TUI weathers headwinds

FRANKFURT German tourism giant TUI announced last week that it has defied worldwide headwinds for travel firms caused by terrorism and political instability to report solid results for 2015 to 2016, driven by its cruises and hotels.

“We’ve managed to detach ourselves from the global trends in the sector,” chief executive Fritz Joussen said in a statement.

The group based in Hanover and listed on the London stock exchange booked profits attributable to shareholders of 1.04 billion euros (USD1.12 billion), almost three times higher than in 2014 to 2015.

Revenues fell almost 22% year-on-year to 17.2 billion euros, sapped especially by unfavourable movements in exchange rates.

But the group also pointed to a 13% increase in operating profit to 898 million euros, in line with an increased forecast it made in September.

TUI plans to pay a dividend of 0.63 euros per share, up from 0.56 euros in its previous financial year.

Looking ahead to 2016 to 2017, the tour operator said it would increase operating profit by at least 10% and hopes to maintain that level of growth on average each year until September 2019.

There was less demand this year from German clients for trips to Turkey — which has suffered terrorist attacks and a coup attempt this year — and the firm also cut services to north Africa.

But “Spain and the Balearic islands have profited massively,” Joussen told journalists by telephone, as customers opted to travel there rather than to the troubled south and east Mediterranean.

Britain’s June vote to quit the European Union had no visible impact on business, Joussen added, with British customers’ bookings for summer 2017 almost unchanged from the previous year.

Hedging had allowed the company to withstand the British pound’s sharp fall against other currencies, he said.

“We’re making investments today that will impact our bottom line in two or three years,” Joussen said, adding that the firm would pour around one billion euros next year into the profitable hotels and cruises segments as well as IT systems.

A merger between TUI and its British subsidiary TUI Travel kicked off a major transformation in the company at the end of 2014.

It has become an integrated travel company offering flights, hotels and all-inclusive trips aimed at a broad customer base, especially in Germany and the UK.

sourced:ttrweekly.com