TNT ExpressDelivering our customers’ success
Marie-Christine Lombard2 December 2010
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TNT Express
Network A global, interconnected system of local networksOwned air connectivity to provide dedicated capacity & reliabilityDense road networks to provide cost efficient solutions
PeopleService oriented cultureStrong local managementFocus on excellence and value-added services
No1 intra-Europe B2BStrong footprints: China and South AmericaBroad coverage: from Domestic to Intercontinental, from Economy to Full Service/Customised
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TNT Express today
European Road and Air Network
Middle-EastRoad network
South-AmericanRoad network
South-East AsianRoad network
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ManufacturerManufacturer RetailerRetailer End UserEnd User
Domestic
StartingPositionStartingPosition
Local economies / domestic transportPrimary focus on last-mile distribution, largely parcels based
CustomerValue Chain
TNTNetwork
TNTNetwork
Evolution
Growing with our customers
TNT Express can manage the entire flow for its customers
RegionalGlobal
WholesalerWholesalerEU DCEU DCAsiaGateway
AsiaGatewayAssemblersAssemblersSuppliersSuppliers
GlobalisationGlobalisation
Followed the customer to low cost countriesMore consolidated flows, freight basedAcquired & built dense local road networksOwned air connectivity & best-in-class hubs/depots
E-commerceE-commerce Added B2C capabilities for direct delivery
Global IT Infra-
structure
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Special/customised
Express(Day/Time
Definite)
Standard (High End)
Standard(Lower End)
Europe Intercontinental Emerging Platforms
Resulting in broad market coverage
Parcels / Freight Market Segments
Stronghold in European Express market (parcels/freight)
Expansion of value-added services in Europe
Globalisation: inter-continental trade flows
Expansion to emerging platforms to tap domestic growth
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4.7 7.0
2004 Q4 09 – Q3 10
Growth in two phases
• Expansion to Eastern Europe• Double-digit growth in
revenues and volumes• Strong profitability growth
• Expansion to emerging markets• Further growth of revenues and
volumes• Profitability diluted by network
development step-up costs…• …compounded by global
economic recession
Phase I: 2004-2007 Phase II: 2007-2010
Increased focus on costs & yield
Historic revenue development* – € billion
* Excluding one-offs and separation-related costs
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Cost savings and yield improvement programme
Figures indicative only
Target averageprice increase % revenues affected
Improved customer and product mix 1.0% 100%
General price increase for customers on standardised tariffs 3.5% 30-35%
Contract-specific price increase2.0% 65-70%
Surcharges
• Impact on profitability must be understood in context of net of cost inflation and cost efficiencies, full impact in 2011
Cost savings 2009: € 428 million
Cost savings achieved during economic downturn
Impact yield improvement measures
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Yield improvement programme starting to pay-offResults in Q4 2010
Base price increase
Contract specific
Surcharge deployment
Improved customer mix• Gap in international
revenue growth between large accounts and SME customers now gone
• In recent months net positive yield impact of customer churn
• 50% reduction of customers with partial or full fuel surcharge exemption
• Double the deployment of ‘special handling’surcharges
• Launch of Enhanced Security Surcharge as of December 12
• Low yielding customers being cut
• More than double the revenues on Monthly Volume Discount rate card
• Consistent international RPC increase in all customer segments in past 2 months
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Major Trends
Blurring Boundaries
Same day
Time certain
Day certain (1-3 days)
Day certain (3-5 days)
Day uncertain
Integrators
Mail1st class
Standardparcel operators
Couriers
Mailother
Freightforwarders
Seacarriers
Trucking companies
Documents Parcels Full Loads BulkPallets
Adjacent service and infrastructure operatorsAdjacent service and infrastructure operators
Emerging Markets
E-commerce
Sustainability
Customers are looking for efficient solutions and value-added serviceNon-guaranteed players are upgrading their service level
Continued growth of international tradeStrong domestic growth in emerging markets
Ongoing digitisation of the economyLeading to strong growth in B2C parcels
Driven by customers and governments Necessity to reduce carbon emissions & local air pollution
TNT actions
Expanding into value-added servicesOffering economic options, expand in deferred segment
Expanding intercontinental air connectivity with EuropeBuilding local & regional net-works in emerging markets
Expanding into B2C solutionsProviding internet-based sales channel to reach out to our customers
Improving CO2 efficiency:40% by 2020Launching CO2 customer services
Vision 2015: capturing growth opportunities in a changing world
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Expanding into adjacent market segments
Special/customised
High growth verticals, e.g. hospital & clinical express
Express(Day/Time
Definite)
Technology, automotive & field service fulfillment
Standard (High End)
European B2Bparcels
European express freight
Asia-EU lane Day definite servicesCapture latent express demand
Standard
High end B2C parcelsDeferred parcels
Deferred freight
Domestic market leadership
Standard(Low End)
Europe Intercontinental Emerging Platforms
Strengthen existing business
Expand into new activities
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Parcels
Freight
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Value-added services
Emerging Platforms
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21 4
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5.0 7.02009 2010E
Parcels: high-end B2C parcels solution launched1
SMS and/or e-mail notifying receiver when parcel will be delivered
Website for receiver to rearrange delivery
- Another day- Alternative address- Collection at TNT location
‘Not at home’ residential deliveries
+41%
Number of B2C parcelsmillion
20% 10%Traditional New approach
Comprehensive B2C solution for e-commerce playersComprehensive B2C solution for e-commerce players
TNT will deliver your XYZ order on 10/06/10 tracking number 122222222
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Complement TNT offering to and strengthen ties with existing large customers by providing a solution for non-Express supply chain
Focus on European-wide palletised flows
Asset-light set-up, low IT investment
Utilise existing (linehaul) capacity in current Express networks, e.g. empty backhaul
Leverage capabilities, e.g. back-office & procurement
Existing revenues in road freight ~ € 30 million
Top 25 customer potential ~€ 1.2 billion
ApproachApproach
A sizable opportunityA sizable opportunity
Express Process (Road) Road Freight Process
• Fast • On-demand• Trade and emergency flows
• To end customer• Service oriented process
• Standardised and palletised industrial freight
• Predictable and consolidated
• Tailored to large customer supply chains
• Capacity maximisation process
Freight: innovative time-definite solutions
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Spare parts storage management and order processing in forward stock locationsCourier services for urgent deliveriesIn-night for engineer deliveriesExpress services for customer deliveries and replenishmentReturns via road network
Combining Express and special delivery networks …
… to deliver high-quality service
VAS: Storapart solution for Telecom customer3
TNT’s 489 forward stock locations
2, 3 and 4 hour response KPI24 hours / 365 days availabilityFull visibility and continuous improvement through control towerISO accredited
Example
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Emerging Platforms: air connection to Chongqing4
Chengdu / Chongqing
Upcoming area
~70% of production
Production moving towardsCentral and Western ChinaProduction moving towardsCentral and Western China
TNT first to fly to Chongqingwith own 747 freighterTNT first to fly to Chongqingwith own 747 freighterStrong growth of China to Europe revenues: +34% YTD Sept.Solid growth of global computing & semiconductor vertical: +27% YTD SeptFacilitated by TNT’s unique landing rightsHoau network provides China domestic connectivity
Example
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Emerging Platforms: Brazil domestic4
• Secure mobile phonedistribution for leading brand from plant in Manaus to telecom operators and retailers throughout Brazil
• Support of product launches and distribution of hand-held devices for leading high-tech computing company from Sao Paulo to telecom operators in Brazil
• Distribution of auto spare partsto garages for several leading car manufacturers and OEMs
Brazil already #3 growth area for our global accounts (after intra-Europe and China to Europe) leading to >60% revenue growth Sept YTD for GAM segment in Brazil
TNT supports industry leading companies with their expansion into BrazilTNT supports industry leading companies with their expansion into Brazil
Example
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Focus on CO2 efficiency driven by customer requirements
Visibility of CO2
emissions in supply chains
Historical and predictive reporting of CO2 emissions
Joint efforts to reduce CO2
Efficient and clean
transportation
• Bespoke, top-down and activity-based CO2allocation system – including suite of reporting services
• Conform to latest World Economic Forum Consignment-Level Carbon Reporting guidelines
• System CO2 methods assured by external party
• Launch of marketing programme – including dedicated Microsite
100 602007 2020
-40%
TNT Express carbon efficiency targetIndex: 2007 = 100
What customers are asking for
Global roll-out of System CO2 in 2011
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Key financial principlesBalanced mix of high return high growth activitiesStringent investment and working capital managementTax optimisationStrong cash flowSolid balance sheet
Value, growth and profit
EBIT + asset efficiency + tax efficiency
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€ million Revenues EBIT
EBIT after allocation TNT NV central
costs
Q4 09 -Q3 10
Europe & MEA ~4,500
ASPAC ~1,550
Americas ~500
Other Networks ~400
Express ~6,950 ~350 ~330
2011 Target 7,300 – 7,500 420 – 440 400 – 420
2015 Target 10,000 – 11,000 900 – 1,000
2011 and 2015 Express outlook
Note: all figures exclude one-offs, Q4 09 – Q3 10 figures at actual fx rates, targets at constant fx rates
Includes ~€ 20 million of allocated central costs, which will be offset by specific efficiency measures in the coming years
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Executive and Management Boards
Marie-Christine LombardCEO
17 years at TNT
Bernard BotCFO
5 years at TNT
Jan Willem BreenDirector
Marketing & Sales4 years at TNT
Chris GoossensDirector Global
Operations22 years at TNT
Group HR Director
David BurtonRegional Managing Director
Northern Europe28 years at TNT
Christian DrenthenRegional Managing Director
SE and MEA16 years at TNT
Michael DrakeRegionalManagingDirectorASPAC
17 years at TNT
Guy MasonICS Managing
Director1 year at TNT
Mark GuntonRegional ManagingDirector
Americas21 years at TNT
To be
appointed
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3,500 P&L responsible Express entrepreneurs