TUI AG (TUIFF.PK), a holding company in the tourism sector, Tuesday reported a pre-tax profit in its third-quarter, benefited by strong growth in all its sectors, mainly hotel business. Underlying Group EBITA, or operating earnings, a key earnings performance metric, as well as turnover grew from last year and beat estimates.
Looking ahead, the parent of UK-based TUI Travel Plc (TT.L) said it is confident about its full-year performance in the light of a successful third quarter and strong current trading for the summer business. The company said it expects a moderate increase in turnover, growth in operating earnings and a positive Group result for the year. TUI shares increased around 6% in the morning trade on Frankfurt's Xetra.
Bloomberg reported Monday, citing people familiar with the news, that TUI is considering acquiring the Central European tourism operations of its TUI Travel unit, over buying the 44 percent in TUI Travel it doesn't already own, as it would be cheaper.
For the third quarter, TUI reported pre-tax earnings of 22.9 million euros, compared to a loss of 30.8 million euros last year. Group loss attributable to shareholders reduced significantly to 3.3 million euros from 40.5 million euros in the previous year.
Underlying Group EBITA was 102.3 million euros, higher than 96.2 million euros last year.
Turnover for the latest quarter was 4.72 billion euros, 7.7 percent higher than last year's 4.39 billion euros.
Segment-wise, TUI Travel's turnover grew 7.4 percent to 4.56 billion euros, benefited by continued strong trading in the UK, a higher proportion of exclusive product with strong margins and a positive foreign exchange effect. This was partly offset by the timing of Easter, since the profitable Easter business fell in the second quarter this year.
Hotels & Resorts revenues increased 14.8 percent, with growth in the number of bednights, load factors and average revenues per bed. Underlying EBITA more than doubled primarily on higher price levels and successful cost management by Riu, the largest hotel brand.
Cruises sector's turnover climbed 21.5 percent due to the capacity expansion in Hapag-Lloyd Kreuzfahrten.
TUI CEO Michael Frenzel said, "We are seeing our business performance outlook more than confirmed and will achieve our targets for the year despite the European debt crisis."
For fiscal 2012, TUI Travel expects underlying EBITA to increase, benefited by business improvement programs and higher margins resulting from the product strategy. TUI Travel might further exceed current expectations if Sterling remains strong against the euro, the company added.
TUI lifted its outlook for Hotels & Resorts, and now expects underlying EBITA in the Hotel Sector to improve significantly, as the performance is exceeding expectations. 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.
On Frankfurt's Xetra, TUI AG shares gained 0.34 euros or 6.34 percent, and are currently trading at 5.75 euros.
In London, TUI Travel shares are currently trading at 200.60 pence, down 4.30 pence or 2.10 percent.
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by RTT Staff Writer
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