 118
Accounts receivable from affiliated companies 20 20
Loans receivable 22 21
Prepayments and accrued income 237 268
426 427
Total fixed assets 4,117 3,375
Current assets
Inventory 50 42
Accounts receivable 1,640 1,260
Prepayments and accrued income 141 117
Cash and cash equivalents 274 404
Total current assets 2,105 1,823
Total assets 6,222 5,198
Amounts in millions
Consolidated balance sheets
After proposed appropriation of net income
At At
December 31, December 31,
1999 1998
Liabilities and group
equity EUR EUR
Group equity
Shareholders' equity 2,165 1,855
Minority interests 10 7
Total group equity 2,175 1,862
Provisions
Retirement schemes 397 372
Deferred tax liabilities 176 207
Other 658 762
Total provisions 1,231 1,341
Long-term liabilities
State of the Netherlands:
Ordinary loan 41 41
Subordinated loan 31 31
Other liabilities 344 56
Accrued liabilities 107 91
Total long-term 523 219
liabilities
Current liabilities
Other liabilities 1,272 997
Accrued liabilities 1,021 779
Total current liabilities 2,293 1,776
Total liabilities and group 6,222 5,198
equity
Amounts in millions
Liability capital (group equity plus the subordinated loan) was EUR 2,206
million on December 31, 1999 (1998: 1,893).
Capital expenditure on property, plant and equipment
Year ended December 31,
Capital expenditure on property, plant and equipment 1999 1998
Mail 112 168
Express 190 219
Logistics 61 40
Total 363 427
Amounts in millions
END
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