TNT reports fewer losses as FedEx deal looms

With less than a year to go before it completes its expected merger with FedEx, TNT delivered second-quarter operating income of €19 million, compared to €3 million during the same period last year. However TNT still took a loss of €1 million for the quarter, which is less than the €4 million loss in Q2 2014. The operating income includes €17 million for restructuring and €5 million in non-specified costs.

During the second quarter, TNT invested in sorting machinery, vehicles and IT. In addition to investing in its hub in Liège, TNT is completing five new sorting facilities in Spain, the Netherlands, the U.K. and Australia. All are scheduled to enter operations in the second half of this year. Operating profit therefore fell to €41 million in the second quarter, €29 million below last year due to the IT transition and project costs as a result of the carrier’s “Outlook Strategy,” an initiative aimed at growing TNT’s road services and focusing more on small- to medium-size enterprises.

Tex Gunning, TNT’s CEO, said the Outlook Strategy is moving forward as planned. “Service levels and customer satisfaction scores further improved,” he said, adding that 2015 is expected to be “a transition year in terms of bottom-line performance.”

Transition year indeed, as FedEx continues to advance toward its US$4.8 billion takeover of TNT. Assuming the acquisition keeps moving ahead, it is expected to close in the first six months of 2016. FedEx has agreed to pay TNT a US$200 million breakup fee if the transaction fails.