TOP NEWS: TUI's Quarterly Loss Widens After Hot European Summer

LONDON (Alliance News) - TUI Group PLC on Tuesday reported a significantly widened first-quarter ...

Alliance News 12 February, 2019 | 6:59AM
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LONDON (Alliance News) - TUI Group PLC on Tuesday reported a significantly widened first-quarter loss, having under a week ago warned on full-year earnings.

The German travel firm's pretax loss for the three months to December stood at EUR135.0 million, versus EUR84.3 million loss the same period a year prior.

Revenue did increase, however, by 4.4% year-on-year to EUR3.70 billion.

This performance, TUI said, met expectations after a "record" last financial year. First quarter revenue, and volumes, have grown, but margins have slipped.

"The main reasons for the decline in earnings included the unusually long and hot summer in Northern Europe," said TUI.

"In addition, strong bookings to Turkey and North Africa caused overcapacity in other destinations such as the Canary Islands, which went hand in hand with lower margins in the tour operating business. At the same time, the British pound remained weak as a result of the Brexit decision."

On Wednesday last week, TUI said "extraordinarily" hot weather during the summer of 2018 meant earnings for its year ending September 2019 will be flat year-on-year.

In its year ended September 2018, pretax profit was EUR971.5 million, down 10% on the year.

Looking ahead, bookings are in line year-on-year, but TUI reiterated margins will fall on its prior year.

TUI had previously expected 2018's issues to only affect its first half, but it now sees the impact spilling into its second half. It has thus reiterated its earnings guidance provided last week.

TUI said a plan launched five years ago to focus on its Holiday Experiences segment has "proven to be the right approach", and this alongside Hotels & Resorts, Cruises, and Destination Experiences now makes up 70% of the group's operations.

Holiday Experiences first-quarter revenue rose 30% on the year to EUR490.6 million, while underlying earnings before interest, taxes, and amortisation fell 12% to EUR111.0 million.

Cruise underlying Ebita rose 25% to EUR47.0 million, while Destination Experiences' underlying Ebita loss was EUR4.7 million from EUR3.5 million.

Hotels & Resorts' underlying Ebita fell 25% to EUR91.9 million.

Markets & Airlines revenue was up 0.8% to EUR3.06 billion, and this segment posted an underlying Ebita loss of EUR178.1 million, widened from EUR140.8 million.

TUI said there is currently a "challenging" market environment for traditional tour operators.

"The overall trends for our sector are intact. Travel and tourism remain a growth market. Customers continue to travel, but they are currently resistant to increases in price," said Chief Executive Fritz Joussen.

"During this consolidation phase in our sector, it is particularly important to adequately participate in market growth. TUI has a good strategic and operational positioning, and the transformation of the group as a digital platform company is progressing."

"We have paved the way with our investments in hotels and ships, our IT and digital strategy and the acquisition of the Italian digital platform Musement in 2018," he added.

By George Collard; georgecollard@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
TUI AG 773.20 GBX -0.54 -
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