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TUI AG set for growth in Q2: Considerable improvement in turnover and Group result despite unrest in North Africa

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  • Turnover up around 7 per cent
  • Group result up 21 per cent
  • Full-year outlook confirmed: Turnover and operating earnings expected to grow

After the first half of the financial year, the TUI Group is on track. In the second quarter of financial year 2010/11, TUI AG continued to grow and achieved substantial improvements in the Group result. Turnover rose by around 7 per cent to almost 3.1 billion euro (previous year 2.9 billion euro). In the second quarter, operating earnings (underlying EBITA by Tourism and Central Operations) decreased by around 6 per cent to -256 million euro (previous year -240 million euro), driven partly by the crisis in North Africa. Nevertheless, the Group result improved by 21 per cent to a seasonal loss of 209 million euro (previous year -266 million euro).

Earnings per share accounted for -0.60 euro (previous year -0.73 euro) in the second quarter, a year-on-year improvement of around 18 per cent. The net debt position showed a significantly positive development. Overall, net debt was reduced by around 730 million euro to 2.7 billion euro in the second quarter (previous year 3.4 billion euro).
TUI also recorded an improvement in accumulated results for the first six months of the financial year. Turnover grew by 9 per cent year-on-year to around 6.4 billion euro (previous year 5.8 billion euro). Operating earnings (underlying EBITA) improved by almost 2 per cent to -375 million euro (previous year -384 million euro). The Group result, which is traditionally negative in the first half of the year due to the seasonality of the business, improved by almost 130 million euro to -304 million euro (previous year -432 million euro). This is an improvement of 30 per cent.
Despite the impact of events in North Africa on the Tourism business, TUI has confirmed its outlook for the full year. For financial year 2010/11, TUI expects growth in turnover (previous year around 16.3 billion euro) and a slight improvement in operating earnings (underlying EBITA previous year around 590 million euro). Against this background, TUI AG’s Executive Board continues to expect a positive Group result for the year.
TUI Travel
In the second quarter of 2010/11, turnover by TUI Travel grew by 8 per cent. Apart from a positive exchange rate effect resulting from the strengthening of Sterling against the Euro, this growth was mainly driven by higher customer volumes. In spite of the political unrest in North Africa, operating earnings (underlying EBITA) only declined by 4 per cent to around -255 million euro (previous year -245 million euro). This reflects the sound business performance and the turnaround progress in TUI Travel.
Overall, events in North Africa caused reductions in operating results and additional costs of around 34 million euro in the second quarter. A further amount of around 20 million euro was shifted from the second to the third quarter due to the late timing of Easter.
Demand in the travel market picked up again so that TUI Travel tour operators recorded slight increases in customer volumes, in spite of the temporary suspension of bookings for destinations in North Africa. Activities in Scandinavia and Canada continued to show a positive development. Earnings by TUI Travel also benefited from the improved performance of the French Corsair airline. Turnover by TUI Travel amounted to around 6.1 billion euro (previous year 5.5 billion euro) for the first six months, up by almost 10 per cent year-on-year. Operating earnings by the Sector, which are traditionally negative in the first half of the year due to the seasonal swing in the travel sector, increased by almost 4 per cent to a loss of around 360 million euro (previous year -373 million euro).
TUI Hotels & Resorts
TUI Hotels & Resorts recorded regional variations in business performance in the second quarter. While the Riu Group posted continued improvements, e.g. in the Canary Islands and the Caribbean, hotels in North Africa reported lower occupancy rates due to the political unrest, as expected. Overall, TUI Hotels & Resorts recorded a decline of almost 8 per cent in total turnover in the second quarter to around 184 million euro (previous year 199 million euro). Operating earnings fell by around 5 million euro to almost 9 million euro (previous year 14 million euro). This development was primarily attributable to the impact of events in North Africa, which amounted to 4 million euro. Bed occupancy rose by more than 2 percentage points to around 72 per cent in the second quarter. On slightly lower overall capacity, this resulted in an improvement in average revenues per bed to 54 euro (previous year 51 euro).
Accumulated turnover for the first six months in TUI Hotels & Resorts decreased slightly by around 3 per cent to 365 million euro (previous year 376 million euro). Operating earnings by the Sector fell by 10 per cent to 11 million euro (previous year 13 million euro).
Cruises Sector
In the Cruises Sector, the second quarter reflected an unscheduled dry-dock period of a cruise ship operated by Hapag-Lloyd Kreuzfahrten. On the other hand, TUI Cruises recorded a continued rise in demand, as expected. Turnover by the Sector totalled 56 million euro in the second quarter (previous year 60 million euro). This decline of almost 6 per cent resulted from the dry-dock period of MS Europa. The TUI Cruises joint venture is carried at equity in the consolidated financial statements so that its turnover is not shown here. Operating earnings by the Sector amounted to 1.5 million euro (previous year 2.2 million euro). This development reflects the decline in operating results driven by the dry-dock period and start-up costs for the planned fleet expansion announced by the Sector.
Accumulated turnover for the first six months decreased by almost 4 per cent to around 97 million euro (previous year 101 million euro). Operating earnings by the Cruises Sector, by contrast, grew by around 30 per cent to a seasonal loss of just under 3 million euro (previous year -4 million euro).
Container Shipping (100 per cent basis)

In the second quarter, Hapag-Lloyd reported notable turnover and earnings growth. At 1.5 billion euro, turnover was almost 17 per cent up year-on-year (previous year 1.3 billion euro). Operating earnings climbed by 93 per cent to almost 26 million euro. This positive development was driven by the year-on-year rise in average freight rates of almost 10 per cent and the 2 per cent increase in transport volumes. The business performance was adversely impacted by a considerable rise in ship bunker prices. Accumulated turnover by Hapag-Lloyd for the first six months rose by 25 per cent to around 3 billion euro. Operating earnings for the first half of the year totalled almost 123 million euro (previous year -8 million euro).

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Author: Editor