TNT Express revealed today that it has finalised an agreement to sell its domestic road business in China.
The Netherlands-based integrator currently struggling to turn its financial performance around said it will be selling the TNT Hoau unit to funds managed by CITIC PE, the private equity arm of Chinese state-owned investment company.
The sale is subject to regulatory approvals, but should be completed in the second half of 2013, with part of the payment going through in 2014.
TNT said it now planned to focus on cross-border express shipping to and from China once it has withdrawn from the domestic business.
Commenting on the sale today, TNT Express interim CEP Bernard Bot said: “In the past few years, Hoau has transformed itself into a leading nationwide operator in China. The change of ownership secures the ongoing growth and development of the company.
“TNT Express will focus on offering the broadest range of international services to and from China,” added Bot.
TNT is also currently looking to sell its business in Brazil as it pursues a strategy that will focus more on its core market in Europe, and international shipping to and from Europe.
The company’s strategy aims to improve its profitability by EUR 220m by 2015.
TNT said its Hoau business provides less-than-truckload (LTL) services and day-definite delivery services with an “extensive” network go about 1,500 depots covering more than 600 cities.
The Shanghai-based company was originally founded in 1995 as Hoau Logistics, and TNT bought the business in 2007 but subsequently struggled with its Chinese division’s profitability.
TNT announced back in February 2012 that it was looking to explore a possible sale of its Chinese business, holding EUR 114m worth of assets for disposal.
TNT’s China Domestic division generated revenues of EUR 261m last year, with an operating loss of EUR 13m.
Domestic volumes in China represented 65% of all TNT’s shipments, by weight, in the Asia Pacific region in 2012. LTL volumes have been falling, but day-definite volumes have been growing at 40% year-on-year and now account for more than 35.6% of Hoau’s turnover.
TNT’s international express operation in China has 3,000 employees and a network of 36 depots across the country, linking in with three international gateways in Beijing, Shanghai and Shenzhen.
Source: Post&Parcel/TNT Express
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