Tourism on track: 14 per cent rise in operating earnings in financial year 2009/10 to 640 million euro

The TUI Group achieved a sound operating performance in financial year 2009/10 despite substantial impacts of the volcanic eruption in Iceland. While turnover only decreased by almost 2 per cent, TUI’s continuing operations (Tourism & Central Operations) generated earnings of 16.4 billion euro (previous year 16.6 billion euro). All three Tourism Sectors TUI Travel, TUI Hotels & Resorts and the Cruises Sector increased their operating earnings. Underlying EBITA by Tourism climbed by almost 14 per cent to 640 million euro (previous year 564 million euro). TUI CEO Dr Michael Frenzel said: “We have met the substantial challenges posed by the ash cloud well. Tourism operations are on track.” The TUI CEO referred to the successful delivery of synergies at TUI Travel in financial year 2009/10. “Synergies totalling 195 million pounds sterling were delivered. We have thus achieved the targets we had set ourselves one year ahead of the original schedule”, said Frenzel.

 

The performance shown by TUI Cruises in its first full year of operations was better than expected. “At a load factor of over 87 per cent and clearly improved results, Mein Schiff 1 has exceeded our expectations”, said Frenzel. TUI Cruises thus established itself successfully in the premium volume segment within a very short timeframe. The expansion of TUI Cruises has also met with positive market response. The Nordland routes of Mein Schiff 2, which will be commissioned in May, are already almost fully booked at sound pricing levels.

 

TUI’s shipping participation Hapag-Lloyd showed a particularly gratifying performance. It achieved a turnaround in financial year 2009/10. Container Shipping contributed 150 million euro to TUI’s Group result (previous year -174 million euro). TUI CEO Frenzel emphasized the fact that the additional financial commitment with Hapag-Lloyd had been the right decision. “We therefore have resources and options available that we would hardly have considered possible a year ago“, Frenzel continued.

Below the bottom line, TUI generated a Group profit for the year of 114 million euro. The result for the prior-year period (2008/09) of 206 million euro included the book profit from the sale of the majority stake in Hapag-Lloyd. Earnings per share amount to 0.30 euro (previous year 0.58 euro). In the period under review, net debt amounted to around 2.3 billion euro, almost flat year-on-year.

 

For the new financial year, TUI CEO Frenzel sees the Group well positioned. Trading for the current winter season is up year-on-year in all European source markets, with some markets reporting substantial growth. For TUI Travel underlying earnings are expected to rise slightly, partly driven by higher business volumes and the effects of the cost containment programme. For TUI Hotels & Resorts the Executive Board also expects a slight increase in operating earnings. The Cruises Sector, by contrast, is expected to show a decline in earnings due to the start-up and financing costs for Mein Schiff 2. Central Operations are expected to show a stable development so that underlying earnings by the continuing operations (Tourism & Central Operations) will rise year-on-year.

 

Overall, TUI expects a positive Group result for financial year 2010/11.

 

After the balance sheet date, TUI continued its monetarisation programme. Activities included sales of Hapag-Lloyd administrative buildings in Hamburg. Overall, TUI expects a cash inflow of 325 million euro from real estate as well as sale and leaseback transactions.

 

Turnover by TUI Travel decreased by around one per cent. This was due to the business disruption caused by the closure of Europe’s air space. A positive turnover effect arose from strong booking volumes in the late summer. Overall, TUI Travel generated turnover of 15.7 billion euro (previous year 15.9 billion euro). In spite of the challenging market environment, TUI Travel achieved improvements in its operating performance. Underlying EBITA rose by 49 million euro or almost 11 per cent to 506 million euro (previous year 457 million euro). The earnings growth reflects in particular higher synergies. Positive earnings effects also resulted from exiting the German city-pairs business and the merger with tour operator Sunwing in Canada.

Turnover by TUI Hotels & Resorts decreased by around 4 per cent to 380 million euro (previous year 393 million euro) in financial year 2009/10. This was due to a slight decline in average revenues per bednight (-2 per cent). The number of bednights was flat year-on-year. At 75 per cent, the load factor recorded by TUI Hotels & Resorts also matched the good level achieved in the previous year. TUI Hotels & Resorts achieved an increase in operating earnings (underlying EBITA) of almost 15 per cent to 127 million euro (previous year 111 million euro). Apart from the sound load factor, the cost reduction programme initiated at the beginning of the year had a positive effect.

 

The performance of the Cruises Sector* reflected a successful first full year of operations of Mein Schiff by TUI Cruises. MS Europa, operated by Hapag-Lloyd Kreuzfahrten, had an unscheduled dry-dock period which caused a slight decline in Sector turnover of 4 per cent to 179 million euro (previous year 187 million euro).

 

In the period under review, underlying EBITA rose substantially. Following a loss of 3 million euro in the previous year, operating earnings totalled around 8 million euro in the period under review. The significant increase in earnings in the Cruises Sector was driven by TUI Cruises. Earnings attributable to Hapag-Lloyd were flat year-on-year. The fleet operated by Hapag-Lloyd Kreuzfahrten recorded a load factor of around 74 per cent (previous year 77 per cent), while Mein Schiff 1, operated by TUI Cruises, reported a load factor of 87 per cent (previous year 83 per cent).

 

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* As TUI Cruises is measured at equity in the financial statements, the turnover of this joint venture is not consolidated.