Tui confident of achieving 10% annual earnings growth

Tui confident of achieving 10% annual earnings growth

Tui Group remains confident in delivering 10% earnings growth this financial year as it reported improved third quarter results.

Europe’s largest travel group said UK trading remains strong, with no apparent slowdown in bookings as a result of the EU referendum.

Reporting results for the nine months to June 30. Tui said: “Although UK volumes increased by 4%, this was offset by lower volumes in the other source markets, driven by lower demand for Turkey and North Africa and in the wake of the Brussels airport attack.

“However, based on current trading, we expect some modest growth in customer volumes in the final quarter of the financial year, in spite of the geopolitical backdrop.”

Tui’s summer programme from the UK is 89% sold, ahead of the same period last year with revenue and bookings up by 6%. Short haul growth is driven by holidays to Spain, Greece, Cyprus and Portugal.

Long haul bookings are up 16%, driven by growth to Mexico, the Dominican Republic and Jamaica as well as new destinations such as Costa Rica.

UK cruise sales continue to perform well following the introduction of new ship Tui Discovery in June in the Mediterranean.

 “There has been no apparent slowdown in UK bookings as a result of the EU referendum, demonstrating once again the resilience of demand for our unique and differentiated holidays, distributed directly to the customer,” the group said.

UK bookings for winter 2016-17 are up by more than 20%, with growth driven by increased long haul capacity, including the Caribbean, Mexico, Thailand and Mauritius.

Medium haul volumes to the Canary Islands and Cape Verde were described as also doing well, and Tui Discovery is helping driving a good performance by cruise.

“The UK has also seen a good start to summer 2017 and we are also pleased with the progress in trading for Tui Cruises’ sixth ship, Mein Schiff 6, which launches next year,” the company added.

Introduction of the umbrella Tui brand in the UK to replace Thomson is set to take place next year. Tui emphasised that control over distribution “ramains central” to its sales and marketing strategy..

Controlled distribution across the group grew by two percentage points to 72% in the nine months to June. Online distribution grew by three percentage points to 44%.

Tui reported a 46% reduction in losses to €56.9 million in the nine month period with earnings [EBITDA] up 1.1% to €180 million in the quarter to June 30.

Chief executive Fritz Joussen said: “We have delivered a good performance this quarter, driven by the strength of our vertically integrated model and the delivery of our growth plans and merger synergies.

“We are delivering on our strategy to become more content centric, with the launch this summer of two cruise ships, Tui Discovery and Mein Schiff 5, and the opening of five additional hotels in our core brands. We have also announced the launch of Tui Discovery 2 for our UK cruise fleet from summer 2017.

“In addition the disposal processes for Hotelbeds and Travelopia - formerly part of Specialist Group - remain on track, the proceeds from which will be used to invest in future growth opportunities and to further strengthen Tui’s balance sheet.

“Summer 2016 trading remains in line with our expectations, with 87% of the source markets’ programme sold to date and sustained strong demand for holidays in the western Mediterranean, long haul destinations and cruise. We are also pleased with the start to early trading for winter 2016/17 and summer 2017.

“Given the resilience of demand for our holidays, hotels and cruises, the flexibility inherent in our business model, our balanced portfolio of businesses and destinations, and the strength of our balance sheet, we are well positioned to deal with the changing geopolitical and macroeconomic environment.

“We therefore remain confident of delivering at least 10% growth in underlying EBITA in 2015/16, and reiterate our previous guidance of at least 10% underlying EBITA over the three years to 2017/18.”

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