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TUI shares dive nearly 20% on profit warning

  • Written by Kari Reinikainen
  • Category: Top Headlines

Shares in the tour and cruise operator TUI AG, which are listed in London, traded almost a fifth lower in early afternoon after the company had issued a profit warning in the morning.

At 1230 local time, the shares had lost 17.80% since the opening and traded at £9.73. They had hit a low of £9.63 earlier in the session, whilst the session high had been £10.66.

The benchmark FTSE100 share index of the London market was down 0.04% at the same time

The shares in TUI that has its headquarters in Hannover in Germany have lost almost half of their value since hitting a high of £18.16 in may last year.

TUI AG owns 50% of the German cruise operator TUI Cruises and is full owner of the expedition and luxury operator Hapag-Lloyd Kreuzfahrten and UK based Marella Cruises.

 

Core markets continue grow despite certain worries, TUI notes

  • Written by Kari Reinikainen
  • Category: Top Headlines

TUI AG, the German tour operator that is listed in London, said that its core markets continue to grow despite headwinds in some parts of its business.

“Despite the challenges experienced by Markets & Airlines, demand for leisure travel continues to grow in our core markets,” TUI said.

TUI AG owns 50% of the German cruise operator TUI Cruises and is full owner of the expedition and luxury operator Hapag-Lloyd Kreuzfahrten and UK based Marella Cruises. It did not suggest that there was problems with these businesses

“We have positioned TUI to benefit from this through the successful transformation as an integrated provider of Holiday Experiences (hotels, cruises and activities & excursions), based on its strong strategic and financial position,” TUI said.

TUI is planning to enter into new markets generating €1 billion of revenue from one million customers by 2022, driving more demand for our own hotels. Holiday Experiences delivered 70% of earnings in FY18 and we expect continued strong performance from these parts of our business.

“Having delivered this transformation, we expect the ongoing digitalisation and platforming of our business to drive future earnings, positioning TUI to continue to benefit from the strong mid- to long-term growth in consumer demand for leisure travel,” the company stated.

TUI issues profit warning on host of woes

  • Written by Kari Reinikainen
  • Category: Top Headlines

TUI AG, which operates three cruise brands as parts of its business, has issued a profit warning for the financial year to 30 September, citing a host of woes from last year’s hot weather in Europe, shift in consumer demand and a weak British pound as sources of concern.

“TUI AG now expects FY19 underlying EBITA rebased at constant currency to be broadly stable compared with the record performance in FY18 of EUR 1,177m. Consequently, we are not reiterating our guidance of at least 10% CAGR in underlying EBITA at constant currency for the three years to FY20,” said the company, whose headquarters are in Hannover in Germany in a statement.

The company said 34% of its Markets & Airlines Summer 2019 programme has been booked to date. “Bookings are broadly in line with prior year, however, margins are not, TUI said.

This is driven by a continuation of the sector headwinds already discussed at our FY18 results presentation in December 2018, in particular:

  • negative impact from the extraordinary hot weather in 2018, resulting in later bookings and weaker Markets & Airlines margins;
  • shift in demand from the Western to Eastern Mediterranean, which has created overcapacities in certain destinations such as the Canaries, resulting in lower margins for Markets & Airlines; and
  • continued weakness of the Pound Sterling, making it difficult to improve margins on holidays sold to UK customers.

Previously, it was anticipated that these headwinds would impact primarily H1 (Winter), however we are seeing from current bookings an additional impact on H2 (Summer), and have updated our guidance accordingly.

TUI said the management is already taking specific measures to address Markets & Airlines headwinds, including harmonisation under one leadership to drive cost savings and efficiencies; reducing distribution costs by shifting to more direct, more online, more mobile; and increasing upselling of activities & excursions to drive revenue and margin benefits.

“We also expect that the continued sector headwinds may trigger market consolidation, and that TUI could be a beneficiary of this,” the company said.

TUI AG owns 50% of the German cruise operator TUI Cruises and is full owner of the expedition and luxury operator Hapag-Lloyd Kreuzfahrten and UK based Marella Cruises

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