11th Dec 2019 11:59
(Alliance News) - TUI AG on Wednesday reported a "resilient" performance in its most recently ended financial year against a "challenging" market environment.
The stock was trading 0.3% higher in London on Wednesday midday at 945.00 pence a share.
The Anglo-German travel company said its pretax earnings for the year to the end of September declined by 28% to EUR691 million from EUR966 million a year earlier, despite revenue growing by 2.5% to EUR18.93 billion from EUR18.47 billion. On a constant currency basis, revenue rose by 2.7%.
TUI explained that its earnings were hurt by EUR293 million cost from the grounding of the Boeing 737 MAX aircraft.
Excluding this impact, the FTSE 100-listed company said it has delivered a result in line with prior year, driven by the "strong" underlying growth of its Holiday Experiences businesses.
Meanwhile, the Markets & Airlines business faced ongoing external headwinds such as continued Brexit uncertainty and airline overcapacities, TUI noted.
Turning to dividend, the Hannover, Germany-headquartered company declared an annual payout of EUR0.54 a share, down from EUR0.72 paid a year earlier.
Separately, TUI said it has made changes to its payout policy for dividend payments from 2021 onwards. The company highlighted that the new dividend policy is expected to result in lower payouts, but shareholders will be guaranteed a minimum distribution irrespective of the market environment of the tourism industry.
TUI intends to pay a core dividend payout of between 30% and 40% of the its underlying EAT, with a guaranteed minimum payout of EUR0.35 per share a year.
Underlying EAT is calculated as underlying earnings before interest and taxes, minus interest expenses, minus taxes, based on underlying tax rate of currently 18%.
TUI explained that the updated dividend policy will increase its flexibility as it facilitates investments in strategic initiatives and future growth opportunities.
Looking ahead, the company said it expects underlying earnings before interest and taxes for current financial 2020 in the range of between EUR950 million to EUR1.05 billion, which includes a EUR130 million cost impact from the 737 MAX grounding. TUI said it assuming a scenario whereby the MAX returns to service by end of April 2020.
For financial 2019, TUI reported underlying Ebit of EUR893 million.
The company said it expects an additional cost impact of between EUR220 million and EUR270 million if the MAX grounding continues to the end of its financial 2020.
"This coming year will see us focus on driving competitiveness in Markets & Airlines, asset-right expansion of our Holiday Experiences business, and building reach and scale through our digital platforms in new markets and Destination Experiences, to enlarge TUI's ecosystem," the company said in its statement Wednesday.
By Evelina Grecenko; [email protected]
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