Following the completion of the sale of container shipping, the 43.33% stake in ‘Albert Ballin’ Joint Venture GmbH & Co. KG has been measured at equity in TUI’s consolidated financial statements since the second quarter of 2009. In line with its character as a shareholding, the proportional at equity earnings by the container shipping shareholding, to be included in consolidated earnings as of the second quarter of 2009, are not included in the TUI Group’s operating management variable EBITA. Accordingly, the comments below will focus on the operative development of tourism and central operations (continuing operations).
Information about the development of container shipping operations in the second quarter of 2009 is provided here.
Since container shipping was no longer included in consolidation in the second quarter and the first half of 2009, respectively, a year-on-year comparison of cumulative turnover or earnings by division is of limited use only.
Development of turnover
Divisional turnover
€ million | Q2 2009 | Q2 2008 restated | Var. % | H1 2009 | H1 2008 restated | Var. % |
|---|---|---|---|---|---|---|
| Tourism | 4,158.8 | 4,721.8 | - 11.9 | 7,227.0 | 8,339.4 | - 13.3 |
| TUI Travel | 4,007.9 | 4,575.5 | - 12.4 | 6,922.3 | 8,041.2 | - 13.9 |
| TUI Hotels & Resorts | 106.3 | 99.8 | + 6.5 | 202.1 | 193.7 | + 4.3 |
| Cruises | 44.6 | 46.5 | - 4.1 | 102.6 | 104.5 | - 1.8 |
| Central operations | 16.9 | 18.6 | - 9.1 | 31.6 | 31.8 | - 0.6 |
| Continuing operations | 4,175.7 | 4,740.4 | - 11.9 | 7,258.6 | 8,371.2 | - 13.3 |
| Discontinued operation – Container shipping | – | 1,510.1 | n/a | 1,118.9 | 2,961.3 | - 62.2 |
| Divisional turnover | 4,175.7 | 6,250.5 | - 33.2 | 8,377.5 | 11,332.5 | - 26.1 |
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In the second quarter of 2009, turnover by the continuing operations amounted to €4.2bn, down 12% year-on-year. The decline in turnover was in particular attributable to TUI Travel’s diminishing business volume going along with the capacity cuts. In addition, the British tour operators generated lower turnover in tourism due to the weaker exchange rate of the British pound against the euro. Accumulated turnover for the first half of the year was 13% down year-on-year.
Following the deconsolidation of the container shipping operations, the discontinued operations have no longer posted any turnover as of the second quarter.
Development of earnings
Underlying divisional EBITA
€ million | Q2 2009 | Q2 2008 restated | Var. % | H1 2009 restated | H1 2008 restated | Var. % |
|---|---|---|---|---|---|---|
| Tourism | 106.6 | 87.7 | + 21.6 | - 170.0 | - 132.9 | - 27.9 |
| TUI Travel | 98.0 | 72.4 | + 35.4 | - 191.2 | - 167.3 | - 14.3 |
| TUI Hotels & Resorts | 12.1 | 15.3 | - 20.9 | 24.8 | 28.5 | - 13.0 |
| Cruises | - 3.5 | 0.0 | n/a | - 3.6 | 5.9 | n/a |
| Central operations | - 11.7 | 13.4 | n/a | - 21.8 | 20.3 | n/a |
| All other segments | - 9.5 | 11.4 | n/a | 36.1 | 54.9 | - 34.2 |
| Consolidation | - 2.2 | 2.0 | n/a | - 57.9 | - 34.6 | - 67.3 |
| Continuing operations | 94.9 | 101.1 | - 6.1 | - 191.8 | - 112.6 | - 70.3 |
| Discontinued operation – Container shipping | 0.0 | 114.9 | n/a | - 221.7 | 133.4 | n/a |
| Underlying divisional EBITA | 94.9 | 216.0 | - 56.1 | - 413.5 | 20.8 | n/a |
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Divisional EBITA
| € million | Q2 2009 | Q2 2008 restated | Var. % | H1 2009 restated | H1 2008 restated | Var. % |
|---|---|---|---|---|---|---|
| Tourism | 63.8 | - 146.7 | n/a | - 287.9 | - 452.7 | + 36.4 |
| TUI Travel | 55.2 | - 159.7 | n/a | - 309.1 | - 484.8 | + 36.2 |
| TUI Hotels & Resorts | 12.1 | 13.0 | - 6.9 | 24.8 | 26.2 | - 5.3 |
| Cruises | - 3.5 | 0.0 | n/a | - 3.6 | 5.9 | n/a |
| Central operations | - 11.7 | 13.4 | n/a | - 21.8 | 20.3 | n/a |
| All other segments | - 9.5 | 11.4 | n/a | 36.1 | 54.9 | n/a |
| Consolidation | - 2.2 | 2.0 | n/a | - 57.9 | - 34.6 | n/a |
| Continuing operations | 52.1 | - 133.3 | n/a | - 309.7 | - 432.4 | + 28.4 |
| Discontinued operation – Container shipping | - 8.1 | 89.0 | n/a | 894.2 | 90.1 | + 892.5 |
| Divisional earnings (EBITA) | 44.0 | - 44.3 | n/a | 584.5 | - 342.3 | n/a |
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Continuing operations
Earnings adjusted for special effects of the continuing operations tourism and central operations (underlying divisional EBITA) decreased by €6m to €95m year-on-year in the second quarter of 2009. With tourism recording a stable business development, this was solely due to lower earnings by central operations. Accumulated underlying EBITA for the first half of the year declined to €-192m, down €80m.
In the second quarter of 2009, underlying earnings by tourism rose by €19m against previous year’s level to €107m. TUI Travel’s profit contribution rose year-on-year also benefitting from the change in Easter timing, with demand in the travel market impacted by the current economic climate in the quarter under review, as expected. Earnings by hotel operations fell year-on-year but, at €12m, remained on a stable earnings level year-on-year. Earnings by the cruises sector were impacted by start-up losses for TUI Cruises. Besides business volumes of Hapag-Lloyd Kreuzfahrten were down year-on-year. In the first half of the year, underlying earnings by tourism were €37m down year-on-year due to the disruption of travel to individual long-haul destinations in the first quarter and the current economic environment.
Underlying earnings by central operations declined by €25m to €-12m year-on-year in the second quarter of 2009. The decrease in earnings was mainly driven by the reversal of provisions no longer required, effected in the previous year. The decline in earnings of €42m in the first half of the year was also caused by the profit contributions from the valuation of hedges, included in 2008 figures.
Underlying divisional EBITA – Continuing operations
€ million | Q2 2009 | Q2 2008 restated | Var. % | H1 2009 restated | H1 2008 restated | Var. % |
|---|---|---|---|---|---|---|
| Divisional EBITA | 52.1 | - 133.3 | n/a | - 309.7 | - 432.4 | + 28.4 |
| Gains on disposal | – | – | – | – | ||
| Restructuring | + 7.4 | + 190.6 | + 34.9 | + 217.7 | ||
| Purchase price allocation | + 11.1 | + 13.9 | + 21.6 | + 56.5 | ||
| Other one-off items | + 24.3 | + 29.9 | + 61.4 | + 45.6 | ||
| Underlying divisional EBITA | 94.9 | 101.1 | - 6.1 | - 191.8 | - 112.6 | - 70.3 |
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In the second quarter of 2009, the Group’s continuing operations included items worth a total of €43m to be adjusted. Reported divisional EBITA accounted for €52m in the second quarter, up €185m as against the comparative period in 2008, which was impacted in particular by the strategic realignment of TUI Travel’s flight operations. Adjustments effected in the first half of 2009 totalled €118m, exclusively relating to TUI Travel.
Discontinued operation
In the framework of the early first-time application of the revised IAS 27, the gains on disposal from the sale of container shipping, carried in discontinued operations, had to be revalued. The resulting additional gain (€192m) was fully adjusted in underlying earnings by discontinued operations. Following the deconsolidation of container shipping, the TUI Group has no longer posted any earnings shown in EBITA as of the second quarter of 2009.