11th Feb 2014 10:09
LONDON (Alliance News) - Thomas Cook Group PLC Tuesday reported a pre-tax loss of GBP161 million for the first quarter as revenue declined during the period due to lower customer demand for winter holidays to Egypt, but notes that it is confident that the summer period will meet targets.
In an interim management statement for the three months to December 31 2013, the tour operator said its pre-tax loss widened to GBP161 million, up from GBP123 million last year
Thomas Cook Group said revenue fell by 0.9%, a GBP15 million drop to GBP1.656 billion, down on the GBP1.671 billion reported last year. Thomas Cook said the reduced demand for Egypt holidays offset improvements in capacity management and new product growth.
Excluding the Middle Eastern destination, the Thomas Cook said revenue for the quarter was up 4.1% on the comparable period last year.
The underlying earnings before interest and taxes loss was improved during the quarter, said the firm, reduced by GBP10 million to GBP56 million, which it said reflects profit improvement and cost out initiatives. Thomas Cook said this was achieved after incorporating the estimated impact related to travel disruption arising from political events in Egypt, "our profitable growth strategy largely offset the impact of Egypt which we estimate to have been approximately GBP80 million compared with the three months ended 31 December 2012," said the company.
On a last 12 month basis, underlying EBIT is up 36% to GBP274 million, included in order to view the quarter in an annual context and reconcile with the firms' targets, said the statement. Revenue for the year grew 2.4% to GBP9.3 billion. Net debt reduced to GBP1.286 billion from GBP1.559 billion as at December 31 2012. Liquidity headroom improved to GBP374 million from GBP290 million, said the tour operator.
Free cash flow for the quarter came in at GBP879 million, down GBP118 million from the comparable quarter, reflecting an unwinding of short term cash management actions and the positive impact of an extension of supplier payment terms in 2013 which resulted in a higher proportion of payments for the Summer 2013 season falling in the first quarter of the current financial year, said the firm. These impacts are set to normalises during the current financial year.
Also noteworthy, the group reports a steady increase in the number of holidays booked online, now accounting for 36% of bookings, up from 34% for the comparable period. "Significant progress [has been] made to integrate web platforms and enhance content to enable increased online penetration and achieve our target of more than 50% by FY15," said the firm.
Harriet Green, Group Chief Executive, said, "Our Q1 results, new product revenue growth, web integration, cost out and profit improvement programmes combined with an intense business focus and financial discipline, all underpinned by the Thomas Cook Business System, give us confidence of achieving our targets and delivering even more value in the years to come."
Looking ahead, Thomas Cook said that bookings for Summer 2014 are developing in line with expectations and are at similar level to last year, currently at approximately 36%, said the company, with UK bookings up 2% on last year, compared with a 1% drop in capacity commitments.
On a full-year basis, Thomas Cook said incremental new product revenue was GBP131 million, on track to achieving its FY14 target of more than GBP300 million. The firm noted that Summer bookings at its Concept hotels have increased by 42% to 252,518 compared with the same period last year.
Since the end of full-year 2013, Thomas Cook said it has secured 136 new exclusive hotels, up from 309, an increase of 44%, as part of its targeted 640 new hotels by full-year 2015.
The travel firm is remaining focused on its turnaround plan, which includes selling-off low-value businesses in a number of asset sales, including recent divestments in Essential Travel Ltd for GBP2.1 million and Elegant Resorts for GBP14.3 million, as well as the latest deal, announced today for the sale of Gold Medal, a UK-based distributor of long-haul scheduled flights, hotels and car hire, to dnata, a Dubai-based travel company that is part of the Emirates Group, in a GBP45 million deal.
The firm said deal is expected to close on or about February 27 2014.
Post-transaction, Gold Medal will continue as the exclusive supplier of long-haul scheduled flights to the Thomas Cook businesses in the UK, as part of a long-term commercial agreement, increasing the range of flexible options to meet the travel needs of Thomas Cook's customers, said the group.
Under Green, the group has been trying to shrink the debt it piled on during the recent economic downturn as it focuses on its core assets. During the first quarter UK underlying EBIT on a like-for-like basis was GBP67 million, remaining stable compared with the same period the previous year as the impact of unrest in Egypt was offset by the benefits of cost out. "We remain confident of achieving our target underlying UK EBIT margin of more than 3.5% in FY14 and more than 5% in FY15," the firm said in the statement.
The latest divestment brings the total amount generated in Thomas Cook's divestitures programme as part of its UK transformation to GBP125 million, said Green, which achieves its previously announced target of GBP100 - GBP150 million in divestments by the end of 2015.
In its full-year results for 2013, released in November, the firm raised a number of its growth, profit and cash targets for the group in 2015 in line with its asset sell-off plans, which it Tuesday said it will achieve 18 months ahead of schedule upon completion its these remaining transactions.
Thomas Cook said, "Our focus on delivery continues. A lot has been achieved but as our Wave 2 work is revealing, supported by the adoption of the Thomas Cook Business System, there is a significant amount of value left to release. Our confidence of achieving our targets remains. So too does our confidence of delivering a step change in sustainable profitable growth over the long term."
Shares in Thomas Cook Group were trading near the bottom of the FTSE 250 Tuesday, down 1.35% at 182.9 pence per share.
By Alice Attwood; [email protected]; @AliceAtAlliance
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Thomas Cook