Tourism achieved profit in second quarter despite Iraqi war Strong rise in logistics result – high gain on disposal of energy sector – net debt substantially reduced

Hanover, August 28, 2003

Tourism, the TUI Group's main division, has been in an upswing for several weeks now. On Group level, the booked turnover for the summer season 2003 improved from around -15% in spring to currently around -6%.

Although the second quarter 2003 was affected overall by the aftermath of the Iraqi war, the lung disease SARS and the economic weakness in Germany, TUI's tourism division achieved a clearly positive result of 51 million euro in this period. In logistics, results were up strongly to 71 million euro. Overall, results by divisions improved from 146 million euro to 625 million euro year-on-year. The gains on the divestment of the energy sector contributed substantially to that result.

In the first half of 2003, Group turnover declined by 4.9% year-on-year to 8.8 billion euro. In contrast, results by divisions before taxes and goodwill amortisation (EBTA) climbed to 545 million euro from 117 million euro in the previous year, impacted by the gains on the divestment of the energy sector. Net debt was reduced by around one third in the first half of 2003 to 3.6 billion euro.

Tourism
Despite the persistent weakness in consumer sentiment and the geopolitical crises, the tourism division achieved a positive result of 51 million euro (previous year: 152 million euro) in the second quarter. Turnover rose by 1.9% to 3.2 billion euro. However, the Nouvelles Frontières Group was fully consolidated for the first time; if it had not been included, quarterly turnover would have been 5.8% less than last year.

Declines were recorded above all in source market Germany. Consumer restraint in particular had an adverse impact on the result. Overall, the Central Europe sector (Germany, Switzerland, Austria and Hapag-Lloyd-Flug) recorded an almost balanced result at -1 million euro (previous year: 49 million euro) in the second quarter. Turnover totalled 1.4 billion euro, down 1.6%.

In the Northern Europe sector (UK, Ireland, Nordic countries and Britannia Airways), turnover in the second quarter dropped by 12.0% to 1.1 billion euro. This decline mainly resulted from a lower turnover in tour operation in the UK and the Nordic countries, but also from currency effects from the conversion of British pound sterling in euro. Nevertheless, the sector posted a positive result of 29 milllion euro (previous year: 56 million euro).

Due to the first-time full consolidation of the Nouvelles Frontières Group, turnover in the Western Europe sector (France, Netherlands, Belgium and Corsair) rose by 74% to 604 million euro in the second quarter. The sector recorded a result of minus seven million euro (previous year: plus three million euro).

The destinations sector (incoming agencies and hotel companies) closed the second quarter at a positive result of 24 million euro (previous year: 45 million euro). Turnover totalled 112 million euro (previous year: 136 million euro).

Logistics
In the second quarter, the turnover of the logistics division virtually matched the previous year's level at 953 million euro (previous year: 955 million euro). Due to the upswing in container shipping, the division increased its result by 65% to 71 million euro. The improvement was mainly due to the nine percent growth in the transport volume and an increase in freight rates. VTG-Lehnkering and Algeco made a relatively stable profit contribution.

Central operations
In the second quarter, central operations posted a positive result of 502 million euro. This figure primarily reflected the gains on the divestment of Preussag Energie GmbH, completed in June, of 769 million euro. On the other hand, central operations incurred costs and provisioning totalling 267 million euro, including the expected 20 million euro start-up costs for Hapag-Lloyd Express.

Prospects
Since the end of the Iraqi war, in the tourism division incoming bookings for the summer season 2003 have improved significantly. Bookings for the months of July through September are particularly good. The sustained trend towards late bookings will reduce the backlog in bookings further. This catch-up effect is expected to be sufficient to bring back the earnings of the third quarter close to previous year's level. In the tourism division, results for financial year 2003 will be clearly positive, but lower than in the previous year due to the development of earnings in the first half of 2003.

The logistics division will continue to benefit from the sustained upswing in container shipping and increase its result for the current financial year.

In central operations, improvements are expected by means of a reduction in corporate centre costs and interest expenses.

The divestment of the energy sector generates high non-recurrent gains. Therefore the TUI Group's results by divisions for financial year 2003 will exceed the previous year's level.

Dr Michael Frenzel, TUI AG chairman: "Over the past few months, the tourism industry has been operating in an extremely difficult environment. However, the catch-up effects in booked tourism turnover which have been recorded for quite some time now indicate that the trend is bottoming out. Against the backlog of the expected economic recovery and the increase in consumer confidence, tourism will return to a growth path next year. This trend will also benefit the TUI Group."

The complete interim report is available at www.tui-group.com/en/ir/reports/download/.


For further information please contact:
Björn Beroleit, phone +49 511 566-1310
Nicola Gehrt, phone +49 511 566-1435