31st Jul 2014 08:12
LONDON (Alliance News) - UK travel operator Thomas Cook Group PLC said Thursday it continued to see strong demand in the UK, Germany and Northern Europe in the third quarter of its financial year, although the group reported lower revenue and a bigger loss on a statutory basis.
Thomas Cook shares were among the top 10 gainers in the FTE 250 early Thursday, up 1.3% trading at 123.50 pence.
On an underlying basis, Thomas Cook said all of its businesses delivered improved results in the quarter, contributing to a GBP32 million increase in underlying group earnings before taxes, while underlying UK earning before interest and taxes improved by GBP27 million. Its underlying EBIT margin increased to 1.5%, compared to flat the prior year.
Underlying profit for the 12 months to June 30 increased to GBP306 million from GBP252 million a year earlier.
"Every business improved, and the UK delivered the most significant contribution, accounting for over three quarters of the total rise, as we start to realise its full potential," said Chief Executive Harriet Green in a statement.
However on a statutory basis, Thomas Cook reported an earnings before interest and taxes loss of GBP44 million, compared with a GBP30 million loss last year. Its statutory profit for the 12 months to June 30 was GBP31 million, compared with GBP51 million a year earlier.
Revenue in the quarter came in a GBP2.22 billion, down from the GBP2.34 billion in revenue it report for the same period a year earlier, held back by fewer customers travelling to Egypt due to political unrest in the region earlier in the year.
Thomas Cook has continued to strip out unnecessary costs across the business, under the reign of Green, as the group tries to enhance margins and operate a leaner business. As part of the group's turnaround plan, it embarked on what it called "wave one", which was to exit low-value businesses to help shrink its huge debt pile. The group also has made savings by reducing its brands and labels to 30 from 85. The travel group unveiled its second wave of costs targets in May, when it said it expects to reach GBP460 million per year in benefits by 2015, with a "wave 2" target of over GBP400 million by the fiscal year 2018.
"As a stronger and more resilient business, our operational performance remains in line with our expectations for FY14, and we look forward to delivering more value in FY15 and onwards," Green said in Thursday's statement.
The travel group said recent demand in the Summer 2014 "late bookings" market has been strong in the UK, Germany and Northern Europe, albeit some pricing softness due to higher levels of European short haul market capacity. It said it has currently sold approximately 83% of its Summer programme.
Thomas Cooks said it has seen strong demand for its concept hotels and resorts and partnership hotels, which are available exclusively through Thomas Cook, as well as a strong increase in online booking. It said Summer 2014 bookings for its concept hotels are up 43%.
It said it has also seen "encouraging bookings and pricing trends" for the Winter 2014/15 and Summer 2015 seasons.
"We are confident that the acceleration of our cost out and profit improvement programme will mitigate market pressures in order to achieve our FY14 gross margin target improvements of greater than 1.2% and achieve operational performance in line with our expectations for FY14," the company said.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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