20th May 2015 14:12
LONDON (Alliance News) - Thomas Cook Group Wednesday reported a narrowed pretax loss in the first half of its financial year, even though revenue fell, although it said current trading is performing above the levels of this time last year and is confident it will improve profitability through its growth initiatives.
The travel operator reported a pretax loss of GBP303 million in the six months to March 31, narrower than the GBP366 million reported in the same period the prior year, due to lower charges and impairment costs.
Revenue fell to GBP2.7 billion from GBP3 billion, as further discontinuation of less profitable products and a reduction in sales in France, Russia and in the UK and Europe city breaks business offset a 1.2% rise in like-for-like sales.
However, Thomas Cook said that current summer trading is "encouraging" with more than half of its summer programme already sold at 62%, which is 2% higher than this time last year.
It added that capacity for the important peak summer season in the fourth quarter is well sold, offsetting a weaker booking performance in the third quarter due to a later booking profile and softer market demand.
In March, Thomas Cook partnered up with Chinese investment group, Fosun International Ltd, in order to implement a hotel investment platform to accelerate hotel development and establish a joint venture targeting the Chinese tourism market. Fosun invested GBP92 million in exchange for 4.8% of Thomas Cook's enlarged share capital.
It said it has made good progress with its joint initiative and initially identified a list of approximately 30 hotel investments, which will be funded through the investment capital of insurance companies within Fosun's portfolio. Thomas Cook said it aims to complete the acquisition of several target hotels by the end of the year.
"Our growth initiatives are leading to more demand for our holidays, which, combined with our cost reduction and efficiency programmes, are improving bottom line profitability," the company said in a statement.
Shore analyst Greg Johnson said that while the travel operator expects to meet its full-year expectations, which Shore expects to be GBP370 million in underlying earnings before interest and tax, this will only be achieved by lower one-off costs rather than improving underlying performance.
Underlying earnings exclude costs associated with things such as restructuring, disposal of assets and finance-related charges.
Thomas Cook suspended dividend payments in 2011 but said it intends to resume them following the end of its next financial year.
"Our performance in the first half provides a solid foundation for the full year and beyond. I am confident that we can continue to make Thomas Cook a stronger and more profitable holiday company, as we continue to implement our clear strategy for profitable growth, and move towards the resumption of dividend payments in respect of FY16 earnings," Chief Executive Peter Fankhauser said in a statement.
Shares in Thomas Cook were trading down 1.9% at 154.00 pence Wednesday afternoon.
By Karolina Kaminska; [email protected] @KarolinaAllNews
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Thomas Cook