- Vision 2015 focuses TNT’s activities on Day-Definite Delivery Services globally and Mail Services in the Netherlands.
- In the Day-Definite Delivery Services four focus areas are defined: European Parcels;
- Freight; Special Delivery Solutions and Emerging Platforms. All areas offer attractive profitable growth opportunities.
- Mail NL will focus on cash flow, cost adjustment and business renewal in a sharply declining market. European Mail Networks will realise and free up its value through partnerships and sale.
- Starting from a cautious 2010 economic recovery assumption, the Vision 2015 ambitions are translated into clear and attractive financial objectives.
Focus on Networks successfully completed
- TNT developed a strong and agile Express platform in Europe for “time and day definite delivery services” for Parcels and Freight, which rapidly reacted in a flexible way to significant changes in economic patterns. At the same time potentially leading platforms in the emerging economies of Asia and South America were established.
- The Mail business has been successfully managed in the context of a substantially declining business environment, due to liberalisation and substitution in the core market in the Netherlands. Although revenue outside the Netherlands developed well, this business could not yet bring a sustainable contribution. Overall Mail profits and cash flow therefore decreased largely in line with the volume decline in the core market in the Netherlands.
- TNT delivered a strong track record in satisfying its stakeholders’ requirements. In the period of 2005 – 2009 almost € 4.5 billion (75% of net cash generated), in the form of dividend and share buybacks, has been returned to our shareholders. Our employees and former employees were paid € 17.5 billion in the form of wages, contributions and pensions. Employee engagement scores are at high levels and in the case of restructurings TNT has been able to assist many departing colleagues in finding alternative jobs.
- Customer ratings are strong, service quality levels have continued to improve even during the downturn and a successful model of subcontracting binds many suppliers to our company. Finally TNT was awarded several top recognitions from leading indicators on sustainability, corporate governance, financial reporting, leadership development and investor relations.
Strategic and Business Context
- The current economic outlook is still uncertain and TNT takes a cautious view on the short term recovery. Since the start of the economic crisis TNT has seen international core volumes revert back to 2006 levels with European Air volumes dropping back to 2002 levels.
- TNT’s current business portfolio consists for part of its revenue of high growth areas in time and day definite delivery services. As a result of continued cost pressure on our customers, the fastest growing sectors in these markets are the lower cost economy and standard services, although the premium international segments are expected to see good growth as well.
- Customers, faced with the need for greater visibility, reliability and flexibility in their supply chains, will increasingly request solutions tailored to their sectors, creating opportunities for differentiated or new value added services. Furthermore, solutions across different customers in the same sectors are gaining acceptability.
- A big opportunity is the E-commerce sector. Here TNT is well placed to add value in all parts of the delivery chain, both in deliveries and in other services such as online payments and fulfillment.
- The Emerging Platforms in South America and China provide an unrivalled “first mover” competitive advantage and going forward have the potential to become significant in size and results with profitable return on investment levels.
- The Mail business in the Netherlands will be subject to accelerated further volume declines due to substitution and competition, burdened by relatively high labour costs and an uncertain regulatory environment, putting pressure on profits and cash flows going forward. The negotiations with labour unions so far have not delivered a path forward towards structurally closing the wage gap with competition. If that were to remain the case, a deep restructuring will be unavoidable given the sharp decline in volumes and revenues.
- The European Mail Networks business (EMN) is operating in a deteriorating perspective, due to the uncertain implementation of European mail liberalisation, regulatory restraints, price competition, volume declines and high start-up costs.
Day Definite Delivery Services accelerated
- European Parcels will target additional growth in the €20 billion Standard Parcels market, by extending its existing leadership position in next day domestic and in economy cross-border parcels. Differentiated solutions will be offered by market segment (Business to Business, Business to Consumer) in each major European geography. In this cost competitive market the achievement of cost leadership through optimising our networks and standardising our operations is essential.
- On the basis of TNT’s strong European road network as well as high growth inbound intercontinental volumes, the Freight activities will aim to extend TNT’s lead in the day definite freight transport within Europe and add global extensions through partnerships like the one with Conway in the USA and our owned networks in all emerging markets. In Europe, TNT expects that over time Freight will grow into partial separate networks to underline cost leadership and customer requirements.
- Emerging Platforms will aim to capitalise on its first mover advantage towards leadership positions in the day definite markets of South America and China. Next to that TNT will continue to expand and connect its road networks in “greater ASPAC” (Asia Pacific incl. India and Australia), Middle East / Africa and South America, where TNT has established an excellent competitive basis.
- Special Delivery Solutions (SDS) aims to develop focused multi-customer network solutions, that provide dedicated service quality while improving the economics of the TNT delivery networks. Vertical delivery solutions for sectors like pharma, health, electronics, automotive, defense, energy and high-end non-food retail will be developed. TNT is excellently positioned to service the fastest growing market for delivery solutions from E-commerce for which a dedicated solutions team has been put in place to target the chosen supply chains.
Mail focus on the Netherlands and sustainable cash performance
- Mail NL operates in an environment of sharp further volume decline, driven by substitution and competition. The continued implementation of Master plans will include further organisational centralisation and delivery model adjustments leading to significant savings at the originally communicated levels. If no agreement with unions can be reached on the alignment to market level of labour costs, the socially less preferred route of higher employment reduction becomes unavoidable, as revenue in Mail NL is expected to decrease with approximately 4 to 6% per year.
- TNT will explore business renewal opportunities and other sources of value creation in Mail NL for which TNT plans to set up an investment budget. Further details will be worked out in the coming months. As part of this renewal effort, the Mail activities will over time be prepared to enable participation in partnership options including possible future European Mail incumbent consolidation.
- In this context the remaining European Mail Network business (EMN) will be managed for value realisation through partnerships and sale. For EMN Germany, a final review will be undertaken in 2010, in the context of the expected market development including the outcome of the minimum wage court case and the developments regarding the VAT exempt position of the incumbent. TNT expects to give a further update on EMN by the time it announces the full year 2009 results.
Financials Vision 2015
Business update 2009
TNT provides businesses and consumers worldwide with an extensive range of services for their mail and express delivery needs. Headquartered in the Netherlands, TNT offers efficient network infrastructures in Europe and Asia and continues to optimise the performance of its networks. TNT serves more than 200 countries and employs some 160,000 people. Over 2009, TNT reported €10.4 billion in revenues and an operating income of €648 million. TNT is publicly listed on the stock exchange of Amsterdam. TNT recognizes its social responsibility, and has formed partnerships with the United Nations World Food Programme and the United Nations Environment Programme to fight hunger and pollution in the world. Our efforts are being recognised: in 2010, TNT was again designated the “Supersector Leader” for “Industrial Goods and Services” (including the “Industrial Transportation” sector) in the Dow Jones Sustainability Index (DJSI), More information about TNT can be found on its website http://group.tnt.com.
PostNL is the inventive partner in the world of sending and receiving. We have been so for 200 years already. We are primarily active in the fields of mail, parcels and e-commerce, but we also offer services in the areas of data and document management, direct marketing and fulfilment. Outside the Netherlands, we are active in Germany, the United Kingdom, Italy, Belgium and Luxemburg. PostNL employs a total of more than 59,000 people. In 2013 our revenues reached € 4.3 billion.
We like to stay ahead of things. We are the most modern postal company in the world. We are proud of that. As the first listed postal company, we are an example to the rest of the world in automatic letter sorting. And our innovative parcels network is completely adapted to the wishes of web retailers.