TNT Express Annual Report 2011

Business performance
Chapter 2
In Europe, the company operates a unique combination of road and air networks that connects its strong
domestic platforms. The road network connects 39 countries through 20 road hubs; the European Air
Network connects 65 destinations through a fleet of 46 aircraft. TNT Express’ infrastructure offers
customers the widest range of services and best delivery performance, even in less dense regions of
Europe.
In the Middle East, TNT Express operates a regional road network as well as air-based services. In
Africa, the company has own operations in a number of countries and serves most of the rest of the
continent through partnerships and agents. A new partnership with Getma, a subsidiary of the French
transport and logistics group NCT Necotrans, is intended to improve network capabilities, service and
market share in eight Sub-Saharan African countries.
2011 PERFORMANCE
Within Europe, 2011 real GDP growth was highest in Turkey and Germany and more subdued in France
and the Netherlands. Year-on-year overall real GDP growth declined, especially in the latter part of the
year. The United Kingdom, Italy, Spain and Portugal were particularly affected, with growth of 0.7%,
0.5%, 0.7% and -1.9% respectively.
Year ended at 31 December 2011 variance % 2010
Adjusted revenues 4,547 2.1 4,453
Adjusted operating income 380 (1.0) 384
Average consignments per day ('000) 725 1.0 718
Revenue per consignment (€) 1 24.4 1.2 24.1
Average kilogrammes per day ('000) 14,661 2.6 14,288
Revenue per kilogramme (€) 1 1.21 0.0 1.21
1 based on reported revenues @avg10 rates
(in € millions, except percentages)
As mentioned earlier, adjusted revenue in Europe & MEA showed muted underlying growth (2.1%) in
2011.
In an increasingly weak economic environment, average consignments per day grew by 1.0% and
average kilogrammes per day by 2.6%. International Economy volumes showed healthy growth, while
International Express volumes declined. Domestic volumes also grew, albeit at a slower pace. This
changing product mix was the primary reason for kilogrammes growing ahead of consignments. Volume
growth was strongest in the United Kingdom, Eastern Europe, Turkey and the Middle East. In line with
changes in product mix, volumes in the air network decreased and road network volumes grew.
Revenue per consignment (RPC) increased by 1.2%, supported by a higher fuel surcharge and a higher
average weight per consignment. The second half of the year experienced more pressure on average
prices, as a result of a weakening economic environment and continued negative customer and product
mix changes. Various commercial initiatives, such as marketing campaigns and internal sales drives,
were successfully undertaken to increase European parcel volumes. These initiatives generated
approximately 60,000 new small and medium-sized trading customers. A differentiated pricing approach
was also implemented to support product mix targets, with base price increases in International
Economy and domestic products, and targeted price reductions in International Express. A new rate
card was introduced to align with TNT Express’ new cross-border service offering. Customer loyalty
remained high.
Service quality (measured by on-time delivery) achieved an all-time high of 95% during the peak season
and was 96% for the full year, despite the impact of heavy snowfall in January.
To counter cost inflation, the company implemented several efficiency and productivity initiatives. These
initiatives target cost savings through subcontractor and linehaul productivity improvements and tariff
optimisation, lower procurement costs and application of ‘lean’ methodology to operational processes.
The size of the European Air Network was adjusted to volumes on a quarterly basis, although the
volatility in volumes led to lower capacity utilisation compared to 2010. As a result, two additional
BAe146 were held for disposal. The European Road Network continued to perform strongly, in terms of
both costs and service.
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