UPS takeover target TNT Express reports 67pc rise in quarterly profit

THE Dutch package delivery company TNT Express, that is awaiting approval from European regulators for a takeover by United Parcel Services (UPS), reported that second quarter operating profit soared by 67 per cent to US$94.7 million (EUR77 million) from $56.6 million a year ago on higher revenue and reduced costs.

Sales increasing slightly by 1.7 per cent to $2.25 billion while net profit jumped tenfold to $49.2 million.

TNT said it expects "increasingly challenging" conditions in Europe and Asia-Pacific for the remainder of the year, according to media reports.

Earnings before interest and taxes in Europe slipped 14 per cent to $108 million in the second quarter, while the Asia Pacific region rebounded to a $19.7 million profit from a year earlier loss of $9.8 million. Despite a botched integration of two Brazilian acquisitions, the company's Americas unit managed to narrow losses to $28.3 million from $55.4 million.

TNT chief executive Marie-Christine Lombard said: "In Europe, good volume growth underscores the strength of our diversified product portfolio. Cost savings and revenue enhancement initiatives also supported profits. Performance in Asia-Pacific and Americas continued to improve as a result of business development and restructuring measures."

The company has targeted a $185 million reduction in fixed costs by the end of 2013, partly by contracting out air freight capacity - Emirates Sky Cargo has absorbed half the payload of its three Boeing 777 freighters - and group administration.

UPS last week reiterated it expects to close on its $6.8 billion acquisition of TNT Express in the fourth quarter of 2012. European Union competition regulators will rule by December 12 on the takeover, which will create a company matching the European market share of Germany's Deutsche Post DHL.