Thomas Cook Group today revealed that profit after tax for the 12 months to September 30 was down by 10% to just £9 million.
This came as the impact of security concerns in Turkey were offset by a shift to alterative destinations and currency translation.
Cook’s UK business achieved a £33 million rise in earnings to £152 million.
Europe’s second largest travel group reported record underlying margins in the UK and Northern Europe.
But German airline Condor fell into the red with losses of £10 million and earnings in continental Europe also fell by £22 million.
This resulted in a 2% drop in annual underlying earnings (EBIT) to £308 million as group revenue declined marginally to £7.812 billion.
However, Cook is to pay its first dividend to shareholders in five years as 0.5p per share and forecast improved financial benefits of £30 million by 2019 due to increased efficiencies and its ‘new operating model’ initiative.
The group made £27 million is cost savings in the year, helped by reducing IT complexity across source markets and rationalising marketing activities, particularly in the UK and Germany.
The proportion of online bookings grew from 40% the previous year to 43%. Cook also gained £17 million from lower commission payments.
The summer 2017 programme from the UK is 20% sold, in line with this time last year, with prices up by 8%. Spain, Greece, Bulgaria, Mexico and the Caribbean are attracting increased bookings.
Chief executive Peter Fankhauser said Cook was taking a “cautious approach” to 2017 after a difficult year for tourism.
“We've had an encouraging start to bookings for summer 2017 in our key markets, but it is early days,” he said.
“Overall, we are confident that our strategy for profitable growth, focusing on improving our holidays for customers, will help us to achieve a full year operating result in line with current market expectations."
Reviewing the past financial year, he said: “The early actions we took to shift our holiday programme into the western Mediterranean and long haul, together with the benefits of a stronger euro, helped us to maintain revenue at group level.
“Additionally, a focus on holidays to our own-brand and partner hotels delivered record profit margins in our UK and Northern European businesses.
“Underlying operating profit for the group was £308 million. This reflects the decline in customer demand for Turkey, which impacted Condor in particular, and the effect on our Belgian business of the Brussels attacks.
"Meanwhile, we've made big strides towards our target to put the customer back at the heart of the business. Our strategy is clear: to deliver sustainable growth by giving our customers great holidays which inspire them to come back to Thomas Cook and recommend us to their family and friends.”
A renewed focus on quality and service delivered a six-point increase in customer satisfaction in summer 2016, he revealed.
"Right across our business we're making customers' experience of our holidays better,” Fankhauser added.
“By focusing on fewer hotels, we can have a bigger influence on quality and service, whether that's a promise to fix any issues within 24 hours or the reassurance of regular checks on health and safety standards.
"We're also building a stronger portfolio of own-brand hotels, with the aim of increasing the proportion that we manage ourselves.
“This will enable us to offer holidays that are unique to Thomas Cook and to attract a new generation who might have thought a package holiday wasn't for them.”
A renewed focus on the customer “has breathed new energy into the business”.
"Given the environment, the board's recommendation to pay a dividend, our first in five years, reflects confidence in the strategy and the opportunity for sustainable, profitable growth.”
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