Dutch mail company TNT NV, which has been eyed by US rival FedEx according to media reports, reported a surprise drop in its second-quarter operating profit, sending its shares down 9 percent. TNT, Europe's second-biggest mail company after Deutsche Post, said on Monday operating profit fell to 324 million euros ($509 million) from 330 million a year ago.
The average market forecast was for a profit of 351 million euros, according to a Reuters poll of 10 analysts. Net profit fell by a bigger-than-expected 13 percent to 205 million euros, while sales rose 7.5 percent to 2.8 billion euros, broadly in line with forecasts. TNT will pay an interim dividend of 0.34 euros per share after a 0.30 euro payout in the year-ago period. TNT said it expected economic activity to remain under some pressure for the rest of the year and reiterated its 2008 outlook but at the low end of the range.
Its shares were down 9 percent at 21.80 euros by 1025 GMT, off an earlier low of 21.37 but remaining the biggest decliner in the DJ Stoxx European industrial goods and services sector index. The second-quarter results disappointed, said Petercam analyst Thijs Berkelder, who cut his rating on the stock to 'hold' from 'buy'.
"We, however, when looking at underlying second-quarter performance and the deteriorating economy, no longer believe TNT can make its full-year 2008 guidance come in and will slice our earnings estimates by some 10-15 percent," he said. Like US rivals FedEx, which last month forecast a weak fiscal 2009, and United Parcel Services, TNT said soaring fuel costs had hurt demand, prompting customers to switch to its cheaper postal services.
"The sharp rise in fuel prices during the quarter and the general economic outlook have impacted both our customers and us," Chief Executive Peter Bakker said in a statement. He said this led to slower volume growth in the premium express business in Europe in June but that volume growth recovered somewhat in July.