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‘Deep recession’ hits Kuoni results
Wednesday, 20 Aug, 2009
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Kuoni plunged into the red in the first half of the year as the operator was caught up in the impact of the recession.
The loss before tax and interest came in at CHF 40.7 million against a profit of CHF 17 million in the first six months of 2008.
Turnover dropped by 21% to CHF 1,760 million.
Kuoni in the UK saw turnover drop by almost eight per cent which resulted in a profit of CHF 4.8 million, down from CHF 17.4 million for the equivalent period last year.
This was described as an “encouraging result” in a tough economic environment.
Bookings from the UK have been rising for several weeks, suggesting that the first markets to be hit by the financial and economic crisis are starting to recover, the Swiss-based group said.
For Kuoni as a whole, the half-year results statement said: “The global financial and economic crisis, significantly adverse currency movements and the first effects of the swine flu all depressed the first-half results.
“With deep economic recession, the continuing reluctance to spend among consumers and negative currency movements, results were down on their prior-year levels in all Kuoni markets
“However, booking trends for the second half of 2009 suggest a slight improvement in general consumer demand.”
The half year statement revealed that members of the management will be forgoing part of their salaries to help the business through “this challenging business year”.
The operator has cut more than 500 jobs from its workforce of more than 9,700 and instigated a three-year process of standardising bookings systems across the group as well as investing in electronic distribution channels, global marketing and branding.
Group tour operating bookings at August 16 were 12% down in local currency terms over last year, with the UK seven per cent down.
Group CEO Peter Rothwell said: “The global financial and economic crisis will continue to have a negative impact on the 2009 business year.
“Despite the adverse external influences though, I am confident that the Kuoni Group will post a positive operating result for 2009 as a whole.
“Experts expect the flu pandemic to accelerate its spread with an impact that is presently impossible to predict.
“This development could have a negative effect on the company’s profitability.”
Kuoni plans to continue to pursue an acquisition strategy in the second half of the year despite the downturn in results.
by Phil Davies
Phil Davies
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