Kuoni's 'organic growth' offset by strength of Swiss franc

Kuoni's 'organic growth' offset by strength of Swiss franc

The strength of the Swiss franc saw Kuoni's turnover and profits dip in the first half of 2015, although the firm reported ‘organic growth’ ahead of that seen in the sector.

Reporting on trading for the first six months of the year, the firm said it achieved the sale of its European tour operating division earlier than expected.

The period saw a 0.6% fall in turnover but Kuoni said this masked positive organic turnover growth from continuing operations of 6.8%. Currency changes had a “significant” -7.4% impact.

Turnover was CHF1.532 billion compared to CHF1.542 billion in the same period in 2014, and gross profit stood at CHF278 million, down from CHF288, a 3.5% fall. Kuoni said organic gross profit was positive at +2.5%.

Profit margin for the six months was down slightly year-on-year to 18.2% from 18.7%,

Peter Meier, chief executive of Kuoni Group, said: "Kuoni Group's organic growth above market in first half of 2015 vindicates the new strategic direction initiated at the beginning of the year and the focus on global B2B business areas.

“However, the strong Swiss franc had a significant negative impact on turnover due to the conversion into our presentation currency.

“The two divisions Global Travel Distribution (GTD) and VFS Global recorded strong growth. In the first six months of the year, VFS Global processed over 10 million visa applications for the first time.

“With the successful sale of all tour operating activities in June and August 2015, we achieved a key objective of the new strategic direction faster than planned."

Kuoni’s net result from continuing operations was in the positive at CHF5.9 million, although down year-on-year by 80%, and the net result from discontinued operations was minus CHF178 million, a fall of 300% on the previous year.

Much of the impact on non-continuing operations was down to the costs of sale of the European tour operating business and had no impact on the firm’s liquidity, Kuoni said.

In a statement on the outlook for 2015 Kuoni said: “For 2015 as a whole the Kuoni Group expects operating earnings (EBIT) from continuing operations in the range of CHF40 to CHF50 million.

“This includes an expected negative exchange rate impact on the presentation currency of around CHF7.5 million compared to prior-year due to the strong appreciation of the Swiss franc in 2015.”

Meanwhile, Kuoni announced group chief finance officer Thomas Peyer is to leave the firm.

Peyer has been with Kuoni since 1999 and held various senior roles in finance prior to his appointment in March 2014.

Kuoni said he was “instrumental in the divestiture process of the outbound units”, which will be concluded in the course of 2015.

A search for his successor has started and Peyer will remain in the role until the first half of 2016.

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