9th Aug 2018 12:41
LONDON (Alliance News) - TUI AG on Thursday reiterated its annual earnings guidance despite a 27% drop in third-quarter pretax profit, which was hurt by the weak pound and air traffic control strikes in France.
The stock was trading 6.5% lower on Thursday at 1,480.50 pence per share, the worst performer in the FTSE 100.
The Anglo-German travel operator also said that summer bookings for the current year are up 4%, with 86% of the programme sold, and with Spain remaining the top destination.
For the three months to the end of June, TUI recorded pretax profit of EUR147.5 million, down from EUR203.3 million recorded in the same period a year ago, on a revenue of EUR5.02 billion and EUR4.78 billion, respectively.
The drop in quarterly pretax profit was blamed upon a decline in financial income, which nearly halved to EUR23.6 million from EUR42.9 million. The company also said its financial expenses grew significantly to EUR56.5 million from EUR34.2 million.
On a regional basis, the Nordic countries, Belgium and the Netherlands delivered a good operational performance, TUI said.
However, this was offset by margin effects in the UK due to the weaker pound. Earnings were also hit to the tune of EUR19 million due to the earlier timing of Easter, and the company booked a one-off cost of EUR13 million as a result of airline disruption, driven by air traffic control strikes in France.
The rise in revenue was credited to 5% growth in customer volumes, good portfolio performance, and additional hotel and cruise ship capacity.
"We have considerably reduced our seasonality and thus our susceptibility to external challenges through the group's transformation focussing on hotels and cruises," said Chief Executive Fritz Joussen.
In the third quarter, the Hotels & Resorts revenue improved by 6.4% year-on-year to EUR161.0 million from EUR151.3 million while revenue from Cruises rose 6.1% to EUR227.3 million from EUR214.3 million.
The Hotels & Resorts segment delivered a good performance boosted by high levels of occupancy, which grew to 80% from 75% the prior year. Average revenue per bed remained broadly flat, however, at EUR59, hit by the negative impact of foreign currency translation.
Meanwhile, in the Cruises division, all trends indicated that the growth of this sector will continue in the next decade, TUI said. As a result, the company plans to expand its entire fleet by newbuilds scheduled for delivery over the coming years.
Average revenue per passenger per day climbed across all three brands. The TUI Cruises brand recorded an average revenue per passenger at EUR200 per day, up from EUR183 a year earlier.
The Marella Cruises brand average revenue per passenger grew year-on-year to EUR138 from EUR126, while the Hapag-Lloyd Cruises brand climbed to EUR571 from EUR562.
Adjusted earnings before income, taxes and amortisation - the company's preferred profit measure - fell 18% to EUR193.4 million in the quarter from EUR235.8 million a year ago.
For the 2018 financial year, ending in September, TUI said it expects to record at least 10% underlying Ebita growth year-on-year, with revenue growth of around 3%. In the 2017 financial year, TUI posted underlying Ebita of EUR1.10 billion and revenue of EUR18.54 billion.
"A good third quarter, very good nine-month results," added Joussen. "For the full year, we expect to deliver double-digit earnings growth for the fourth consecutive time."
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