2nd UPDATE: TUI Posts Net Loss But Confirms 2010 Outlook
12 Mai 2010 - 12:16PM
Dow Jones News
TUI AG (TUI1.XE), a holding company with assets in tourism and
shipping, Wednesday reported a net loss in the second quarter but
said the upward trend in the European tourism sector and global
container shipping continued and it confirmed its full-year
outlook.
The Hanover-based company reiterated its outlook of slightly
higher adjusted earnings before interest, tax and amortization, or
Ebita, for continuing operations for fiscal 2010. It also still
expects stable adjusted Ebita in its tourism business. The
company's tourism operations comprise mainly U.K.-listed TUI Travel
PLC (TT.LN), in which it holds a 54% stake.
Net loss for the January-through-March period hit EUR176.8
million, after a profit of EUR744.3 million a year earlier. It was
a slightly narrower loss than the average EUR181 million in a Dow
Jones Newswires poll of seven analysts.
The year-ago net profit figure was skewed after TUI sold a
majority stake in container-shipping company Hapag-Lloyd AG
(GD-HPL) in March 2009 and booked a EUR990 million gain. After the
EUR3.25 billion disposal, which erased EUR1.2 billion in debt for
TUI, the Albert Ballin GmbH & Co. KG consortium owns a 56.7%
stake in Hapag-Lloyd, while TUI owns the remaining 43.3%.
Hapag-Lloyd "showed a gratifying performance" in the second
quarter, according to Chief Executive Officer Michael Frenzel. It
generated a positive equity contribution of EUR6 million. The
container shipping company's sales soared 13% to EUR1.3 billion and
adjusted Ebita rose to EUR13 million from a EUR222 million loss a
year ago due to cost cutting and higher transport volumes and
freight rates.
WestLB analyst Raimon Kaufeld said the improvement of
Hapag-Lloyd "was the biggest surprise," beside solid earnings. At
0919 GMT, TUI shares traded up 3.1% at EUR8.25, having risen more
than 30% since the start of the year, as investors welcomed a
moderate recovery in shipping volumes.
Adjusted Ebita loss from continuing operations in the second
quarter narrowed to EUR228.6 million, better than the EUR273.8
million loss a year earlier, boosted by higher synergies, improving
market conditions and ongoing cost cutting. Because of advance
payments that have to be made, earnings in tourism are
traditionally negative in the first two quarters.
"TUI Travel and our cruises division have contributed to the
growth in our operating earnings in (the second quarter)," Frenzel
said in a statement.
Sales contracted 6.5% to EUR2.88 billion in the second quarter
as the economic downturn dragged shipping volumes down across the
globe. Analysts had forecast sales at EUR2.89 billion. Sales at TUI
Travel, which accounts for the bulk of TUI's earnings, fell 7% to
EUR2.7 billion.
The MDAX-listed company said it expects around EUR100 million in
costs from the air-traffic disruptions caused by the volcanic
eruption in Iceland. It noted it mainly hurts TUI Travel's earnings
and will be visible in the third quarter.
To weather the economic downturn, TUI has established a
restructuring program including exiting activities that will be
unprofitable in the long run, refinancing assets and selling
non-core assets.
The company changed its fiscal year to bring it in line with
that of TUI Travel and after a short financial year for 2009, the
company's financial year now runs from October through
September.
-By Hilde Arends, Dow Jones Newswires; +49 69 29725 506;
hilde.arends@dowjones.com
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