TUI AG (TUI1.XE), a holding company with assets in tourism and shipping, Tuesday said it expects to report a positive group result for its current fiscal year due to strong earnings from TUI Travel PLC (TT.LN) and continued cost control, but said it won't pay a dividend for fiscal 2010.

When and to what extent the MDAX-listed company will restart dividend payments depends on the further development of the company, it said.

Chief Executive Michael Frenzel said the Hanover, Germany-based company is well positioned for the coming financial year. It reported that the winter travel season is developing well, with bookings above last year's level in Europe and substantial growth in some markets.

TUI AG is the majority owner of Europe's biggest travel company, U.K.-based TUI Travel. The British company is expected to show a slight increase in earnings before interest, taxes and amortization, or Ebita, excluding gains on disposals and restructuring expenses in fiscal 2011. Adjusted Ebita for continuing operations, which includes the tourism business and central operations, is expected to rise on the year.

TUI AG expects cash inflows in the current fiscal year, which began Oct. 1. It said it will book EUR325 million in inflows from the sale of the administrative building of container shipping business Hapag-Lloyd to that company, as well as income from other real estate divestments and sale and lease back deals. Most of the total inflow will be booked this year.

The company also expects some cash inflow from repayments of remunerations paid to board members after a restatement of its 2009 shortened financial year earnings. The company was forced to restate its 2009 earnings after TUI Travel discovered an accounting error.

TUI also wants to further cut its net debt level, which reduced to EUR2.29 billion in fiscal 2010 from EUR2.33 billion a year earlier.

Net profit for fiscal 2010 fell 40% to EUR101.8 million, after the previous year was boosted by the disposal of a majority stake in its container shipping unit Hapag-Lloyd. This year's figure clearly beat the EUR80 million expected, according to a Dow Jones Newswires poll of nine analysts.

Earnings from TUI Travel were hit by air-traffic disruptions caused by an ash cloud from a volcanic eruption on Iceland earlier this year.

TUI AG's sales contracted 1.5% to EUR16.35 billion but still beat analysts' forecast of EUR15.9 billion. Sales at TUI Travel, which accounts for the bulk of TUI's earnings, fell to EUR15.7 billion from EUR15.9 billion a year before.

TUI aims to fully divest its stake in Hapag-Lloyd. After a planned capital increase, TUI will hold 49.8% in the company and the Albert Ballin GmbH & Co. KG consortium will hold the remaining 50.2%. It is considering a stock listing of the unit or a sale to strategic or financial investors.

TUI AG 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 to September.

-By Hilde Messer and Kirsten Bienk, Dow Jones Newswires; +49 69 29725 506; hilde.messer@dowjones.com
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