TIDMTT.
RNS Number : 9257W
TUI Travel PLC
07 February 2012
7 February 2012
TUI Travel PLC
("TUI Travel")
First Quarter Results for the three months ended 31 December
2011 and Interim Management Statement
Key financials
First quarter ended 31 December
Underlying results(1) Statutory results
GBPm Q1 12 Q1 11(2) Change% Q1 12 Q1 11(2)
Revenue 2,845 2,716 +5% 2,845 2,716
Operating loss (109) (86) -27% (131) (117)
---------------- ------ --------- -------- -------- ----------
(1) Underlying operating loss excludes separately disclosed
items, amortisation of business combination intangibles,
acquisition related expenses, predecessor accounting for Magic Life
and interest and taxation of results of the Group's joint ventures
and associates (2) Prior year figures have been re-presented to
include Jet4You which was previously reported as a discontinued
operation, and to incorporate the results of Magic Life under
predecessor accounting
Highlights
-- Winter 2011/12 and Summer 2012 bookings overall have progressed as
anticipated since our last update, with an improvement in the cumulative
booked position in all key source markets.
-- As expected, underlying operating loss for the quarter increased
by GBP23m, principally driven by lower demand for North African destinations.
-- Business improvement programme progressing to plan.
-- Improved UK Winter trading with load factors and late sales margins
ahead of the prior year.
-- Outperformed the UK leisure travel market, as defined by GFK Ascent,
during the key booking period in January:
-- TUI Summer 2012 bookings flat versus -14% for total market.
-- Our business strategy to grow differentiated product and to be online
driven is progressing well:
-- Differentiated product currently accounts for 64% of UK bookings
for Summer 2012, up seven percentage points on prior year.
-- UK Summer 2012 differentiated product volumes up 16% in January
versus prior year.
-- UK Mainstream websites occupy a number one position in online
travel*.
-- Thomson website visits up 11% and First Choice up 45% in January
versus prior year.
-- Online bookings up 19% for Winter and 16% for Summer 2012 in
January versus prior year.
-- Increase in holidays booked online in the UK during January:
49% booked online for Winter, up ten percentage points versus
prior year and 42% for Summer, up six percentage points versus
prior year.
-- Summer 2012 online accommodation bookings in the Accommodations
& Destinations Sector up 21% to date on the prior year.
* Hitwise
Peter Long, Chief Executive of TUI Travel PLC, commented
"We are satisfied with the progress in trading since our last
update and are particularly pleased with the performance of
differentiated product, which continues to book earlier,
demonstrating the resilience of our business model. We are also
pleased with the development of bookings and pricing in the UK,
where we have outperformed the market during the key booking period
in January. We have also had a particularly good performance in
online sales. We believe that this outperformance reflects the
trust that customers place in our market leading brands.
"As anticipated, underlying operating loss for the quarter
increased principally due to lower demand for North African
destinations.
"Our performance remains in line with our expectations and the
flexibility of our business model means that we are able to manage
capacity to match profitable demand. In addition, our business
improvement programme is progressing according to plan. These
self-help measures, coupled with our strategy of increasing
differentiated product, controlled distribution and online sales,
will help us to deliver in the current challenging macro-economic
environment."
Investor and Analyst Conference Call
A conference call for investors and analysts will take place
today at 8.00am (GMT). The dial-in arrangements for the call are as
follows:
Telephone: +44 (0)1452 555 566
Participant Code: 48883360
A presentation to accompany the conference call will be made
available at 7.30am (GMT) via our corporate website:
http://www.tuitravelplc.com
A recording of the conference call will be available for 30 days
on:
Telephone: +44 (0)1452 550 000
Participant Code: 48883360#
Enquiries:
Analysts & Investors
Will Waggott, Chief Financial Officer Tel: +44 (0)1582 645 334
Andy Long, Head of Strategy & Investor Relations Tel: +44 (0)1293 645 795
Press
Lesley Allan, Corporate Communications Director Tel: +44 (0)1293 645 774
Michael Sandler / Kate Hough (Hudson Sandler) Tel: +44 (0)20 7796 4133
CURRENT TRADING
Winter 2011/12
Trading for Winter has been encouraging since our last update on
5 December 2011. The cumulative booked position has improved in all
of our key source markets, reflecting the anticipated later booking
profile.
YoY customer booking variation % Cumulative Bookings since previous Cumulative
bookings at 27 Nov trading statement bookings at 29 Jan
UK -12 -6 -10
Nordic region Flat +17 +3
Germany -8 +4 -4
France tour operators -12 -7 -10
Belgium +2 +16 +6
Netherlands +15 +27 +18
---------------------------------- -------------------- ------------------------ --------------------
Current Trading(1) Winter 2011/12
YoY variation% Total ASP(2) Total Total Risk Only
Sales(2) Customers(2)
Capacity(3) Left to sell(3)
MAINSTREAM
UK +5 -5 -10 -9 -8
Nordic region Flat +3 +3 +4 +15
Northern Region +4 -2 -5
Germany +4 -1 -4 -13 -7
Austria Flat -7 -7
Switzerland -13 -20 -9
Poland +13 +49 +32
Central Europe +3 -1 -4
France tour operators -1 -11 -10
Belgium -2 +4 +6
Netherlands +6 +25 +18
Western Europe Flat +3 +3
SPECIALIST & ACTIVITY N/A +8 N/A
A&D(4) +4 +21 +16
(1) These statistics are up to 29 January 2012 (2) These
statistics relate to all customers whether risk or non-risk (3)
These statistics include all risk capacity programmes (4) These
statistics refer to online accommodation businesses only; sales
refer to total transaction value (TTV) and customers refers to
roomnights
In the UK, bookings since our last announcement have improved,
with volumes continuing to trend towards the capacity reduction of
9% and have less left to sell versus last year. Booked load factor
is currently 71%, broadly in line with last year. We are pleased
with our price performance, with average selling prices up 5% in
light of inflationary cost increases and increased differentiated
sales. Demand for differentiated products continues to be strong
with volumes up 15%. These products now account for 62% of our
sales, up 12 percentage points on prior year. As anticipated, North
Africa remains challenging with volumes down 23%. Across our
programme strong demand in the lates booking period has resulted in
improved load factors for November, December and January.
In Canada, we are continuing to trade strongly, following
capacity expansion to Mexico and the Caribbean.
In the Nordic region, volumes since our last announcement are up
17% and the Winter programme is now 92% sold, broadly in line with
prior year. Demand for Thailand continues to be weak following the
flooding in Bangkok. Demand for differentiated products continues
to be strong with volumes up 31% on prior year.
In Germany, bookings since our last announcement are up 4%
leading to improved load factors year on year for December and
January. Demand for North Africa remains weak, with volumes down
37%, however volumes for the Canaries have offset some of this
decline, with customer numbers up 16%. Load factors for the
remaining months of the Winter season are ahead of prior year. The
late selling market has benefited our direct seller L'tur with
volumes up 18% since our last announcement.
In France, the market continues to be impacted by the weaker
demand for North Africa. For the French tour operators volumes to
North Africa are down 23%.
In Belgium and the Netherlands, bookings have been strong since
our last announcement, reflecting an increase in capacity in those
source markets.
Trading in the Specialist & Activity sector remains
positive, with sales up 8%.
In the Accommodation & Destinations sector (A&D)
bookings are now up 16% driven by the B2B division, where bookings
are up 20%. Volumes in B2C have improved since our last update and
are now 9% ahead of last year.
Summer 2012
Since our last announcement the markets outside of Northern
Region have launched their Summer 2012 brochures. Early trading has
been in line with expectations, against what was a strong
comparative period.
YoY customer booking variation % Cumulative Bookings since previous Cumulative
bookings at 27 Nov trading statement bookings at 29 Jan
UK -11 -1 -7
Nordic region -14 -6 -8
---------------------------------- -------------------- ------------------------ --------------------
Current Trading(1) Summer 2012
YoY variation% Total ASP(2) Total Total Risk Only
Sales(2) Customers(2)
Capacity(3) Left to sell(3)
MAINSTREAM
UK +8 Flat -7 -9 -10
Nordic region +2 -6 -8 Flat +4
Northern Region +7 -1 -7
Germany +2 -2 -4 -8 -7
Austria -2 -6 -4
Switzerland -5 +1 +6
Poland Flat +41 +41
Central Europe +1 -1 -3
France tour operators +4 -10 -13
Belgium -5 -6 -1
Netherlands +4 -1 -6
Western Europe Flat -5 -5
SPECIALIST & ACTIVITY N/A +3 N/A
A&D(4) +11 +34 +21
(1) These statistics are up to 29 January 2012
(2) These statistics relate to all customers whether risk or
non-risk (3) These statistics include all risk capacity programmes
(4) These statistics refer to online accommodation businesses only;
sales refer to total transaction value (TTV) and customers refers
to roomnights
In the UK, we have significantly outperformed the market in the
month of January where volumes have continued to improve and are
now ahead of our 9% capacity reduction, with 35% sold to date,
which is in line with prior year. Capacity has been reduced for
North Africa and the Eastern Mediterranean, with some of this
reduction offset by increased capacity in the Canaries. Turn of
year trading has been ahead of expectations and we are particularly
pleased with our online performance. We have continued to increase
the proportion of holidays sold online with 42% booked online for
Summer 2012, up six percentage points versus the prior year.
Average selling price is currently up 8% reflecting cost base
inflation of approximately 5% and the continued increase in
differentiated content.
This Summer is the first season that First Choice will be
exclusively all inclusive. The attractiveness of all inclusive
holidays, particularly in the current economic environment, is
demonstrated by all inclusive products making up 55% of bookings to
date, up seven percentage points on prior year. As we continue to
expand our differentiated offering, which traditionally books
earlier, these products have accounted for 64% of bookings to date,
up seven percentage points on the prior year.
In the Nordic Region, trading has improved since our last
update, with volumes now down 8% on last year and average selling
price up 2%. To date we have sold 29% of the programme. Despite the
reduction in volumes, differentiated content continues to increase
within the sales mix, with these products accounting for 81% of
bookings to date, up seventeen percentage points on prior year.
In Germany, where the programme is 26% sold (broadly in line
with prior year), volumes are currently down 4% against a very
strong position this time last year, however, we are seeing a
weekly improvement in volumes. The reduction in volumes is driven
by Greece, due to the change in consumer sentiment towards the
destination, with volumes down 27%, and the continued impact of
North Africa where volumes were strong at this stage last year.
This is reflected in our capacity reduction of 8%.
In France, volumes are down 13% to date, due to the difficult
trading background we are encountering, particularly in North
Africa. We are very early in the booking cycle for France and have
sold just over 12% of the programme. The joint capacity management
across the French tour operators which we began in Winter 2011/12
will allow us to balance capacity, especially to North Africa.
Early trading in the Netherlands and Belgium has been in line
with our expectations as we continue to encounter later booking
profiles in both markets. With 25% of the programme now sold
(broadly in line with prior year), volumes in Belgium are down 1%
year on year. Compared to very strong early trading last year,
volumes in the Netherlands are 6% behind this stage of Summer 2011,
with 27% of the programme sold to date.
Sales in Specialist & Activity are up 3% on prior year. The
Adventure division continues to be affected by lower demand for
North Africa, however, trading in the Sport division has benefited
from our role as official tour operator for the 2012 UEFA European
Championships.
In A&D, bookings are up 21% versus prior year, driven by
both the B2B (up 22%) and B2C (up 14%) divisions. The strong trends
experienced in the Winter season have continued for Summer
2012.
Fuel/Foreign exchange
We are largely hedged for the current financial year, which
gives us certainty of costs when planning capacity and pricing.
Winter 2011/12 Summer 2012
Euro 100% 95%
US Dollars 92% 92%
Jet Fuel 93% 84%
As at 2 February 2012
----------------------- --------------- ------------
FIRST QUARTER BUSINESS AND FINANCIAL REVIEW
Group Performance
First quarter ended 31 December
Underlying results(1) Statutory results
GBPm Q1 12 Q1 11(2) Change% Q1 12 Q1 11(2)
Revenue 2,845 2,716 +5% 2,845 2,716
Operating loss (109) (86) -27% (131) (117)
---------------- ------ --------- -------- -------- ----------
(1) Underlying operating loss excludes separately disclosed
items, amortisation of business combination intangibles,
acquisition related expenses, predecessor accounting for Magic Life
and interest and taxation of results of the Group's joint ventures
and associates (2) Prior year figures have been re-presented to
include Jet4You which was previously reported as a discontinued
operation, and to incorporate the results of Magic Life under
predecessor accounting
Group revenue increased by 5% to GBP2,845m (Q1 11: GBP2,716m).
Organic revenue growth was 4%, driven by strong pricing across the
Group and volume growth in A&D. The annualisation impact of
acquisitions in the prior year increased revenues by 1%.
The Group's underlying operating loss increased by GBP23m
against the prior year to GBP109m (Q1 11: loss of GBP86m). The main
drivers of the year on year increase in underlying operating loss
were:
GBPm
Q1 11 underlying operating loss (86)
Magic Life Winter losses (7)
------
Q1 11 underlying operating loss (incl Magic Life Winter losses) (93)
UK pension cost saving 2
French tour operators (10)
North Africa (excluding France) (14)
Investment in accommodation Online Travel Agents (OTAs) (1)
FX translation 1
Trading 6
------
Q1 12 underlying operating loss (109)
A reconciliation of underlying operating loss to statutory
operating loss is as follows:
Q1 12 Q1 11
GBPm GBPm
Underlying operating loss (109) (86)
Separately disclosed items (5) (7)
Predecessor accounting for Magic Life - (7)
Acquisition related expenses (17) (16)
Interest and taxation on results of joint ventures
and associates - (1)
------ ------
Statutory operating loss (131) (117)
------ ------
Segmental Performance
Segmental performance is based on underlying financial
information (which excludes certain items, including separately
disclosed items, acquisition related expenses and predecessor
accounting).
As previously announced, we reported Jet4You's results as a
discontinued operation in the first quarter of the prior year, as
we expected to dispose of the business in the near term. As a sale
agreement has not been reached, the prior year figures have been
re-presented to include Jet4You's results. In addition, the impact
of predecessor accounting for Magic Life is included within the
revenue figures for the Hotels division.
Northern Central Western Total Emerging Specialist Total
Region Europe Europe M'stream Markets & Activity A&D Group Group
Customers ('000)
Q1 12 1,159 1,357 1,183 3,699 - 242 - - 3,941
Q1 11(3) 1,209 1,350 1,178 3,737 - 259 - - 3,996
Change % -4% +1% Flat -1% - -7% - - -1%
Revenue (GBPm)
Q1 12 839 966 596 2,401 - 293 151 - 2,845
Q1 11(2) 826 928 583 2,337 - 249 130 - 2,716
Change % +2% +4% +2% +3% - +18% +16% - +5%
Underlying operating (loss)/profit (GBPm)(1)
Q1 12 (36) (15) (34) (85) (9) (15) 8 (8) (109)
Q1 11(2) (39) (14) (19) (72) (3) (9) 4 (6) (86)
Change % +8% -7% -79% -18% -200% -67% +100% -33% -27%
(1) Underlying operating (loss)/profit excludes separately
disclosed items, amortisation of business combination intangibles,
acquisition related expenses, predecessor accounting for Magic Life
and interest and taxation of results of the Group's joint ventures
and associates
(2) Prior year figures have been re-presented to include Jet4You
which was previously reported as a discontinued operation, and to
incorporate the results of Magic Life under predecessor
accounting
(3) Customer figures for Germany and Switzerland have been
restated for Q1 2011 to reflect redefined product reporting
following the implementation of a new system
Mainstream Sector
Northern Region
Underlying operating loss in the Northern Region reduced by
GBP3m to GBP36m (Q1 11: loss of GBP39m).
In the UK, the result improved versus prior year. Adverse
trading as a result of the continued impact of unrest in North
Africa was offset by airline pension cost savings of GBP2m. The
result also benefited from a four percent increase in controlled
distribution compared with the prior year and strong load factors
during the period.
The Nordic region result was flat year-on-year, with bookings to
Thailand adversely impacted by the flooding in Bangkok. This was
mitigated by an increase in volumes to alternative destinations,
such as the Canaries, and cost actions.
The strategic venture with Sunwing in Canada continues to
perform well, delivering an improved result in the quarter, mainly
due to higher volumes.
As anticipated, the Hotels result was down year-on-year due
primarily to the inclusion of Winter losses for the Magic Life
properties acquired in July 2011, which are included under
predecessor accounting for the prior year.
Central Europe
Underlying operating loss in Central Europe increased by GBP1m
to GBP15m (Q1 11: loss of GBP14m). The result in Germany improved,
with adverse trading to North African destinations offset by
increased sales to other destinations such as the Canaries, and a
strong performance by our lates retailer, L'tur. The improvement in
Germany was offset by the results for the other Central Europe
source markets, where trading conditions have been challenging.
Western Europe
In Western Europe, underlying operating loss increased by GBP15m
to GBP34m (Q1 11: loss of GBP19m). As expected, the French result
was adversely impacted by lower demand for Tunisia, Egypt and
Morocco, which were unaffected by political unrest in the
comparative period. Unfavourable hedging on fuel costs versus prior
year led to a deterioration of results at Corsair in the quarter,
however, this is expected to improve going forwards.
Emerging Markets Sector
In the Emerging Markets Sector, our Russian business suffered,
particularly in the first quarter, due to the continued impact of
unrest in Egypt. Underlying operating losses were GBP9m (Q1 11:
loss of GBP3m).
Specialist & Activity Sector
The Specialist & Activity Sector reported an underlying
operating loss of GBP15m, down GBP6m on prior year (Q1 11: loss of
GBP9m). The adverse variance to prior year was driven primarily by
the Specialist Holiday Group, Education and Adventure divisions,
partly offset by North American Specialist.
The Specialist Holidays Group result was adversely affected by
poor snow conditions in key ski resorts in October and November,
which have since improved, but with margins adversely affected in
December. In Education, trading remains subdued due to the
challenging economic climate, in particular on premium products
such as School Ski, and a weakness in gap year travel due to a rise
in university tuition fees. In addition, the Adventure division
continues to experience lower demand for North African and
Australian holidays (the latter being due to the strong Australian
dollar) which offset the inclusion of the results of the strategic
venture with Intrepid Travel, which began in April 2011.
The North American Specialist division benefited from increased
demand in its Starquest business (private jet tours), with six
tours offered in the quarter compared with two tours in the prior
year. In addition occupancy rates improved within the Quark polar
cruising business.
Accommodation & Destinations (A&D) Sector
The A&D Sector reported an underlying operating profit of
GBP8m (Q1 11: GBP4m). In the B2B division volumes increased due to
continued growth in the source markets and destinations of the
Americas and Asia and demand for the destinations of Spain and Cape
Verde which helped to offset the impact of reduced volumes to North
Africa. Volumes in the B2C division also improved, driven by
increased brand awareness following marketing campaigns in 2011 and
investment to improve conversion rates. This was partly offset by a
further GBP1m investment in the accommodation OTA. AsiaRooms
performed well during the quarter with bookings and conversion
rates ahead of our initial expectations. Intercruises reported a
good start to the year with 2,000 port calls achieved in the
quarter.
Separately disclosed items (SDIs)
SDIs in the quarter were a charge of GBP5m (Q1 11: charge of
GBP7m). These related primarily to the planned merger of the French
tour operators.
Financing
We remain satisfied with our funding and liquidity position. We
have three main sources of long-term debt funding - these include
the external bank revolving syndicated credit facilities totalling
GBP970m which mature in June 2015, a GBP350m convertible bond (due
October 2014) issued in October 2009, and a GBP400m convertible
bond (due April 2017) issued in April 2010. The external bank
revolving facility is used to manage the seasonality of the Group's
cash flows and liquidity.
Consolidated income statement (unaudited)
for the 3 month period ended 31 December 2011
Restated
3 month 3 month
period ended period ended
31 December 31 December
2011 2010
GBPm GBPm
--------------------------------------- ------------- -------------
Revenue 2,845 2,716
Cost of sales (2,715) (2,589)
--------------------------------------- ------------- -------------
Gross profit 130 127
--------------------------------------- ------------- -------------
Administrative expenses (258) (248)
Share of (loss) / profit of joint
ventures and associates (3) 4
--------------------------------------- ------------- -------------
Operating loss (131) (117)
--------------------------------------- ------------- -------------
Analysed as:
Underlying operating loss (109) (86)
Separately disclosed items (5) (7)
Predecessor accounting for Magic Life - (7)
Acquisition related expenses (17) (16)
Taxation on (loss) / profit of joint
ventures and associates - (1)
--------------------------------------- ------------- -------------
(131) (117)
--------------------------------------- ------------- -------------
Financial income 21 31
Financial expenses (48) (57)
--------------------------------------- ------------- -------------
Net financial expenses (27) (26)
--------------------------------------- ------------- -------------
Loss before tax (158) (143)
Taxation 55 37
--------------------------------------- ------------- -------------
Loss for the period (103) (106)
--------------------------------------- ------------- -------------
Attributable to:
Equity holders of the parent (103) (106)
Minority interest - -
--------------------------------------- ------------- -------------
Loss for the period (103) (106)
--------------------------------------- ------------- -------------
Note 1. Basis of preparation (unaudited)
The unaudited financial information in this report relates to
the 3 month periods ended 31 December 2011 and 31 December 2010.
This unaudited financial information does not constitute the
statutory accounts of TUI Travel PLC within the meaning of section
434 of the Companies Act 2006.
The unaudited financial information relating to the income
statement for the 3 month periods ended 31 December 2011 and 31
December 2010 has been prepared on the basis of the Company's
Adopted IFRSs accounting policies, which are disclosed in Note 1 of
the consolidated financial statements for the year ended 30
September 2011, except that the Group has adopted a number of
amendments to existing standards that have become effective in the
current period. These have not had an impact on the financial
information contained in this report.
Note 2. Restatement of prior period results
The unaudited financial information of the Group for the
comparative quarter ended 30 December 2010 has been restated in
respect of Jet4You and Magic Life. The results of the Group's
business of Societe d'Investissement Aerien S.A. (Jet4You) were
previously separately classified as a discontinued operation for
the comparative period ended 31 December 2010. The acquisition of
six operating companies, referred to as Magic Life, occurred on the
22 June 2011 and for the year ended 30 September 2011 was accounted
for in accordance with 'predecessor accounting' rules. Further
information regarding both of these is provided on pages 72-74 of
the TUI Travel PLC 2011 Annual Report & Accounts.
The Consolidated income statement for the 3 month period ended
31 December 2010 has not been published since these restatements
were announced and as such, the Consolidated income statement has
now been restated as shown below.
Consolidated income statement
Restated
Period ended 31 Impact of predecessor Period ended
December 2010 as Impact of the re- accounting for Magic 31 December
previously reported presentation of Jet4You Life 2010
GBPm GBPm GBPm GBPm
------------------------- ----------------------- ------------------------ ------------------------ --------------
Revenue 2,694 21 1 2,716
------------------------- ----------------------- ------------------------ ------------------------ --------------
Operating loss (108) (2) (7) (117)
------------------------- ----------------------- ------------------------ ------------------------ --------------
Underlying operating
loss (84) (2) - (86)
------------------------- ----------------------- ------------------------ ------------------------ --------------
Loss before tax (134) (2) (7) (143)
------------------------- ----------------------- ------------------------ ------------------------ --------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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