Core themes for future profitable growth defined
-Underlying EBITA grows by 24 per cent in Q1 2014/2015
-Hotels & Resorts and Cruise Sectors are growth drivers
-Outlook for full year confirmed: Underlying EBITA growth of 10-15 per cent
-Core themes for future success defined: Profitable top-line growth in Mainstream / further growth in Cruises / creation of long-term competitive Airline group / focused IT / maximising growth and value of Non-Mainstream
-Joussen: “We intend to take the Company from good to great”
Hanover, 10 February 2015. The TUI Group’s financial year is off to a good start with a considerably improved operating result in Q1 2014/15. In the period under review, underlying EBITA improved by 24 per cent to a typical seasonal loss of 107.9 million euros (previous year -141.1 million euros). This positive development was driven, in particular, by the Hotels & Resorts and Cruises Sectors, which achieved a significant increase in their profitability. At the same time, turnover by the TUI Group grew by 5.4 per cent to 3.54 billion euros (previous year 3.36 billion euros). On the basis of the very strong results for the quarter, the Group has confirmed its outlook for the full year 2014/15: The operating result (underlying EBITA) is to grow by 10 to 15 per cent versus the prior year. The future positive development will also be driven by the targets defined in the wake of the merger between TUI AG and TUI Travel PLC last December. Fritz Joussen and Peter Long, Joint CEOs of the TUI Group: ”Our new financial year is off to a strong start. We will now have to preserve this momentum and our positive performance in order to maintain our profitable growth in future, too. To this end, we have launched various measures including the identification of areas, which we will define in greater detail in the next few months. Our goal is to improve our excellent prior-year operating result by a further 10 to 15 per cent by the end of the current financial year.” In his AGM speech Fritz Joussen stated: “We have also defined our overarching goal: We want to take the Group from good to great.”
Focus on five areas for profitable growth
The new TUI Group is well on track to achieve the targets promised in the framework of the merger. The new Group is already taking shape. Integration is well underway, and the first synergies will be delivered in the current financial year. Nevertheless, the Group will have to tackle the next key challenges and decisions. Sustaining the successful development of the TUI Group will hinge upon clearly defined core areas to be developed in detail in the next few weeks and months.
Profitable top-line growth in Mainstream
The Mainstream business, which comprises the packaged holiday business, is to achieve profitable turnover growth and gain new market shares in future. Joussen: “In order to achieve that goal, we will need to offer unique products and services and strengthen our marketing activities. Excellent marketing is also a key prerequisite for a successful online business.“
Further growth in Cruises
In the Cruises Sector, TUI Cruises is to continue its strong growth. The second newbuild of the fleet, “Mein Schiff 4”, will be commissioned in June. It has been announced that Hapag-Lloyd Kreuzfahrten is expected to break even in the current financial year 2014/15. The Group expects to be able to operate Hapag-Lloyd at a very attractive earnings level in the long term, too. Contributing to this will be the acquisition of “Europa 2” in January and the corresponding termination of the charter contract. The five ships of the Thomson Cruises fleet, operating in the British market, are to be completely modernised in the next few years. At the same time, Thomson Cruises is to cooperate more closely with TUI Cruises. The goal is to expand TUI’s cruise activities so as to become a leading cruise operator in Europe in the foreseeable future.
Creation of a long-term competitive Airline group
The TUI Group’s Airline business currently comprises 140 medium- and long-haul aircraft in six companies. In order to remain competitive in the long run and deliver economies of scale across national borders, the structure of the Airline business will have to be rendered more efficient. Corresponding plans and measures will be developed in the course of the year.
Focusing IT on strategic projects and scalable platforms
With regards to its IT operations, the Group will focus on key strategic projects in future. A few weeks ago, the TUI Group launched a booking platform for the dynamic packaging of holidays in Spain for the Spanish market. The platform has been designed so as to be operable in different markets in the future. When being successful, it will enable TUI to enter markets in which the Company is not yet operating as a traditional integrated tour operator in the next few years. The Group is thus driving the change towards digitised business models and the integration of online and retail distribution further ahead while securing new turnover sources for the TUI Group. The Group is also pooling its IT competence in one platform for state-of-the-art customer relationship management (CRM) technology. The platform is to enable the Group to create a single view of the customer across the entire customer cycle.
The more than 30 Group-wide computer centres operated to date will also be pooled, combining them to two powerful centres located at the Group’s head office in Hanover. The TUI Group is thus also strengthening Hanover as a business location in this field.
Maximising growth and value of Non-Mainstream
The newly created Non-Mainstream Sector, which entails the Hotelbeds-Group and the Specialist tour operators globally, will be led by Will Waggott. Both, the Hotelbeds-Group as well as some of the Specialist tour operators are growing strongly. In the coming weeks and months a strategy will developed aiming at growth and increased value for the whole Sector.
Overview of Sectors
Travel flat year-on-year – Rising demand for unique holidays
The Travel Sector (previously TUI Travel) increased its turnover by 4.1 per cent to 3.37 billion euros (previous year 3.21 billion euros) in Q1 2014/15. By contrast, the operating result declined by 8.6 per cent to a seasonal loss of 149.1 million euros (previous year -137.3 million euros). Half of the decline compared to the previous year is attributed to exchange rate effects. The Mainstream business, which comprises package tours, maintained its operating result almost flat year-on-year at -114.3 million euros (previous year -110.0 million euros). Adjusted for exchange rate effects, the result exactly matched the prior year’s level. While the UK reported a virtually stable business performance versus the prior year, Germany and the Nordics reported slight declines. The German market was affected, in particular, by margin pressure in the Canaries, one of the key destinations in the winter months. The Nordics were affected by the phasing of airline costs. Despite the declines, the source markets reported an overall increase in demand for unique travel offerings.
Hotels & Resorts remain growth drivers
Hotels & Resorts remains a growth driver for the Group. The increase in total turnover of 4.3 per cent to 197.9 million euros (previous year 189.8 million euros) in Q1 2014/15 was attributable, in particular, to RIU and Robinson which again delivered a very good performance. The operating result of Hotels & Resorts climbed by 34.6 per cent to 35.0 million euros (previous year 26.0 million euros). Including the income from the sale of a RIU hotel (ClubHotel Waikiki), underlying EBITA by the Sector was almost doubled to 51 million euros. Despite the increase in capacity for the Sector as a whole, Hotels & Resorts improved the occupancy levels of its facilities and increased average revenues per bed. Occupancy by the Sector grew by 3.6 percentage points to 77.6 per cent (previous year 74.0 per cent).
Cruises posts positive operating result
The TUI Group’s Cruises Sector benefited from the very good development of the two companies in Q1 2014/15. Stronger demand for “Europa 2” helped Hapag-Lloyd Kreuzfahrten to more than halve its loss year-on-year. At TUI Cruises, the joint venture with Royal Caribbean Cruises, the successful expansion of the fleet to include “Mein Schiff 3” in June 2014 created a considerable improvement in the operating result. At +2.0 million euros, underlying EBITA by the Sector was positive, in contrast to the loss generated in the prior year (-15.9 million euros). Occupancy of the three cruise ships of TUI Cruises remained strong at 101 per cent, while the average rate per passenger per day rose to 151 euros. TUI Cruises consistently continues its growth path in the market segment of premium cruises. “Mein Schiff 4” will be launched in June of this year, to be followed by “Mein Schiff 5” (in 2016) and “Mein Schiff 6” (in 2017) in the next two years. Occupancy of the luxury and expedition cruise ships of Hapag-Lloyd Kreuzfahrten was considerably increased by +9 percentage points to 70 per cent. The average rate per passenger per day climbed by 26 per cent to 462 euros in the period under review. For the current financial year 2014/2015, the TUI Group has confirmed that Hapag-Lloyd Kreuzfahrten will break even.
