The ratings on The Netherlands-based TPG N.V. reflect: the group's strong Dutch mail business, which is very profitable and cash generative; its good position in the global express and logistics businesses; and its overall conservative financial profile, although leverage is somewhat high for the rating. The ratings are underpinned in particular by TPG's stable mail business, which achieved a strong EBITA margin of more than 22% in the fiscal year ended Dec. 31, 2004. Standard&Poor's expects this margin to remain above 20% in 2005, despite higher pension costs. Cost-flexibility and cost-reduction measures have so far offset the expected decline in letter volumes. The mail division is expected to generate a high absolute cash flow in the foreseeable future.
