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Announcement:

Moody's affirms TNT's A3 ratings and maintains negative outlook

Global Credit Research - 07 Jun 2010

Approximately EUR900 million of rated debt

Milan, June 07, 2010 -- Moody's Investors Service has today affirmed TNT's A3 ratings but maintained the negative outlook. While the concerns about the difficult market conditions in the express market that prompted the negative outlook for the ratings have somewhat abated, the outlook now focuses on the business and financial implications of the company's exploration of the best long-term alternatives for its Mail business.

"Although there are mild signals of recovery in trading conditions in the Express division, with volumes in the air transportation segment up significantly compared to the previous year, the negative outlook reflects Moody's view that TNT remains weakly positioned in its rating category and that a partial disposal of the mail business to the extent of losing managerial control would reduce diversification with Mail being a relatively stable activity while the use of disposal proceeds to strengthen the capital structure is uncertain at this stage", says Paolo Leschiutta, a Moody's Vice-President - Senior Analyst.

"In April 2010, TNT announced that, as part of its Vision 2015 strategy, the group will focus on its Day-Definitive Delivery business, exploring the best alternatives for its Mail business, which might include new partnerships or the IPO of part of the Mail business. If this is implemented, the more cyclical express activities will represent an increasing contribution to the group's profitability going forward, at a time when market conditions remain unsettled and when the Mail activity is likely to face increasing competitive pressure following full liberalisation of the Dutch mail market in April 2009. Despite the declining and mature nature of the postal business, the Mail activity is regarded as a strong and stable contributor to the group's cash flow generation which compensates for the more cyclical nature of the Express activity. A reduction in control of this activity might therefore result in more volatile operating results for the group going forward", continued Mr. Leschiutta.

At this stage, Moody's understands that TNT is only considering various options to gradually reduce its interest in both the domestic and international mail activities, and Moody's would, nonetheless, expect the company to maintain a solid financial profile going forward. In addition, in the event of a loss of control in its domestic business, Moody's would expect the company to retain proceeds in order to reduce debt or to reinvest in the Express business. As a result Moody's would expect the company's financial profile to strengthen to compensate for the more volatile nature of the Express activities. Failure to do so is likely to result in a ratings downgrade.

Based on the current business profile, in order to maintain the existing rating, Moody's would expect the company to maintain a financial leverage, measured as Debt to EBITDA on a gross basis (adjusted for pensions and operating leases) around 2.5x, and an RCF (after dividends but before working capital and capex) to Debt on a gross basis (adjusted for pensions and operating leases) around 20% on a sustainable basis. A deteriorating financial profile as a result of (i) operating margin compression associated with more difficult market conditions across Europe; (ii) any large debt financed acquisitions; and/or (iii) sizeable share buybacks that lead to additional debt financing would likely result in a rating downgrade. Negative pressure would arise if TNT's RCF to Debt trended towards 17% and Debt-to-EBITDA remained above 3x. However, Moody's would likely review and tighten guidance metrics in case of loss of control of the Mail activity to compensate for a deterioration of the company's business risk and cash flow generation profile.

Moody's previous rating action on TNT was implemented on 26 November 2008, when Moody's affirmed the company's senior unsecured ratings at A3 and changed the rating outlook to negative. The rating action followed the weakening operating performance reported by the company during 2008 and the challenging market conditions in the Express delivery business globally.

The principal methodology used in rating TNT is the "Global Postal and Express Delivery Companies" rating methodology, published in December 2008, which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating TNT can also be found in the Rating Methodologies sub-directory on Moody's website.

Based in the Netherlands, TNT N.V. is a global provider of mail and express services operating in more than 200 countries under two brands: Royal TNT Post (Mail) and TNT (Express). As at FYE December 2009, the company reported revenues of EUR10.4 billion (down 6.7% year-on-year), and an underlying operating profit of EUR896 million (down 21.5% year-on-year).

London
Paloma San Valentin
Managing Director
Corporate Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Milan
Paolo Leschiutta
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
Telephone:+39-02-9148-1100

Moody's affirms TNT's A3 ratings and maintains negative outlook
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