Profit warning, competition settlement hit TNT Express shares
AMSTERDAM (Reuters) - Dutch logistics firm TNT Express warned that sluggish growth in Europe would hit profit margins in the third quarter, sending its shares tumbling more than 10 percent.
With European growth below the 2 to 3 percent it had been targeted and competition fierce, the parcel delivery company said on Wednesday it would not meet an 8 percent adjusted operating margin in it main European and American markets.
The logistics sector is seen as a leading indicator for the state of the economy since it is sensitive to companies' forward planning and stock purchases.
"This is a more realistic approach," Andre Mulder, analyst at brokers Kepler Cheuvreux, said in response to the profit warning.
"TNT is highly sensitive to economic conditions, with express (logistics) having the characteristics of a 'luxurious' product with operating leverage high," he wrote in a note.
TNT did not offer a new margin forecast.
The company also announced it would set aside 50 million euros - more than half last year's operating profit - to settle a pending fine from French competition authorities over alleged anti-competitive behaviour in the French parcels sector.
TNT's chief executive Tex Gunning said the revision was "disappointing", but insisted the company remained on the right track.
The company's turnaround programme was "solid", he said, but would realistically take three to five years for the full benefits to come through. Continued...