8th Dec 2016 09:07
LONDON (Alliance News) - Travel operator TUI AG on Thursday said underlying earnings outpaced its previous guidance in its recently completed financial year, and it anticipates further growth in the coming year.
The FTSE 100 holiday company, which owns the Thomson and First Choice holiday brands, said it made underlying earnings before interest, tax and amortisation of EUR1.00 billion in the year to the end of September, up 5.0% but rising 15% in constant currencies, ahead of the 12% to 13% growth guidance the company had given in its post-close statement in September.
Shares in TUI were up 0.8% at 1,072.00p on Thursday.
Revenue slipped 1.9% to EUR17.19 billion from EUR17.52 billion a year before, due to the weak pound against the euro. In constant currencies, revenue rose 1.4%.
TUI said trading for winter 2016-17 and summer 2017 remains in line with its expectations. For winter 2016-17, revenue is up 9.0% year-on-year, bookings are up 5.0%, and 60% of its programme is sold. Strong growth for TUI's long-haul holidays in the UK has been offset by continued pressure in the Nordics and Germany, mainly due to sluggish demand for trips to Turkey.
TUI and its peers in the travel industry have taken a hit from a shrivelling appetite to travel to Turkey, a key destination for European holiday makers until just recently. The country has been afflicted with terror attacks and bombings and saw a failed attempted military coup, against a background of mass migration to the country by refugees attempting to escape the conflict in neighbouring Syria.
The decline in holidays to Turkey has been compounded by weaker demand for travel to North Africa following terror attacks in Tunisia and Egypt and by further jitters in Europe following the same in Belgium and France.
But for the winter 2016-17 season, TUI said further openings by its hotel brands, including a new Rui branch in Jamaica and a TUI Blue sit in Tenerife, plus an expansion of its tour operator concepts in third-party hotels, should help to offset this sluggishness.
Looking to summer 2017, TUI said the majority of its markets are in the very early stages but the strong performance in the UK has continued. The UK programme is over 20% sold, with revenue 16% higher and bookings up 9.0% on the same time a year prior. The group again expects new openings to boost its performance, including a Sensatori hotel in Rhodes and TUI Blue hotels in Croatia and Italy.
TUI said it anticipates at least 10% growth in underlying Ebita in constant currencies in the year to the end of September 2017, in line with the guidance it provided at the start of the 2016 financial year which was then subsequently raised.
For the 2016 financial year, the group reported strong trading in the UK, which helped offset weakness in its Nordics region as a result of a decline in demand for holidays to Turkey. Market conditions in Germany were challenging for the same reason, with demand for trips to Turkey slumping.
Elsewhere, TUI reported an improvement in conditions in France following a restructuring and shift of its holiday programme away from North Africa. Operations in the Netherlands also benefited from restructuring by the group, but this was partially offset by a tough performance in Belgium, hit by the terror attack in Brussels in March. Trading in Belgium since has improved, TUI said.
TUI's Hotels & Resorts division performed well in the half, with seven new hotels opened in the period and the group planning to open another 45 by the end of its 2019 financial year. The Rui unit in Hotels & Resorts was boosted by particularly good trading in Spain, Cape Verde and the Caribbean.
TUI Cruises performed well, with average daily rates and occupancy on the fleet strong. The group will launch Mein Schiff 6 in summer 2017 and two further cruise ships are set to come on line in the 2018 and 2019 financial years.
TUI declared a total dividend for the year of 63.00 euro cents per share, up 13% on the 56.00 cents it paid out a year prior.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
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