Tnt Company Report

Executive Summary

Ð'* TNT N.V. is one of four leading worldwide mail and express delivery companies with a 9% market share of the big four companies and a turnover of continuing business of Ð'Ђ10.105 million in 2005 and profit after interest and taxes of Ð'Ђ772 million.

Ð'* TNT N.V. decided in 2005 to dispose of its logistics division which accounted in 2005 for additional Ð'Ђ3.542 million and a loss of Ð'Ђ111 million.

Ð'* TNT N.V.'s profit, liquidity and efficiency are stable and around industry average but still leave room for improvement.

Ð'* TNT N.V. financial gearing is low compared to its competitors. The company could make better use of long-term debt opportunities.

Ð'* TNT N.V. developed strongly on the stock market in 2005 and outperformed its competitors in terms of share price increase.

Ð'* TNT N.V. is strong on dividends but lacks strength in some areas of stock price performance ratios as earnings per share.

Ð'* TNT N.V.'s annual report 2005 is strong on adoption of IFRS, outlining of business held for sale and management remuneration but could be improved on clarity and detail in other areas than those mentioned.

Table of Contents

Executive Summary II

Table of Contents 3

1 Introduction 4

2 The Company 5

3 The Literature Search 6

4 The Data and its Analysis 7

4.1 Profitability 7

4.2 Efficiency 8

4.3 Liquidity 9

4.4 Financial gearing 9

4.5 Investment ratios and stock market performance 10

4.6 The position of TNT compared to its peer competitors 11

Turnover 11

Stock performance 12

About TNT's company report 2005 13

5 Conclusion and Recommendations 15

Appendix A 17

Bibliography 17

Appendix B 19

Plagiarism Statement 21

1 Introduction

A Dutch company, determined to conquer the world. As if they inherited the trading spirit of their V.O.C. ancestors in the Golden Century. Is that a fair view? That is what this report investigates. Is TNT a financially healthy company? Is TNT following the right strategy? Is TNT successful in the delivery service market? And is TNT worth investing in?

TNT N.V. (TNT) provides businesses and consumers worldwide with an extensive range of services for their mail and express delivery needs. The company has evolved from being a postal company in the Netherlands into an international group. TNT serves more than 200 countries and currently employs around 147,000 people. Over 2006, TNT reported Ð'Ђ10,1 billion in revenues and an operating income of Ð'Ђ1.276 million. TNT is publicly listed on the stock exchange of New York and Amsterdam (TNT N.V., 2007).

This report is based on the 2005 Annual Reports of TNT and its main competitors, Deutsche Post World Net (DPWN), Federal Express (FedEx) and United Parcel Service (UPS). While finishing this report the 2006 Annual Reports of TNT and FedEx became available but could not anymore be considered.

To answer the questions mentioned above a financial analysis is critical. An analysis of the most common ratios was undertaken, which can be found in chapter four. Conclusions and recommendations are pointed out in chapter five. But first the activities of the company are outlined in chapter 2 and are followed by an explanation of the literature search in chapter 3.

2 The Company

As mentioned earlier, TNT provides businesses and consumers worldwide with extensive mail and express delivery services. The company operates in a mail division and an express division. TNT also had a third pillar, logistics, but felt Ð''declining profit margins' and had problems keeping the segments cost under control. TNT therefore decided in 2005 to sell its contract logistics operations during 2006. The segment accounted for 26% of net sales (Ð'Ђ3.542 Mio.) in 2005.

Mail Division

TNT's mail division is segmented into four parts: Mail Netherlands, Cross-border Mail, European Mail Networks and Data and Document Management (Reuters.com, 2007).

Express Division

The TNT express division is organized in two segments: express and freight management. The express division provides door-to-door express delivery services for customers sending documents, parcels and freight. The Company's freight management business provides air and sea freight transportation by acquiring cargo space from airline and shipping firms. (Reuters.com, 2007)

3 The Literature Search

Most of the financial information on TNT can be found on the company's website. The financial newspapers, particularly "De FinanciÐ"«le Telegraaf" were also very useful. The international website of Reuters is very useful for investors. The textbook Ð''Accounting and Finance for non-specialists' (Atrill, P. and McLaney, E., 2006) is a good guidance for calculating ratios for the financial analysis. The annual reports of the main competitors were used for a good comparison of the financial influence, market share and share price performance. A more detailed bibliography is outlined in appendix A.

4 The Data and its Analysis

To give a true and fair view of the financial strengths and weaknesses of TNT, the annual report will be judged on the basis of five aspects. Ratio analysis on profitability, efficiency, liquidity, financial gearing and the investment grade of the company will be used. The analysis comprises a comparison of TNT's development from 2004 to 2005 as well as its relative performance against its competitors. In this analysis, except