TUI Group delivers good start to financial year 2016/17

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Focus on hotels and cruises – global presence in more than 100 countries pays off.

  • Q1 2016/17: underlying EBITA up 17.0 per cent
  • Q1 turnover climbs by 8.5 per cent
  • Growth driven by Northern Region, RIU and Cruise
  • Further post-merger synergies worth 5 million euros delivered
  • Full-year earnings growth guidance reiterated – underlying EBITA to grow by at least 10 per cent
  • CEO Joussen: “Transformation of our Group makes TUI resilient and more competitive.
  • Customers benefit from the variety of countries within the TUI-programme.“
  • Sales process for Travelopia initiated in Q1 2016/17 now successfully completed
    TUI Group has started off well into the new financial year 2016/17.

The Group delivered growth in turnover in the period under review, the seasonal Q1 loss was also reduced year-on-year. On a constant currency basis, underlying EBITA rose by 17.0 per cent to a seasonal loss of 66.7 million euros (previous year -80.4 million euros) in the period from October to December. Including the impact of foreign exchange translation, it rose by 25.0 per cent to –60.3 million euros. The result reflects higher than usual sickness rates in TUI fly Germany in early October 2016. TUI Group’s turnover climbed by 8.5 per cent1 to 3.49 billion euros (previous year 3.21 billion euros) – including the impact of foreign exchange translation, it rose by 2.3 per cent to 3.29 billion euros. Fritz Joussen, CEO TUI Group, emphasised the Group’s strength despite a challenging market environment in some destinations:

“A broad portfolio of Group-owned hotel and cruise companies, aircraft and tour operators are gathered under the Group umbrella. Moreover, we operate in more than 100 countries around the globe. This gives us great flexibility and enables us to quickly remix our programme if our customers’ travel preferences change. The transformation of our business as an integrated tourism business based on own hotel and cruise brands, initiated in 2014, is really paying off. This has been demonstrated by the very good performance delivered in the completed financial year and has been confirmed in Q1 2016/17. In addition, last night we successfully completed the sales process for Travelopia which was initiated in Q1 2016/17. The price was based on an enterprise value of 381 million euros and equals a multiple of 14.4 times underlying EBITA of the segment. This means that the transaction creates value. It also marks the next strategic step to further sharpen TUI’s profile as a vertically integrated tourism business. TUI is in an excellent state of health, and we are delivering on our promises. For the full year 2016/17, we reiterate our guidance of at least 10 per cent1 growth in underlying EBITA.”

Tourism: Strong performance delivered by Northern Region, RIU and Cruises – Earnings by Central Region impacted by sickness levels in TUI fly Germany

On a constant currency basis, the operator businesses from those three sources market-regions reported a seasonal loss of -125.9 million euros (previous year -90.3 million euros). Including the impact of foreign exchange translation, the result totalled -120.3 million euros.

Northern Region (UK & Ireland, Nordics, Canada, Russia) benefited from a strong trading performance in source market UK & Ireland, with volumes currently up more than 10 per cent year-on-year. The growth was driven in particular by long haul and cruise with the launch of “TUI Discovery” in summer 2016. The Nordics continue to operate in a challenging market environment, with lower demand for Turkey and North Africa. Its result was also affected by the phasing of TUI rebrand costs. In the period under review, underlying earnings by Northern Region rose by 10 million euros to -20.2 million euros.

Central Region (Germany, Austria, Switzerland, Poland), by contrast, reported a year-on-year decline in earnings. Source market Germany improved its operational performance based on increased market share and further expanded direct and online distribution. However, earnings of the source market and the region as a whole declined due to higher than usual sickness levels in TUI fly Germany in October 2016, which caused costs of around 22 million euros. Overall, Central Region recorded a decline in earnings of 25.4 million euros to -52.4 million euros on a constant currency basis.

The operating result delivered by Western Region (Belgium, the Netherlands, France) was impacted by a number of factors including marketing costs for the launch of the TUI brand in Belgium and the first-time inclusion of Transat’s seasonal loss in earnings by source market France. TUI had acquired the French Transat subsidiary in October 2016. Western Region reported earnings of -47.7 million euros (previous year -27.7m).

Hotels & Resorts: Growth driven by higher average revenue per bed

In Q1 2016/17, Hotels & Resorts almost doubled its earnings year-on-year. Underlying EBITA grew to 48.8 million euros (previous year 25.2 million euros). RIU, in particular, increased occupancy rates in its own hotels by two percentage points, with average revenues per bed up by six per cent. Robinson also delivered growth in average revenues per bed at an increase of three per cent.

Cruises: Remains successfully on a growth path

In Q1, TUI Group’s Cruises segment continued to deliver growth and posted a positive operating result, underlying EBITA climbed to 19.1 million euros (previous year 8.2 million euros). TUI Cruises achieved substantial growth in the number of passenger days and increased its operating result due to the successful expansion of its fleet with “Mein Schiff 5” in summer 2016. TUI Cruises’ current fleet of five cruise ships continued to deliver a high load factor of 100 per cent. The average rate per passenger was 143 euros (previous year 146 euros) in the period under review. TUI Cruises will continue its growth roadmap in the premium cruises market segment in the course of the current financial year. “Mein Schiff 6” will launch in July of this year. Two further cruise ships from the “Mein Schiff” fleet will be commissioned in 2018 and 2019.

Hapag-Lloyd Cruises also delivered a very positive performance in the period under review. Passenger days of the luxury and expedition ships grew to 74 per cent (previous year 70 per cent). The average rate per passenger per day totalled 549 euros, up 15 per cent year-on-year. Both fleets delivered a positive earnings contribution.

Further synergies delivered

In the period under review, the Group delivered further synergies worth 5 million euros resulting from the merger between TUI AG and TUI Travel in 2014. Most cost savings were achieved in corporate streamlining.

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