In 2007, TNT’s Mail business earned revenues of €4,234 million, a 4.2% increase compared to 2006.
The following tables set out the financial performance of TNT’s Mail division for the past two years:
| Year ended at 31 December | |||
| Mail financial overview | 2007 | variance % | 2006 |
| Total operating revenues | 4,234 | 4.2 | 4,065 |
| as % of total operating revenues TNT | 38.4 | 40.4 | |
| Other income | 64 | 10.3 | 58 |
| Total operating expenses | (3,672) | (9.2) | (3,362) |
| Total operating income | 626 | (17.7) | 761 |
| as % of mail operating revenues | 14.8 | 18.7% | |
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| Mail operating revenues | 2007 | variance % | 2006 |
| Mail Netherlands | 2,551 | (1.7) | 2,596 |
| European Mail Networks | 1,002 | 33.8 | 749 |
| Cross-border Mail | 527 | (1.3) | 534 |
| Data and Document Management | 154 | (17.2) | 186 |
| Total operating revenues | 4,234 | 4.2 | 4,065 |
| as % of total operating revenues TNT | 38.4 | 40.4 | |
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| Mail operating statistics | 2007 | 2006 | 2005 |
| Addressed postal items delivered by Mail Netherlands 1 (millions) | 4,701 | 4,918 | 5,139 |
| per Netherlands delivery address (items) | 608 | 644 | 679 |
| per Mail Netherlands FTE 2 (thousands of items) | 153 | 155 | 152 |
| per Netherlands inhabitant (items) | 287 | 301 | 315 |
| per delivery day (millions) | 15 | 16 | 17 |
| total operating revenues per FTE 2 (thousands of €) | 99 | 95 | 94 |
| average percentage of national mail sorted automatically (%) | 84 | 83 | 84 |
| Postal volumes by Cross-border (thousands of kilogrammes) | 88,782 | 88,237 | 81,334 |
| Addressed postal items delivered by EMN (millions) | 1,621 | 894 | 490 |
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The operating revenues of the Mail business increased by 4.2% in 2007 (2006: 2.8%). In Mail Netherlands revenues declined by 1.7% (2006: 1.9%). On a comparable number of working days’ basis, the addressed Mail Netherlands volume decline was 4.1% (2006: 4.0%). Revenues in European Mail Networks showed a 33.8% growth. Revenues in TNT’s cross-border line of business declined by 1.3%. Data and Document Management revenues decreased by 17.2% of which 16.7% as result of divesting.
Operating expenses were growing by 9.2% to €3,672 million. The growth was due to EMN growth and a charge of €110 million for restructuring costs. Mainly due this increase in operating expenses, the operating income decreased by 17.7% in 2007.
Business performance
TNT’s profitability in Mail was sustained in 2007 through its customer focus, its market segmentation and a set of cost restructuring measures that are being implemented with great rigour in its home market, the Netherlands. The cost saving programme includes a restructuring of the marketing and sales channels and organisation, a restructuring of TNT’s overhead, and a restructuring of its operations. Up until 2006, TNT achieved aggregate cost savings under the Master Plans announced in 2001 of €298 million.
In December 2006, TNT announced new cost saving initiatives targeted to save €300 million on an annual basis. Together with the remaining savings out of the 2001 Master Plans, TNT targets to save €370 million between 2007 and 2015. In 2007, TNT achieved €38 million in savings. At the end of 2007, a start of efficiency projects was announced for which a €110 million provision was established. All savings together with new commercial initiatives will prepare the Dutch Mail activities further for the changing market dynamics. TNT aims at limiting the volume decrease in its position to 3% to 4% per annum.
European Mail Networks
Through its European Mail Networks business line, TNT now has a presence in Austria, Belgium, the Czech Republic, Germany, Italy, the Netherlands, Slovakia and the United Kingdom.
In addressed delivery the main focus in 2007 continued to be on strengthening TNT’s position in the key markets of Germany and the United Kingdom. In Germany, TNT strengthened its position with the further expansion of the regional distribution networks to 24.4% coverage. The aim is to be active in all high density areas in Germany and thus secure a nationwide product offering by TNT’s 71% subsidiary TNT Post AG & Co. KG. This subsidiary successfully gained new customers in 2007. Through partnerships with regional distribution companies of which TNT Post Regioservice is one, TNT furthermore achieved a national coverage for the distribution of letter mail of more than 90% of all households in Germany. TNT’s PostCon Deutschland AG, the market leader in consolidation in Germany, was able to grow its customer base further.
On 21 January 2008, two subsidiaries of TNT Post Germany instituted preliminary legal proceedings with the Administrative Court (Verwaltungsgericht) in Berlin to obtain an injunctive relief (einstweiligen Anordnung) to suspend the generally binding minimum wage in the postal services sector as adopted by the Federal Ministry of Labour and Social Affairs on 28 December 2007. TNT has taken the position that this minimum wage is unconstitutional.
By instituting legal proceedings TNT aims to secure legal certainty for its EMN German operations which employ in total around 14,000 employees and earned €233 million of revenue at an operating loss of €31 million in 2007. So far in total TNT has invested around €80 million in Germany as part of its strategy to become the number one challenger to incumbent European mail operators in selected countries.
In the United Kingdom, TNT has contracted with Royal Mail for downstream access which allows TNT to offer customers an alternative in the postal market. In 2007, TNT again gained many important contracts and strengthened its position further. At the same time TNT opened four regional offices with sorting facilities targeting the small and medium enterprises market that will allow TNT to offer customers a broader portfolio of services and, ultimately, an end-to-end solution.
In unaddressed delivery TNT strengthened its position in 2007 in all markets where TNT is present, mainly through organic growth. In the Netherlands, Belgium, Italy and Central and Eastern Europe TNT is a significant player. In almost all countries, however, TNT is experiencing intense price competition (mostly by companies owned by other postal operators who use their dominant position and wish to enter this market). In all countries TNT has been successful in retaining its market share by retaining customers and volumes. TNT continuously invests in quality of services to differentiate itself from those competing on price. In 2007, EMN saw its revenue grow with 33.8% to €1,002 million and performed at ROS of low single digit (excluding UK parcels).