TUI Travel sees quarterly profit and revenue falls
But the world's largest tour operator said it had sold most of its summer holidays
By CFOWorld staff | CFO UK | Published 11:59, 09 August 12
TUI Travel posted a fall in underlying profit and revenue in the quarter to the end of June despite a rise in summer holiday bookings because of the record rainfall in northern Europe.
The world’s largest tour operator said on Thursday it had sold over 80 percent of its summer holidays by the end of June leaving them fewer deals to sell compared with the same time last year.
The group, which owns Thomson and First Choice, however said underlying operating profit fell 16 percent to £74 million in the three months to the end of June, blaming in part the timing of the Easter holidays this year as it fell in its second quarter rather than the third quarter in 2011.
Group revenues fell 2 percent to £3.69 billion, while operating margin dropped 0.3 points to 2 percent.
The gloomy weather offset weaker demand for holidays in crisis-hit Greece, chief executive Peter Long told reporters.
"Northern Europe has been pretty consistently bad from a weather perspective over the last couple of months and that has benefitted us with people deciding to book (holidays)," he said.
Budget airline easyJet last month said quarterly sales were boosted by sun-starved Britons fleeing unusually soggy home weather, with bookings to Malaga and Alicante in Spain and Faro in Portugal up by a fifth during periods of poor weather.
Travel companies and airlines across Europe have seen bookings fall in recent months, hit by the euro zone crisis and uncertainty in Greece, one of the continent's main holiday destinations.
TUI said consumers are willing to loosen their purse strings for a get-away and are increasingly looking for a holiday at a fixed price where they don't have to worry about how much they are spending.
"Many of the differentiated holidays we offer are driven by the all inclusive offering which has proved to be very popular in this economic climate," Long said.
Shares in TUI Travel, which have risen 13 percent in the last month, were 0.5 percent down at 194.05 pence by 0845 GMT, valuing the business at around £2.17 billion.
The FTSE 100 company said the UK, the Nordic region and Germany had all delivered solid growth during the period but that its French business continued to underperform because of a slower than expected recovery in North African markets.
TUI said winter 2012/13 sales started well and that it was confident of meeting full year earnings expectations.
The company is expected to report an average pre-tax profit of £351.2 million for the year to the end of September, according to Thomson Reuters I/B/E/S data.
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