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Sound operating performance in Q3

TUI Group is confident about full-year results

Hanover, 14 August 2012

The TUI Group is confident about its full-year performance in the light of a successful third quarter of financial year 2011/12 and strong current trading for the summer business. In the period under review, TUI Group’s turnover grew by 8 per cent year-on-year to 4.7 billion euros (previous year 4.4 billion euros). Operating earnings climbed by 6 per cent to 102 million euros (previous year 96 million euros). The Group result turned around from -40 million euros in the prior-year comparative quarter to 9 million euros. TUI also took a crucial step forward in achieving its planned debt reduction: As at 30 June, net debt was cut by around 800 million euros to 759 million euros, above all due to a reduction in the Hapag-Lloyd investment. “We are seeing our business performance outlook more than confirmed and will achieve our targets for the year despite the European debt crisis,” commented TUI CEO Dr Michael Frenzel.

For the Cruises Sector, TUI expects operating earnings to decline as at the end of the year due to start-up costs associated with the fleet expansion. By contrast, the outlook for Hotels & Resorts has been lifted. Frenzel: “Our performance is exceeding our expectations. We now expect underlying EBITA in the Hotel Sector to improve significantly.” For TUI Travel, the TUI AG Executive Board expects underlying EBITA to increase. The key earnings drivers are positive effects of the business improvement programmes and higher margins resulting from the product strategy. Should Sterling remain strong against the Euro, TUI Travel might further exceed current expectations.

For the overall Group, TUI AG expects a moderate increase in turnover, growth in operating earnings and a positive Group result for the year. 

Cumulative turnover for the first nine months of the financial year grew by 7 per cent to 11.5 billion euros (previous year 10.8 billion euros). The Group’s underlying EBITA improved by 4 per cent to a seasonal loss of 269 million euros (previous year -279 million euros).

Development of TUI Travel

In the third quarter, TUI Travel recorded continued strong trading in the UK, a higher proportion of exclusive product with strong margins and a positive foreign exchange effect. An opposite effect was caused by the timing of Easter since the profitable Easter business fell in the second quarter this year. Turnover by TUI Travel grew by 7 per cent to 4.6 billion euros in the third quarter (previous year 4.3 billion euros). Underlying EBITA improved by 2 per cent to 89 million euros (previous year 88 million euros). The Easter effect was offset by the strong performance in Northern Europe and the foreign exchange effects. Further positive effects resulted from savings from the restructuring programmes in Germany and France in the period under review.

For the first nine months of the financial year, TUI Travel posted cumulative turnover of 11 billion euros (previous year 10.4 billion euros), up 6 per cent. At a seasonal minus of 298 million euros, operating earnings were flat year-on-year.

Development of TUI Hotels & Resorts

The Group’s Hotels & Resorts Sector continued the very good performance achieved in the prior quarters, recording a further leap in earnings in the third quarter. It achieved year-on-year growth in the number of bednights, load factors and average revenues per bed in the third quarter. While overall turnover grew by 5 per cent to 195 million euros (previous year 185 million euros), the Sector more than doubled its underlying EBITA to 35 million euros (previous year 17 million euros). This growth primarily reflects higher price levels and successful cost management by Riu, the largest hotel brand.

Cumulative turnover for the first nine months rose by 6 per cent to 566 million euros (previous year 535 million euros). Operating earnings were improved by more than 69 per cent to 90 million euros (previous year 54 million euros).

Development of Cruises

In the third quarter, the Cruises Sector improved its turnover by 22 per cent to 59 million euros (previous year 49 million euros) due to the capacity expansion in Hapag-Lloyd Kreuzfahrten. As TUI Cruises is measured at equity, no turnover is shown in the consolidated financial statements. Underlying earnings decreased to -2.2 million euros (previous year 0.2 million euros). While earnings by Hapag-Lloyd Kreuzfahrten were down on prior year, partially due to start-up costs for the fleet expansion, TUI Cruises continued its positive performance.

For the first nine months, the Sector posted cumulative turnover of 162 million euros (previous year 145 million euros), up 11 per cent on prior year. Cumulative underlying EBITA totalled -8 million euros (previous year -3 million euros).

Development of the Hapag-Lloyd participation

Following the sale of a 17.4 per cent stake in Hapag-Lloyd in June, TUI held a stake of around 22 per cent in Hapag-Lloyd at the end of the third quarter. The stake is measured at equity in the consolidated financial statements.

The rise in average freight rates and the considerable strengthening of the US Dollar against the Euro resulted in turnover growth of around 21 per cent. Earnings reflected in particular the persistently high bunker prices. The at equity result of Hapag-Lloyd included in TUI’s consolidated financial statements for the period under review amounted to -3 million euros (previous year -5 million euros), a significant improvement versus the previous quarter.

Sector turnover

€ million Q3 2011/12 Q3 2010/11 Var. % 9M 2011/12 9M 2010/11 Var. %
 
Tourism 4,713.4 4,375.0 + 7.7 11,420.6 10,713.5 + 6.6
   TUI Travel 4,563.5 4,247.3 + 7.4 10,996.4 10,331.5 + 6.4
   TUI Hotels & Resorts 90.6 78.9 + 14.8 262.6 236.6 + 11.0
   Cruises 59.3 48.8 + 21.5 161.6 145.4 + 11.1
Central Operations 11.3 12.5 - 9.6 34.6 38.3 - 9.7
Group 4,724.7 4,387.5 + 7.7 11,455.2 10,751.8 + 6.5

Underlying sector EBITA

€ million Q3 2011/12 Q3 2010/11 Var. % 9M 2011/12 9M 2010/11 Var. %
             
Tourism 122.4 104.5 + 17.1 - 214.6 - 246.7 + 13.0
   TUI Travel 89.2 87.5 + 1.9 - 297.2 - 297.6 + 0.1
   TUI Hotels & Resorts 35.4 16.8 + 110.7 90.5 53.6 + 68.8
   Cruises - 2.2 0.2 n/a - 7.9 - 2.7 - 192.6
Central Operations - 20.1 - 8.3 - 142.2 - 54.6 - 32.2 - 69.6
Group 102.3 96.2 + 6.3 - 269.2 - 278.9 + 3.5

Sector EBITA

€ million Q3 2011/12 Q3 2010/11 Var. % 9M 2011/12 9M 2010/11 Var. %
             
Tourism 65.8 45.3 + 45.3 - 373.9 - 280.0 - 33.5
   TUI Travel 33.0 28.3 + 16.6 - 456.1 - 328.2 - 39.0
   TUI Hotels & Resorts 35.0 16.8 + 108.3 90.1 50.9 + 77.0
   Cruises - 2.2 0.2 n/a - 7.9 - 2.7 - 192.6
Central Operations - 22.0 - 8.3 - 165.1 - 43.2 - 8.0 - 440.0
Group 43.8 37.0 + 18.4 - 417.1 - 288.0 - 44.8

Income statement

€ million   Q3 2011/12 Q3 2010/11 Var. % 9M 2011/12 9M 2010/11 Var. %
               
Turnover   4,724.7 4,387.5 + 7.7 11,455.2 10,751.8 + 6.5
Cost of sales   4,342.0 4,013.1 + 8.2 10,797.5 10,103.2 + 6.9
Gross profit   382.7 374.4 + 2.2 657.7 648.6 + 1.4
Administrative expenses   341.4 355.9 - 4.1 1,086.0 1,026.7 + 5.8
Other income/Other expenses   + 50.8 + 12.5 + 306.4 + 65.4 + 65.0 + 0.6
Financial income   31.5 32.1 - 1.9 122.7 192.0 - 36.1
Financial expenses   110.1 91.3 + 20.6 302.4 386.7 - 21.8
Share of result of joint ventures and associates   + 9.4 - 2.6 n/a - 47.8 + 24.7 n/a
Earnings before income taxes   22.9 - 30.8 n/a - 590.4 - 483.1 - 22.2
               
Reconciliation to underlying earnings:              
Earnings before income taxes   22.9 - 30.8 n/a - 590.4 - 483.1 - 22.2
plus: Loss on Container Shipping measured at equity   3.0 5.0 - 40.0 61.7 0.3 n/a
less: Gains on reduction and measurement of financial investment in Container Shipping   - 46.6 - 10.0 - 366.0 - 63.7 - 50.9 - 25.1
plus: Net interest expense and expense from measurement of interest hedges   64.5 72.8 - 11.4 175.3 245.7 - 28.7
Group EBITA   43.8 37.0 + 18.4 - 417.1 - 288.0 - 44.8
Adjustments:              
   plus: Restructuring expenses   + 7.6 + 5.3   + 57.6 + 16.0  
   plus: Loss from purchase price allocation   + 15.0 + 26.1   + 55.7 + 65.6  
   plus/less: Expenses/income from other one-off items   + 35.9 + 27.8   + 34.6 - 72.5  
Underlying Group EBITA   102.3 96.2 + 6.3 - 269.2 - 278.9 + 3.5
               
Earnings before income taxes   22.9 - 30.8 n/a - 590.4 - 483.1 - 22.2
Income taxes   13.6 8.8 + 54.5 - 197.2 - 139.9 - 41.0
Group profit/loss for the year   9.3 - 39.6 n/a - 393.2 - 343.2 - 14.6
Group loss for the year attributable to shareholders of TUI AG   - 3.3 - 40.5 + 91.9 - 276.1 - 230.9 - 19.6
Group profit/loss for the year attributable to non-controlling interest   12.6 0.9 n/a - 117.1 - 112.3 - 4.3
               
Basic and diluted earnings per share in € - 0.04 - 0.18 + 76.7 - 1.17 - 0.99 - 18.4
Contact

Björn Beroleit
Head of Investor Relations
phone +49 (0)511 566-1310


Nicola Gehrt
Senior Manager Investor Relations
phone +49 (0)511 566-1435