Hanover, 16 May 2014
Seasonal Group loss down by 146 million euros
Hotels & Resorts: RIU and Robinson with improved returns on capital
Cruises: Turnaround will be achieved this year
High confidence to reach earnings targets fully for the financial year
oneTUI targets for 2014/15 fully on track
Launch of growth strategy following consolidation strategy
Robinson: Expansion to up to 40 clubs and internationalisation
TUI AG is on track to deliver its strategic and economic targets and is fit for new growth following its restructuring. The oneTUI programme launched by TUI CEO Fritz Joussen twelve months ago is taking effect and continues to be consistently implemented: the Group structures have been streamlined, the costs of the Group holding have been cut by more than 30 per cent, and the profit targets set by the end of financial year 2014/15 have been confirmed. TUI CEO Fritz Joussen: “Lean structures and cost discipline are giving us latitude and room for manoeuvre for the future. We are fit for growth and are planning to grow again as a Group. This will open up potential for our shareholders, our business associates and our employees. A TUI delivering growth and investments will guarantee unique products and diversity of services for our customers.
Group-owned hotels, clubs and cruise lines are maximum drivers of differentiation as perceived by our customers and make us stand out.” In the growth phase now beginning, TUI will focus on product differentiation and enhanced exclusivity and strengthen its brand image. According to Joussen, the aim is to move away from a “brand jungle” towards a clear brand architecture showing a sharper TUI profile and gaining stronger customer recognition via the tourism value chain. Joussen announced the presentation of a new brand architecture for the hotels and resorts of the TUI Group for the second half of the year. RIU and Robinson, the core brands, will not be included.
Visible improvement in H1 results
In the current financial year, the Group loss in the first half of the year, typical of the sector, narrowed considerably by 146 million euros (or 29.4 per cent) to -351.2 million euros (previous year -497.2 million euros). The strategic focus on exclusive products caused a slight decline in turnover (-4.1 per cent) to 6.6 billion euros (previous year 6.8 billion euros). At the same time, however, the Group’s operating result (EBITA) improved by 29.1 per cent year-on-year in the period under review to -339.4 million euros (previous year -479.0 million euros). Despite the impact of low demand for Egypt, underlying EBITA was only 2.1 per cent down on the prior year at -345.7 million euros (previous year -338.7 million euros). Excluding the timing effect of Easter – with the key Easter trading period falling in April and hence the subsequent quarter this year – the Group’s underlying operating result improved by 21 million year-on-year, up by 6 per cent.
RIU and Robinson with improved returns on capital
The measures defined by the oneTUI programme are taking effect, as can be seen in the Hotels & Resorts Sector: With a return on invested capital (ROIC) of 12 per cent, the RIU Group already exceeded the target of 11 per cent in the past. In the full year it is expected to increase again slightly. In the past, Robinson Clubs fell significantly short of the target at around 6 per cent. The TUI Group Board had announced a review of the Robinson portfolio and called for measures to improve profitability of the subsidiary. The return indicator is expected to increase to more than 9 per cent in the full year. “Robinson is successfully implementing its profitability growth roadmap. We are thus creating the basis for the future expansion and internationalisation of our premium clubs,” said Joussen.
Cruises: Turnaround will be achieved this year
TUI is assessing the outlook for the cruises business as particularly positive. The Executive Board of TUI AG is confident that the Sector will achieve the turnaround by the end of the financial year. Following the commissioning of the third vessel by TUI Cruises in June 2014, “Mein Schiff 4” is to be delivered in 2015, as scheduled. Further fleet growth is conceivable to achieve the planned internationalisation of TUI Cruises within the TUI Group, in particular through a potential entry into source market UK. The Group is currently evaluating long-term options for an expansion of its fleet. However, here, too, capital discipline remains the priority.
Following two dry-dock periods of the cruise vessel Europa, which impacted earnings, and a decrease in load factors, Hapag-Lloyd Kreuzfahrten is again focusing on delivering consolidation in the luxury segment. In the completed quarter it managed to increase turnover, the average rate per day and passenger and the number of passenger days.
High confidence to reach earnings targets fully for the financial year
The Executive Board maintains its very positive assessment regarding the outlook for the TUI Group. EBITA is expected to grow year-on-year for the full year. The Executive Board of TUI AG had planned to deliver a growth roadmap of 6 to 12 per cent for the underlying operating result for financial year 2013/14. Joussen: „Against the background of the improved business performance of the sectors, we are very confident to fully reach our earnings targets for the full year.”
oneTUI moving from consolidation to growth phase
In the light of these successful developments, the oneTUI programme is now moving to its growth phase. For the forthcoming three to five years, the focus will be on preserving and expanding market share in the Mainstream Business and on further focusing on contents and product differentiation. The aim will be to increase value added per customer. At the same time, activities not delivering any synergies for the overall Group will have to be developed and transformed so as to generate an additional contribution.
Robinson: Expansion to up to 40 clubs and internationalisation
The Robinson Clubs, which form part of the core business, are to be further expanded in the future. The portfolio will be reviewed and substantially improved. The Group is planning to increase the number of club resorts to around 40 in the coming years. The expansion is to go hand in hand with an internationalisation of the product. This has already been successfully implemented at the Robinson Club in the Maldives, which is currently very popular among Asian guests.
Hapag-Lloyd Container: CSAV merger benefits TUI exit
On 16 April 2014, Hapag-Lloyd and its Chilean competitor CSAV signed a business combination agreement, initiating a merger between the two shipping lines. The rights of the TUI shareholders have been optimally secured in this context. Final exit from container shipping is thus drawing closer for TUI AG. The shareholders of Hapag-Lloyd have come to a binding agreement to float the newly formed company in the stock market in 2015. In the event of an IPO, TUI will benefit from priority placement of its shares over all other shareholders. Moreover, TUI will also be entitled in the run-up to the IPO to sell its shares in the form of a private placement or to sell them to individual investors.
