RNS Number:2774O
TPG N.V.
04 August 2003
First half year results prove resilience of TPG business model
Strong performances in Mail and Express; continued weakness in Logistics
Financial highlights:
*Good operational revenue growth
*Strong performances in Mail and Express offset by continued weakness in Logistics
*Logistics transformation plan fully launched:
*David Kulik to lead division and join Board of Management
*Around Euro55 million annualised savings targetted
*Associated one-off costs of around Euro65 million
*Preliminary estimate of up to eEuro195 million for goodwill impairment and asset write-downs
*Interim dividend significantly increased
Half Year Summary HY 2003 HY 2002 % Change
Euro mil Euro mil Operational FX Total
Revenues 5,853 5,797 5.7% -4.7% 1.0%
EBITA 584 588 0.9% -1.6% -0.7%
Operating Income (EBIT) 507 512 0.0% -1.0% -1.0%
Net income 283 288 -0.7% -1.0% -1.7%
Earnings per share (euro cents) 59.6 60.6 -1.7%
Net income from continuing operations excluding 303 288 6.3% -1.1% 5.2%
pension increase and one-off costs (see notes 3
and 4 on page 20)
Net cash provided by operating activities 398 591
Free cash flow 297 403
Second Quarter Summary Q2 2003 Q2 2002 % Change
Euro mil Euro mil Operational FX Total
Revenues 2,936 2,899 5.8% -4.5% 1.3%
EBITA 292 295 0.4% -1.4% -1.0%
Operating Income (EBIT) 253 257 -1.6% 0.0% -1.6%
Net income 143 145 -0.7% -0.7% -1.4%
Earnings per share (euro cents) 30.1 30.5 -1.4%
Net income from continuing operations excluding 156 145 8.3% -0.7% 7.6%
pension increase and one-off costs (see notes 3
and 4 on page 20)
Net cash provided by operating activities 74 337
Free cash flow 16 223
Divisional EBITA Summary HY 2003 HY 2002 % Change
Euro mil Euro mil Operational FX Total
Mail 430 413 3.1% 1.0% 4.1%
Express 118 102 19.6% -3.9% 15.7%
Logistics 41 88 -43.2% -10.2% -53.4%
Non allocated (5) (15)
EBITA 584 588 0.9% -1.6% -0.7%
Group overview
Steady progress in the second quarter has enabled TPG to deliver a resilient overall performance in the first half of
2003. Growth continues to be impacted by weak economic conditions and adverse foreign exchange movements. Strong
performances were again delivered by the Mail and Express businesses in the second quarter, although continued
weakness in parts of the Logistics business has held back overall profit growth.
TPG today announces a set of forceful actions aimed at restoring the operating margin of the Logistics business:
* David Kulik will take over from Roberto Rossi to head up the entire Logistics division and will become a member of
the Board of Management.
* The design and scoping of the "Transformation through Standardisation" programme (TtS) has now been finalised and has
identified annualised savings of around euro55 million which will be delivered within a two year time period.
* One-off costs associated with the programme are expected to be around euro65 million.
* Preliminary estimates have been made for goodwill impairment and asset write-downs of up to euro175 million and
euro20 million respectively, which are likely to be required this year.
Cash generation for the group continues to be strong with working capital well managed and capital expenditure
remaining significantly below last year's level.
In view of the strong cash performance, the lower level of acquisition expenditure and our confidence in the
sustainability of free cash flow, it has been decided to increase the 2003 interim dividend by 20%.
Peter Bakker, CEO : "It is encouraging to see the progress that we have made in the first half of the year despite
the continuing challenging economic circumstances. Our people in Mail and Express have once again produced excellent
industry-leading results. Logistics continues to produce disappointing results but through the TtS programme and the
appointment of a new strong leader for the division, I am confident that major improvements will be made in the
future. I am also pleased that, as a result of our current financial strength, we are able to increase our dividend
payout while also increasing our contribution to the pension funds".
Group results
Group revenues for the half year increased by 1.0% to euro5,853 million, equivalent to a growth of 5.7% at constant
exchange rates. Group earnings before interest, tax and goodwill amortisation of euro584 million were just ahead of
the prior year, expressed at constant rates. Included in this figure are euro19 million of higher pension costs
compared to the previous year and euro13 million of one-off costs associated with the Logistics TtS programme. Half
year net income declined 1.7% to euro283 million. However, excluding the impact of the higher pension costs and
one-off Logistics costs, net income grew by 5.2% (6.3% at constant exchange rates).
Operating cash flow in the half year was a healthy euro398 million. Capital expenditure has been cut back by some 37%
from last year's level. This is the second year of our successful value based management programme which has led to
significant reductions in the levels of working capital used across the group.
Review of operations
Mail has performed strongly in the half year and in particular has achieved excellent results in the second quarter.
The operating margin in the second quarter improved to 21.9% from 20.3% last year, even after absorbing higher
pension costs. This is the result of lower than expected volume decline and ongoing improvements in productivity in
the Netherlands business.
Implementation of the Cost Flexibility programme continues very much on track and is providing the main driving force
for the margin improvements. Some euro62 million of cost savings have been achieved so far as a result of Cost
Flexibility, euro36 million of which were in this half year.
The encouraging lower underlying rate of decline in Dutch mail volumes seen in the first quarter compared to most of
last year was maintained in the second quarter due to higher domestic mail volumes offset by lower direct mail
volumes.
On 20 June 2003 the Government in the Netherlands decided to amend its earlier decision on postal tariffs and shorten
the duration of the price freeze to the 2004 year only. A broader policy on the postal market will be published by
the Government later this year, inclusive of tariff control. TPG is actively involved in this process.
A number of new alliances with other Postal Operators were concluded in the half year. In particular, the strategic
partnership agreed with China Post is a significant step in TPG's international strategy. This partnership could
benefit all three of TPG's businesses.
Express has continued to make excellent progress in creating competitive advantage in its key geographic markets.The
operating margin for the half year improved substantially from 5.0% to 5.7% with the second quarter margin rising to
6.4%. Strong positive revenue quality yields were again achieved across all business units in the division, with an
impressive 4.5% increase achieved in the second quarter in the European business, the fifteenth consecutive quarter
that a positive yield has been achieved. The TNT Express European air and road networks continue to be enhanced in
order to enable the fastest and most reliable service to be offered to customers. A Boeing 737 has recently been
added to the fleet and services to Eastern Europe have been significantly expanded. Growth in Asia continues at a
rapid pace and further expansion is planned for China.
The turnaround in Australia is well on track with at least a full year break even result expected this year in line
with the original timetable. The execution of the Australia turnaround plan, which consisted of a formidable set of
restructuring actions across the entire organisation, has been an excellent achievement and a shining example of
TPG's capabilities in major turnaround projects.
Logistics performance continues to be under pressure but the decline has now stabilised. Although organic revenue
growth has increased considerably in the second quarter as a result of major new contract wins, volumes from existing
business continue to be relatively flat. The underlying operating margin in the second quarter has fallen to 3.6%
compared to 5.4% in the same quarter last year. The TtS programme has identified an initial set of one-off costs of
Euro13 million which have been charged in the second quarter. Taking these one-off costs into account, the second
quarter margin was 2.2%. The majority of the performance shortfall is centred on three European business units,
namely France, Italy non-automotive and Germany, which have largely been formed through acquisitions. Growth and
margins in the three biggest business units, the UK, North America and Italy automotive, continue to be healthy and
robust.
Good new contract wins with an annualised revenue of Euro474 million have been achieved in the half year. This is 84%
of the total 2002 contract wins. All new contracts have been secured at good margins. Major contracts won include
Volkswagen in Germany and China, Pirelli, Telecom Italia, KPN and the NHS in the UK. Also, TPG was appointed as sole
operator for Fiat automotive inbound logistics in Italy through a joint venture with Arvil.
Update on Logistics transformation
Good progress has been made in the implementation of TtS which was launched earlier this year. TtS is a comprehensive
programme of actions designed to standardise operating and business development practices across the entire Logistics
business in order to improve margins. Particular emphasis is being placed on the turnaround of underperforming
operations mentioned above. This programme has evolved from the identification and implementation of competency
centres and best practice systems at the end of last year.
The design and scoping of the TtS programme has now been finalised and a number of cost saving initiatives and
actions contained in the plan have been launched. This programme will require some fundamental changes in the
operations and processes within business units and implementation will continue well into next year. The nature of
Logistics business is unlike that of our other businesses, in that it consists of a number of long term contracts and
therefore will require relatively more time for a full turnaround to take effect.
The TtS programme consists of five process improvement modules: Procurement, Transportation and Distribution,
Warehousing, IT and Contract Rationalisation, each of which has a project leader responsible for achieving the
targetted savings. A sixth module addresses the overhead and restructuring actions resulting mainly from the
individual turnaround plans for the three underperforming countries. Total annualised savings of around Euro55
million have been identified for TtS and are scheduled to be fully realised in 2004. Some euro14 million of these
savings will already benefit the current 2003 year. The first wave of TtS actions has focussed on realising quick win
savings in the areas of procurement and contract rationalisations, together with coordinated actions for the
operations in the underperforming countries. The second phase of actions brings in the standardised solutions in
warehouse and transportation management.
One-off costs associated with TtS actions are expected to be around Euro65 million, the majority of which are
anticipated in 2003. These costs relate to various restructuring and rationalisation measures, including those
related to warehouse and contract terminations. Euro13 million of one-off costs have been charged in the half year.
A goodwill impairment review has been carried out for all TPG Logistics businesses. Preliminary calculations would
indicate that a goodwill impairment charge of up to Euro175 million and an asset write-down of up to euro20 million
are likely to be required this year. Both of these charges are non-cash items. The companies affected are restricted
to France, Italy and Germany.
Board of Management change
TPG is pleased to announce that David Kulik has been appointed to head up the Logistics division as Group Managing
Director. Kulik, who currently holds the position of Managing Director TNT Logistics North America and also leads the
TtS project, will be responsible for all of TPG's worldwide Logistics activities and will become a member of the
Board of Management as per 1 September 2003, subject to compliance with statutory requirements. He will replace
Roberto Rossi who will step down from his current role and will leave the company.
Financial review
Group operating income was flat year on year, inclusive of the higher pension costs and one-off Logistics costs.
Non-allocated items amounted to a net cost of euro5 million in the half year (prior year Euro15 million) and included
corporate costs of Euro7 million incurred in the second quarter. Goodwill amortisation remained flat year on year.
Net financial expense for the half year was almost 10% lower than last year, mainly due to the reduced level of net
debt. The effective tax rate in the half year at 37.2% was slightly higher than the same period last year.
Dividend
The Board of Management has the intention to raise the dividend pay-out ratio over time to around 40% of net income.
As a first step, the interim dividend for 2003 will be increased by 20% to Euro0.18 per ordinary share. The interim
dividend will be paid on 13 August 2003.
Prospects
The overall results in the first half of the year have demonstrated the resilience of TPG's business model in a weak
economic environment. The global economic climate is expected to remain sluggish over the remainder of this year.
Nevertheless, TPG is well positioned to benefit should there be any upturn in the economic cycle.
The Mail division is targetted to achieve a 20% operating margin for 2003 as a whole. On the basis of the trends seen
in the first half of the year, the rate of decline in Dutch mail volumes in 2003 overall is expected to be lower than
the 2 to 3% previously assumed. Further benefits are expected from the Cost Flexibility programme. Growth in
international business is expected to continue at a similar pace to the first half year.
Further good progress is expected in Express in the second half of the year. The operating margin is expected to rise
above 6% overall for the first time in 2003, driven by continuing positive revenue quality yield developments,
together with the fastest and most reliable express delivery service.
The difficult trading environment currently faced by Logistics is expected to continue for the remainder of this
year. Although the TtS programme will help alleviate some of the pressure on margins in the current year, most of the
benefits will not be seen until next year. An underlying operating margin before one-off costs of around 3.5% is
expected for the 2003 year. The pace of new business development is expected to remain healthy.
The Board of Management expects TPG's growth in net income from continuing operations excluding additional pension
costs in 2003 to be around 5% at constant rates of exchange. This outlook excludes the impact of one-off costs and
non-cash impairments in Logistics.
Update of events in 2nd Quarter 2003 to date
Apr 1 Wim Kok and Rene Dahan appointed as members of Supervisory Board
Apr 2 Positive Standard & Poors credit rating review outcome announced
Apr 3 Acquisition of Blitzpunkt in German unaddressed mail
Apr 25 China Post strategic partnership announced
Apr 29 Acquisition of DocVision in the Netherlands
Apr 29 Top executives hired for Logistics in both Central Europe and France
May 16 Appointment of TPG and Arvil joint-venture as Fiat sole operator
May 27 Agreement reached with Unions on 2003/2004 Collective Labour
agreement in the Netherlands
May 28 Express contract with Brazil Post announced
June 20 Amended decision on postal tariffs announced by Dutch Government
July 1 A Boeing 737 added to Express European Air Network
July 21 Logistics contract signed with Shanghai Volkswagen in China
July 23 Logistics contract with the NHS in UK announced
* Improved operating margin despite higher pension costs
* Particularly strong second quarter performance
* Volume declines less than expected
* Productivity gains driven by Cost Flexibility
Half Year HY 2003 HY 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Revenues 1,966 1,969 -0.2% -0.1% 0.9% -1.0%
EBITA 430 413 4.1% 1.2% 1.9% 1.0%
Operating margin 21.9% 21.0%
Second Quarter Q2 2003 Q2 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Revenues 967 959 0.8% 0.2% 1.6% -1.0%
EBITA 212 195 8.7% 3.1% 4.1% 1.5%
Operating margin 21.9% 20.3%
Mail revenues fell by 0.2% in the half year. Organic revenue growth was a marginally negative 0.1%. Excluding the
impact of last year's one-off Euro coins project, organic growth was a positive 0.7%. Second quarter revenues grew
organically by 0.2%.
Half year earnings increased by 4.1% with the operating margin improving to 21.9% from 21.0% last year. Second
quarter earnings grew by 8.7%, pushing up the operating margin from 20.3% last year to 21.9%. An additional euro15
million pension costs have been charged in the half year, equally split over the two quarters.
The improved performance is mainly driven by the Cost Flexibility programme and ongoing tight cost controls which
together have led to a significant saving of euro36 million in the Mail Netherlands operation in the half year. In
Distribution and Sorting a large reduction of full time equivalent staff has been achieved. A reduction in Mail Head
Office costs also contributed to the cost efficiencies.
Start up costs in European Mail Networks and Data & Document Management were euro5 million in the half year, similar
to last year. A one-off gain was made on the sale of Geldnet, a cash services company, in the half year. Net one-off
gains in the first half of last year, which consisted of the release of an accrual for terminal dues less provisions
for Cost Flexibility, exceeded this gain.
The quality of next day mail delivery in the Netherlands is 96.4%, well ahead of the government target of 95%.
Revenue Analysis
Revenues for Mail lines of business for the first quarter of 2003 and the prior year have been restated to reflect a
more accurate elimination of internal transactions.
Half Year HY 2003 HY 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Mail Netherlands 1,363 1,381 -1.3% -1.5% 0.2% 0.0%
Cross Border 305 319 -4.4% 0.0% 0.0% -4.4%
European Mail Networks 197 173 13.9% 9.2% 6.4% -1.7%
Data & Document Management 101 96 5.2% 3.1% 4.2% -2.1%
Mail 1,966 1,969 -0.2% -0.1% 0.9% -1.0%
Second Quarter Q2 2003 Q2 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Mail Netherlands 663 666 -0.5% -1.0% 0.5% 0.0%
Cross Border 148 157 -5.7% -1.9% 0.0% -3.8%
European Mail Networks 105 88 19.3% 12.5% 9.1% -2.3%
Data & Document Management 51 48 6.3% 0.1% 8.3% -2.1%
Mail 967 959 0.8% 0.2% 1.6% -1.0%
Mail Netherlands revenues fell by 1.3% in the half year. However, excluding the impact of last year's one-off Euro
coins project, revenues were flat year on year. Price and mix effects had a positive 1.3% impact in the half year,
mainly in the second quarter.
Total addressed mail volumes declined by 1.3% in the half year. Election mail volumes in the half year were the same
as last year. Second quarter volumes declined by 2.7% but, excluding the impact of elections in the second quarter of
last year, the underlying decline was only 1.4%, similar to the first quarter of this year. The decline in volumes is
entirely in direct mail where volumes fell by 3.4% in the half year (3.9% in the second quarter). This is mainly due
to the slow economy which continues to impact magazines, papers and other printed matter. Domestic letter mail
volumes remained flat year on year mainly due to a good second quarter which had an underlying 0.5% increase.
Cross Border revenues fell by 4.4% in the half year entirely due to foreign exchange movements. Organic growth was
flat in the half year due to a fall in the second quarter Spring volumes resulting from the effects of the SARS
virus. Prices in the Spring business remain under pressure, particularly in Europe.
European Mail Networks continue to deliver high organic revenue growth: 9.2% for the half year and 12.5% in the
second quarter. The main contributors to this growth are Italy, Eastern Europe and the Netherlands VSP operation.
Also, as from the second quarter of this year, Europost, the addressed mail joint venture with the Otto Hermes group
in Germany, is now also distributing cross border mail in Germany. The acquisitions of the German unaddressed mail
companies Blitzpunkt and Werbeagentur Fischer in the first half of this year added a further 6.4% to year on year
revenue growth.
Data & Document Management revenues from the Cendris brand grew organically by 3.1% in the half year. Volumes
continue to be under pressure as a result of the depressed economic environment in the Netherlands and the rest of
Europe. The acquisition of DocVision in the second quarter contributed an additional 4.2% revenue growth in the half
year.
* Further margin improvements
* Strong positive revenue quality yield
* Profit improvements in nearly all business units
Half Year HY 2003 HY 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Revenues 2,073 2,059 0.7% 6.3% -0.3% -5.3%
EBITA 118 102 15.7% 25.1% -5.5% -3.9%
Operating margin 5.7% 5.0%
Second Quarter Q2 2003 Q2 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Revenues 1,036 1,040 -0.4% 5.1% -0.2% -5.3%
EBITA 66 61 8.2% 22.4% -8.8% -5.4%
Operating margin 6.4% 5.9%
Express revenues, which grew nominally by 0.7% in the half year, were impacted by significant adverse foreign
exchange translation effects caused by the strengthening of the euro against all major currencies. The rate of
organic growth was 6.3%, which was affected by a slight slowing in the second quarter to 5.1% due mainly to the
timing of the Easter holiday.
Half year earnings climbed 15.7% and the operating margin improved from 5.0% to 5.7% after charging additional
pension costs of Euro3 million. Almost all business units achieved good year on year growth in earnings and this has
been achieved mainly by improving the mix of the business through selling no discount simplified contract rate
agreements to small and medium sized customers.
The major profit improvements in the half year have been achieved in the Benelux countries, Germany, Eastern Europe
and Australia. The focus on revenue quality yields and enforcement of disciplines involved in selling the no discount
contract agreements to all new customers are the key reasons for the improvements, mirroring the successes achieved
in other countries. Well trained specialist domestic and international sales teams working with a proven sales
territory management system have produced excellent results supported by the fastest and most reliable express
delivery service.
Air network capacity and utilisation in the half year are approximately the same as the equivalent period last year,
having been successfully tailored for a relative shift by customers towards the road express services provided by the
company.
Revenue Analysis
Half Year HY 2003 HY 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Express Europe 1,703 1,681 1.3% 5.2% -0.4% -3.5%
Express ROW 370 378 -2.1% 11.7% 0.0% -13.8%
Express 2,073 2,059 0.7% 6.3% -0.3% -5.3%
Second Quarter Q2 2003 Q2 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Express Europe 847 845 0.2% 3.8% -0.2% -3.4%
Express ROW 189 195 -3.1% 10.3% 0.0% -13.4%
Express 1,036 1,040 -0.4% 5.1% -0.2% -5.3%
Europe revenues increased by 1.3% in the half year. Organic revenue growth was 5.2% with the strongest growth being
achieved in the UK, France, Eastern Europe, Spain and Austria. Foreign exchange movements negatively affected
revenues on conversion to euros by 3.5% and there was a 0.4% adverse impact resulting from the disposal of an air
network company in Italy last year.
Organic revenue growth in the second quarter was 3.8%. Total European core revenues grew by 4.9% mainly due to a 4.5%
improvement in revenue quality yield. The amount of core kilos carried increased by 0.9% and the number of
consignments handled fell by 0.1%.
The relatively low growth in volumes is mainly due to the continued focus on uprating or discarding unprofitable
customers in order to improve revenue quality yields. Also, the timing of the Easter holiday which resulted in one
less working day compared to last year, impacted the second quarter growth.
Rest of the World revenues fell by 2.1% in the half year but were affected by a 13.8% negative foreign exchange
impact. Organic revenue growth was 11.7% with strong growth achieved in Australia, Asia, the Americas and the Middle
East. Second quarter organic revenue growth dropped slightly to 10.3%, partly due to the impact of the SARS virus but
mainly because of the Easter holiday timing.
* Earnings affected by underperformance in three countries
* TtS programme is underway; certain one-off costs already incurred
* High level of new contract wins at good margins
* Good second quarter organic revenue growth
Half Year HY 2003 HY 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Revenues 1,829 1,781 2.7% 7.5% 3.4% -8.2%
EBITA 41 88 -53.4% -24.7% -18.5% -10.2%
Operating margin 2.2% 4.9%
Operating margin excl one-off costs 3.0% 4.9%
Second Quarter Q2 2003 Q2 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Revenues 944 908 4.0% 9.9% 1.4% -7.3%
EBITA 21 49 -57.1% -18.4% -29.0% -9.7%
Operating margin 2.2% 5.4%
Operating margin excl one-off costs 3.6% 5.4%
Logistics revenues increased by 2.7% in the half year. On an organic basis, revenue growth of 7.5% was achieved. A
large negative foreign exchange conversion effect of 8.2% significantly reduced nominal revenues. Second quarter
organic revenue growth rose to 9.9% driven by higher growth in both Europe and North America.
First half earnings fell by Euro47 million compared with the first half of last year. One-off costs of Euro13 million
have been incurred in the half year relating to the Transformation through Standardisation programme. These consist
of various contract and warehouse termination costs and other restructuring costs. Adverse foreign exchange movements
have further reduced earnings by Euro9 million. The comparison to last year is also somewhat distorted by a gain of
Euro15 million in the prior year from the termination of a joint venture in North America and one-off costs last year
of Euro5 million. The real operational shortfall is therefore Euro15 million.
All business units still suffer from low volumes on existing contracts resulting from the weak economic conditions.
The majority of the decline in earnings however is attributable to France, Italy non-automotive and Germany. In
France, the inability to completely pass on labour and fuel surcharges to the customer, operational difficulties on a
major contract and underutilised warehouse capacity were the main reasons for the reduction in earnings. In Italy
non-automotive and Germany, inefficiencies on existing contracts are the key reasons for the decline.
New contract wins in the half year have an annualised revenue of Euro474 million (Euro314 million in the first half
of 2002). Contract renewals successfully completed in the half year amount to annualised revenues of Euro375 million,
representing a current retention rate of 77%. Contract terminations amounted to annualised revenues of Euro110
million of which the majority were due to either our own portfolio rationalisation or customer in-sourcing. New
contract wins net of terminations are 70% higher than the first half of 2002.
The business development pipeline has slightly fallen to Euro1.4 billion from Euro1.6 billion at the end of the first
quarter as a result of the recent high level of contract wins. The higher certainty part of the pipeline has remained
stable in absolute terms and represents some 17% of the total pipeline.
Revenue Analysis
Half Year HY 2003 HY 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Logistics Europe 1,360 1,277 6.5% 3.4% 5.9% -2.8%
Logistics North America 329 382 -13.9% 8.4% -3.9% -18.4%
Logistics ROW 140 122 14.8% 47.5% 0.0% -32.7%
Logistics 1,829 1,781 2.7% 7.5% 3.4% -8.2%
Second Quarter Q2 2003 Q2 2002 % Change Org% Acq% FX%
Euro mil Euro mil
Logistics Europe 703 651 8.0% 6.3% 4.3% -2.6%
Logistics North America 166 192 -13.5% 11.5% -7.8% -17.2%
Logistics ROW 75 65 15.4% 41.5% 0.0% -26.1%
Logistics 944 908 4.0% 9.9% 1.4% -7.3%
In line with the division's sector diversification strategy, the amount of total Logistics revenues represented by
the automotive sector has fallen from over 40% in the first half of last year to 37% this half year. The fast moving
consumer goods sector showed the largest increase.
The 7.5% first half organic revenue growth was achieved through new contracts (14.9%) and a positive volume impact
(1.0%), offset by the impact of terminated contracts (8.2%) and adverse price and mix effects (0.2%).
Europe revenues grew by 6.5% in the half year, 3.4% of which was organic. The rate of organic revenue growth improved
in the second quarter to 6.3% as a result of strong contract wins, including Pirelli and Volkswagen in Germany,
Telecom Italia in Italy and KPN in the Netherlands. The commencement of the sole operator contract for Fiat in May
has also contributed to the higher growth. The acquisitions of Transports Nicolas and TNT DFDS Transport in the first
half of 2002 added 5.9% to Europe's revenue growth in the half year.
North America organic revenue growth was a healthy 8.4% in the half year although nominal revenues fell by 13.9% due
to a large foreign exchange impact of 18.4%. In the second quarter organic growth increased to 11.5% due again to a
high level of new contract wins, including NACCO and Interline Brands. The termination of an automotive joint venture
in the first half of last year reduced revenue growth in the half year by 3.9%.
Rest of the World first half revenues increased by 14.8%. Organic revenue growth was a massive 47.5%, driven by the
TNT Anji joint venture in China and strong growth in the rest of Asia and Australia. This was offset to some extent
by a substantial 32.7% adverse impact from foreign exchange conversion.
Euro Million Q2 2003 Q1 2003 Q4 2002 Q3 2002 Q2 2002 Q1 2002 Q4 2001 Q3 2001 Q2 2001 Q1 2001
Group
Revenues 2,936 2,917 3,180 2,805 2,899 2,898 3,013 2,642 2,787 2,776
Earnings 299 290 382 222 305 298 363 210 278 277
from
operations
Non-allocated (7) 2 12 8 (10) (5) (41) 4 (22) 87
items
EBITA 292 292 394 230 295 293 322 214 256 364
Goodwill (39) (38) (39) (39) (38) (38) (37) (34) (35) (33)
amortisation
Operating 253 254 355 191 257 255 285 180 221 331
Income
(EBIT)
Financial (23) (24) (25) (31) (25) (27) (8) (29) (26) (30)
income and
expenses
Income taxes (84) (87) (115) (60) (81) (85) (104) (56) (70) (105)
Results from (3) (1) (1) (1) (3) (1) 2 (2)
affiliates
Minority (2) (2) (3) (3)
interests
Net Income 143 140 212 99 145 143 169 97 123 196
Net profit (14) 3 (5) (28)
on sale of
non-core
business
Net Income 143 140 198 99 145 143 172 97 118 168
from
continuing
operations
Average 475.1 475.0 475.0 475.0 475.0 475.0 475.0 475.0 478.0 475.3
number of
shares (mil)
Earnings per 30.1 29.5 44.6 20.8 30.5 30.1 35.6 20.4 25.9 41.2
share (euro
cents)
Net cash 74 324 227 214 337 254 256 161 34 322
provided by
operating
activities
Capital (72) (60) (152) (111) (130) (79) (147) (155) (114) (65)
expenditure
on property,
plant and
equipment
and other
intangible
assets
Disposals of 14 17 23 19 16 5 21 36 27 7
property,
plant and
equipment
and other
intangible
assets
Free cash 16 281 98 122 223 180 130 42 (53) 264
flow
Number of 160,536 150,155 150,365 148,285 143,097 141,463 138,563 139,065 135,539 131,426
employees
Full time 119,946 114,348 113,444 113,711 112,751 112,261 109,589 111,976 106,782 103,270
equivalent
employees
Euro Million Q2 2003 Q1 2003 Q4 2002 Q3 2002 Q2 2002 Q1 2002 Q4 2001 Q3 2001 Q2 2001 Q1 2001
Mail
Mail Netherlands
Revenues 663 700 780 634 666 715 801 624 657 688
Growth % -0.5% -2.1% -2.6% 1.6% 1.4% 3.9% 3.9% 4.5% 0.0% 1.5%
Organic -1.0% -2.1% -2.6% 1.6% 1.4% 3.9% 3.9% 4.5% 0.0% 1.5%
Acquisition 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Fx 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Addressed mail 1,297 1,411 1,575 1,201 1,333 1,412 1,618 1,225 1,328 1,393
pieces (mil)
Working days 61 64 63 65 61 64 63 65 61 64
Cross Border
Revenues 148 157 176 155 157 162 178 157 158 161
Growth % -5.7% -3.1% -1.1% -1.3% -0.6% 0.6% 4.1% 1.3% -2.5% -3.0%
Organic -1.9% 1.8% 1.1% 0.6% -1.8% -4.5% 2.8% -0.6% -1.4% -4.1%
Acquisition 0.0% 0.0% 0.0% 0.0% 3.7% 3.9% -0.6% 3.2% 0.0% 0.0%
Fx -3.8% -4.9% -2.2% -1.9% -2.5% 1.2% 1.9% -1.3% -1.1% 1.1%
European Mail Networks
Revenues 105 92 100 85 88 85 96 74 78 57
Growth % 19.3% 8.2% 4.2% 14.9% 12.8% 49.1% 45.5% 42.3% 39.3% 3.6%
Organic 12.5% 5.9% 8.4% -1.3% 3.2% 16.9% 0.2% 0.2% 8.6% -5.5%
Acquisition 9.1% 3.5% -4.2% 16.2% 10.1% 31.8% 45.8% 43.2% 30.7% 9.1%
Fx -2.3% -1.2% 0.0% 0.0% -0.5% 0.4% -0.5% -1.2% 0.0% 0.0%
Data & Doc Management
Revenues 51 50 62 44 48 48 48 45 42 32
Growth % 6.3% 4.2% 29.2% -2.2% 14.3% 50.0% 71.4% 60.7% 23.5% 6.7%
Organic 0.1% 6.3% 6.3% -6.6% 1.0% 8.1% 34.6% 14.3% -1.0% 6.7%
Acquisition 8.3% 0.0% 25.0% 4.4% 13.3% 41.9% 36.8% 46.4% 24.5% 0.0%
Fx -2.1% -2.1% -2.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total Mail
Revenues 967 999 1,118 918 959 1,010 1,123 900 935 938
Growth % 0.8% -1.1% -0.4% 2.0% 2.6% 7.7% 8.4% 8.2% 2.9% 1.0%
Organic 0.2% -0.4% -0.7% 0.7% 1.0% 3.5% 4.3% 4.0% 0.3% 0.3%
Acquisition 1.6% 0.3% 0.7% 1.6% 2.1% 4.0% 3.8% 4.9% 2.8% 0.5%
Fx -1.0% -1.0% -0.4% -0.3% -0.5% 0.2% 0.3% -0.7% -0.2% 0.2%
EBITA 212 218 247 144 195 218 240 144 189 208
Operating 21.9% 21.8% 22.1% 15.7% 20.3% 21.6% 21.4% 16.0% 20.2% 22.2%
margin
Goodwill (10) (7) (9) (6) (8) (7) (6) (4) (5) (4)
amortisation
Operating 202 211 238 138 187 211 234 140 184 204
income (EBIT)
Note: Revenues for Mail lines of business have been restated to reflect a more accurate elimination of internal
transactions.
Euro Million Q2 2003 Q1 2003 Q4 2002 Q3 2002 Q2 2002 Q1 2002 Q4 2001 Q3 2001 Q2 2001 Q1 2001
Express
Express Europe
Revenues 847 856 899 822 845 836 825 747 780 783
Growth % 0.2% 2.4% 9.0% 10.0% 8.3% 6.8% -2.5% 1.4% 3.2% 5.5%
Organic 3.8% 6.3% 8.4% 7.3% 7.7% 2.8% -2.2% 3.5% 4.1% 5.8%
Acquisition -0.2% -0.5% 1.8% 2.8% 1.9% 3.0% -0.1% -1.1% -1.3% 0.6%
Fx -3.4% -3.4% -1.2% -0.1% -1.3% 1.0% -0.2% -1.0% 0.4% -0.9%
Core 33.7 33.8 35.2 30.2 33.8 32.9 33.0 28.8 31.6 32.0
consignments
(mil)
Core kilos 527.3 523.3 566.4 494.3 522.5 519.8 550.2 487.3 505.8 521.8
(mil)
Core revenue 4.5% 3.3% 4.3% 2.8% 2.4% 2.0% 2.2% 2.8% 5.7% 7.5%
quality yield
improvement
Express ROW
Revenues 189 181 205 190 195 183 195 192 198 186
Growth % -3.1% -1.1% 5.1% -1.0% -1.5% -1.6% -11.8% -13.1% -3.4% -4.6%
Organic 10.3% 13.3% 14.9% 7.4% 5.0% -4.8% -7.1% -4.6% 1.2% 1.0%
Acquisition 0.0% 0.0% 0.0% 0.5% 0.0% 0.5% 0.1% 0.2% 0.0% 0.0%
Fx -13.4% -14.4% -9.8% -8.9% -6.5% 2.7% -4.8% -8.7% -4.6% -5.6%
Total Express
Revenues 1,036 1,037 1,104 1,012 1,040 1,019 1,020 939 978 969
Growth % -0.4% 1.8% 8.2% 7.8% 6.3% 5.2% -4.4% -2.0% 1.8% 3.4%
Organic 5.1% 7.6% 9.4% 7.2% 7.1% 1.4% -3.2% 1.6% 3.4% 4.8%
Acquisition -0.2% -0.4% 1.6% 2.4% 1.5% 2.5% -0.1% -0.9% -1.0% 0.5%
Fx -5.3% -5.4% -2.8% -1.8% -2.3% 1.3% -1.1% -2.7% -0.6% -1.9%
Working days 60 63 62 65 61 62 62 65 60 63
EB1TA 66 52 107 37 61 41 69 19 35 34
Operating 6.4% 5.0% 9.7% 3.7% 5.9% 4.0% 6.8% 2.0% 3.6% 3.5%
margin
Goodwill (13) (13) (13) (14) (13) (12) (12) (14) (12) (13)
amortisation
Operating 53 39 94 23 48 29 57 5 23 21
Income (EBIT)
Euro Million Q2 2003 Q1 2003 Q4 2002 Q3 2002 Q2 2002 Q1 2002 Q4 Q3 Q2 Q1
2001 2001 2001 2001
Logistics
Logistics Europe
Revenues 703 657 707 659 651 626
Growth % 8.0% 5.0% 19.4% 26.5% 18.8% 32.6%
Organic 6.3% 0.5% 3.7% 4.1% 6.0% 19.3%
Acquisition 4.3% 7.5% 8.6% 11.3% 4.4% 0.4%
Fx -2.6% -3.0% 7.1% 11.1% 8.4% 12.9%
Logistics North America
Revenues 166 163 168 155 192 190
Growth % -13.5% -14.2% -5.6% -11.9% -9.9% -5.0%
Organic 11.5% 5.3% 6.2% -3.4% -1.9% -9.5%
Acquisition -7.8% 0.0% 0.0% 0.0% 0.0% 0.0%
Fx -17.2% -19.5% -11.8% -8.5% -8.0% 4.5%
Logistics ROW
Revenues 75 65 72 68 65 57
Growth % 15.4% 14.0% 24.1% 21.4% 6.6% 14.0%
Organic 41.5% 54.4% 53.4% 44.6% 18.0% 18.0%
Acquisition 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Fx -26.1% -40.4% -29.3% -23.2% -11.4% -4.0%
Total Logistics
Revenues 944 885 947 882 908 873 885 814 878 778
Growth % 4.0% 1.4% 7.0% 8.4% 3.4% 12.2% 9.8% 39.4% 72.7% 62.8%
Organic 9.9% 5.0% 7.7% 6.1% 0.6% 3.3% 1.9% 6.8% 11.5% 11.2%
Acquisition 1.4% 5.4% 4.8% 6.3% 6.9% 7.1% 7.7% 36.2% 61.5% 53.6%
Fx -7.3% -9.0% -5.5% -4.0% -4.1% 1.8% 0.2% -3.6% -0.3% -2.0%
Revenues by sector:
Automotive 345 336 347 316 356 361
Tyres 43 58 68 58 47 46
FMCG 163 151 195 179 150 131
Hi-tech 117 119 125 103 109 109
electronics
Publishing / 48 56 66 57 57 56
media
Other 228 165 146 169 189 170
EB1TA 21 20 28 41 49 39 55 46 53 36
Operating 2.2% 2.3% 3.0% 4.6% 5.4% 4.5% 6.2% 5.7% 6.0% 4.6%
margin
Goodwill (17) (17) (18) (17) (18) (19) (18) (17) (18) (16)
amortisation
Operating 4 3 10 24 31 20 37 29 35 20
Income (EBIT)
HY 2003 HY 2002
Euro mil Euro mil
Net sales 5,811 5,748
Other operating revenues 42 49
Total operating revenues 5,853 5,797
Salaries and social security contributions (2,045) (2,023)
Depreciation, amortisation and impairments (246) (236)
Other operating expenses (3,055) (3,026
Total operating expenses (5,346) (5,285)
Operating income 507 512
Financial income and expenses (47) (52)
Income before income taxes 460 460
Income taxes (171) (166)
Results from investments in affiliated companies (4) (3)
Minority Interests (2) (3)
Net income 283 288
Effective tax rate 37.2 36.1
Net income per ordinary share and per ADS (1) (in euro cents) 59.6 60.6
(1)Based on the average amount of 475,072,479 ordinary shares, including ADS (2002: 475,017,834).
Before proposed appropriation of net income
HY 2003 HY 2002*
Euro mil Euro mil
Net income 283 288
Depreciation, amortisation and impairments 246 236
Changes in pension liabilities (109) (71)
Changes in other provisions (13) 13
Changes in deferred taxes 68 11
Changes in working capital (77) 114
Net cash provided by operating activities 398 591
Acquisition/disposal of group & affiliated companies (28) (84)
Capital expenditure on property, plant and equipment (121) (209)
Capital expenditure on intangible assets (11)
Disposals of property, plant and equipment 22 21
Disposals of intangible assets 9
Changes in other financial fixed assets (19) (11)
Changes in minority interests 0 2
Net cash used in investing activities (148) (281)
Dividend (120) (115)
Long-term liabilities acquired 56 10
Long-term liabilities repaid (34) (51)
Changes in short-term bank debt (61) (301)
Net cash used by financing activities (159) (457)
Changes in cash and cash equivalents 91 (147)
Cash and cash equivalents at beginning of period 357 451
Exchange rate differences on cash items (7) (13)
Cash and cash equivalents from acquisition and disposal of group companies (4) 1
Changes in cash and cash equivalents 91 (147)
Cash and cash equivalents at end of period 437 292
* Reclassifications have been made to increase comparability with current year presentation of other intangible
assets separate from property, plant and equipment.
Before proposed appropriation of net income
At 30 June At 31 Dec 2002
2003 Euro mil
Euro mil
Assets
Fixed assets
Intangible assets 2,659 2,766
Property plant and equipment 2,041 2,130
Financial fixed assets 708 677
Total fixed assets 5,408 5,573
Current assets
Inventory 55 56
Accounts receivable/prepayments 2,382 2,280
Cash and cash equivalents 437 357
Total current assets 2,874 2,693
Total assets 8,282 8,266
Group equity
Shareholders' equity 3,084 2,961
Minority interests 13 18
Total group equity 3,097 2,979
Provisions
Retirement schemes 28 28
Deferred tax liabilities 126 133
Other provisions 121 133
Total provisions 275 294
Pension liability 633 742
Liabilities
Interest bearing liabilities 1,714 1,761
Non Interest bearing liabilities 2,563 2,490
Total liabilities 4,277 4,251
Total liabilities and group equity 8,282 8,266
Divisional Summary
HY 2003 Euro mil Euro mil HY 2002 Euro mil
Euro mil Euro mil Operating EBITA Euro mil Operating
EBITA Goodwill income Goodwill income
amortisation amortisation
Mail 430 (17) 413 413 (14) 399
Express 118 (26) 92 102 (26) 76
Logistics 41 (34) 7 88 (36) 52
589 (77) 512 603 (76) 527
Non-allocated (5) 0 (5) (15) 0 (15)
items
584 (77) 507 588 (76) 512
Capital expenditure on property, plant and equipment and other intangible assets
HY 2003 HY 2002
Euro mil Euro mil
Mail 39 51
Express 59 82
Logistics 32 75
Corporate 2 1
Total 132 209
Movement in shareholders' equity
Movement in shareholders' equity
HY 2003 HY 2002
Euro mil Euro mil
Opening balance at 1 January 2,961 2,600
Net income for the period 283 288
Foreign exchange effects (41) (49)
Cash dividend (119) (114)
Balance at 30 June 3,084 2,725
Net Income
HY 2003 HY 2002
Euro mil Euro mil
Net income under Dutch GAAP 283 288
Adjustments for:
Employment schemes & group reorganisation (6) (7)
Stock based compensation expense (2)
Goodwill amortisation 77 76
Financial instruments 6 (9)
Real estate sale (1)
Depreciation on restoration of previously recognised impairments 2 2
Depreciation of capitalised software (4)
Pension curtailment gain 2
Tax effect of adjustments 5
Net Income under US GAAP 359 353
Net income per ordinary share and per ADS 1 (in Euro cents) 75.6 74.3
(1)Based on the average amount of 475,072,479 ordinary shares, including ADS (2002: 475,017,834)
Shareholders' Equity
HY 2003 HY 2002
Euro mil Euro mil
Shareholders' equity under Dutch GAAP 3,084 2,725
Adjustments for:
Employment schemes & group reorganisation 146 158
Stock based compensation (2) 1
Goodwill 168 12
Other intangible assets amortisation (2) 0
Financial instruments (5) (15)
Real estate sale (17)
Sale and leaseback transaction (4)
Restoration of previously recognised impairments, net of depreciation (9) (13)
Long-term contract incentive payment (6)
Capitalised software 6
Pension curtailment gain 2 2
Deferred taxes on adjustments (40) (50)
Shareholders' equity under US GAAP 3,315 2,826
1. Accounting policies
Accounting policies have remained unchanged in the six months to 30 June 2003.
2. Restatement of prior year numbers
The prior year numbers of Express and Logistics have been restated for consistency to reflect the transfer of the
In-night business from Express to Logistics at the beginning of 2003.
Revenues for Mail lines of business for the first quarter of 2003 and the prior year have been restated to reflect a
more accurate elimination of internal transactions.
In accordance with the Dutch Council for Annual Reporting directive RJ160 , prior year shareholders' equity has been
restated to reflect that the appropriation of results for the year be recorded as a dividend upon shareholder
approval and not upon declaration by management.
3. Increase in pension costs
An additional gross pension cost of euro37 million (euro24 million net of tax) will be charged in the income
statement in 2003 compared to the previous year in respect of defined benefit schemes. As a result of this, net
income excluding pension increase will be separately identified in 2003. Additional pension costs charged in the half
year 2003 income statement compared to the previous year are as follows:
Gross Net
(before tax) (after tax)
Euro mil Euro mil
Pension costs in HY 2003 21 13
Pension costs in HY 2002 (2) (1)
Increase in pension costs 19 12
4. One-off costs
One-off costs associated with the Logistics "Transformation Through Standardisation" programme have been charged in
Operating Income in the half year.
Gross Net
(before tax) (after tax)
Euro mil Euro mil
One-off costs 13 8
5. Composition of the Group
There have been no material changes in the composition of the Group during the six months to 30 June 2003.
6. Employees
Total number of employees at 30 June 2003 was 160,536 compared to 150,365 at 31 December 2002.
Financial Calendar 2003
Wednesday 6 August Ex-dividend listing of TPG shares
Wednesday 13 August Payment of interim dividend
Monday 27 October Publication of 2003 third quarter results
Financial Calendar 2004
Thursday 19 February Publication of 2003 full year results
Wednesday 7 April Annual General Meeting of Shareholders
Tuesday 13 April Ex-dividend listing of TPG shares
Wednesday 21 April Payment of final dividend
Jon Downing
Director of Investor Relations
Contact:
Phone +31 20 500 62 41
Fax +31 20 500 75 15
Email jon.downing@tpg.com
Emilie de Weert
Manager of Investor Relations
Contact:
Phone +31 20 500 62 42
Fax +31 20 500 75 15
Email emilie.de.weert@tpg.com
Tanno Massar
Director of Media Relations
Contact:
Phone +31 20 500 61 71
Fax +31 20 500 75 20
Email tanno.massar@tpg.com
Published by:
TPG N.V.
Neptunusstraat 41-63
2132 JA Hoofddorp
P.O. Box 13000
1100 KG Amsterdam
Phone +31 20 500 60 00
Fax +31 20 500 70 00
Email tpg.communication@tpg.com
Internet www.tpg.com
Responsible for content and editing:
TPG Investor Relations
Forward-looking statements warning - Safe Harbour Statement under the US Private Securities Litigation Reform Act of
1995
This press release contains forward-looking statements. Forward-looking statements generally can be identified by the
use of terms such as "ambition", "may", "will", "expect", "intend", "anticipate", "believe", "plan", "seek",
"continue" or similar terms. By their nature, forward-looking statements involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future. These forward-looking statements involve
known and unknown risks, uncertainties and other factors, many of which are outside of our control, that may cause
actual results to differ materially from any future results expressed or implied in the forward-looking statements.
In addition to the assumptions specifically mentioned in this press release, there are a number of other factors that
could cause actual results and developments to differ materially from those expressed or implied by these
forward-looking statements. These factors include, but are not limited to: substitution of alternative methods for
delivering information for TPG's Mail and Express services; regulatory developments and changes, including with
respect to the levels of tariffs, the scope of mandatory and reserved services, quality standard, liberalisation in
the Dutch and European postal markets and the outcome of pending regulatory proceedings; competition in the mail,
express and logistics businesses; decisions of competition authorities regarding proposed joint ventures or
acquisitions; costs of complying with governmental regulations; general economic conditions, government and
regulatory policies and business conditions in the markets served by us, including adverse effects of terrorist
attacks, anthrax incidents, war or the outbreak of hostilities; higher costs of insurance coverage for future claims
caused by acts of war, terrorism, sabotage, hijacking or other similar perils; the effect of the current economic
downturn and other risks and trends in the world economy and the timing, speed and magnitude of any economic
recovery; our ability to achieve cost savings and realise productivity improvements and the success of investments,
joint ventures and alliances; fluctuations in fuel costs; changes in currency and interest rates; increased price
transparency resulting from the adoption of the Euro; changes in TPG's credit rating and their impact on TPG's
financing costs and requirements; changes in TPG's relationship with the State of the Netherlands; disruptions at key
sites; incidents resulting from the transport of hazardous materials; mismatches between TPG's investment in
infrastructure (aircraft, depots and trucks) and our actual capacity needs; strikes, work stoppages and work
slowdowns and increases in employee costs; costs of completing acquisitions or divestitures and integrating newly
acquired businesses; and changes to the international conventions regarding the limitation of liability for the
carriage of goods. These factors and other factors that could affect these forward-looking statements are described
in TPG's annual report on Form 20-F and TPG's other reports filed with the US Securities and Exchange Commission. Any
statements regarding past trends or activities should not be taken as a representation that such trends or activities
will continue in the future. You are cautioned not to put undue reliance on these forward-looking statements, which
speak only as of the date of this press release. TPG disclaims any obligation to publicly update or revise these
forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.
END
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