TUI share price falls despite shrinking winter losses

TUI’s share price slipped this morning after it announced its winter losses and its intention to sell its Specialist Holiday Group.

As it revealed that it had reduced its losses for the first six months of the year to the end of March to €237 million, down from €283 million in the first half of the previous year following a near 3% rise in turnover, TUI revealed it was seeking a buyer for SHG.

The sale comes shortly after TUI off-loaded its bed bank Hotelbeds.

Senior market analyst Connor Campbell of spreadex.com said the news had not gone down well in the City.

"Despite shrinking its pre-tax losses and posting a better than expected jump in half year revenue its stock fell anywhere between 1.5% and 3% this morning," he said.

"Considering the sale of Specialist Group was something of a surprise it seems clear that the negative reaction has stemmed from that decision.

"Of course in the long-term investors may be buoyed by TUI’s attempts at streamlining its business, but for now it appears that the sale of two large assets in a row hasn’t been greeted with much cheer."

TUI ‘s turnover in the first half of the year rose to €6.8 billion, boosted by a strong performance from the UK and Ireland, in particular for the Canaries, long-haul bookings and cruises.

Germany remained impacted by very challenging trading conditions and lower demand for destinations in North Africa and Turkey, it said, and Belguim was hit by a decline in demand for north Africa and the closure of Brussels Airport.

CEO Fritz Joussen said: "Step by step, we continue to grow, invest and expand our position as the world’s number one tourism group. Having delivered the best result in the history of our Company in 2014/15, we have also started off very well into the current financial year 2015/16.

He said current trading for summer 2016 was in line with its expectations, with booked revenue up by 2% and TUI is continuing to forecast at least a 10% rise in earnings this year.

"While customers show restraint in bookings to Turkey, destinations in the western Mediterranean and long-haul bookings delivered a strong performance," said Joussen.

"Thanks to our successful growth strategy, the resilience of our integrated business model and current trading, we can reiterate our previous earnings guidance for the full year 2015/16. We expect underlying EBITA to grow by at least ten per cent1 year-on-year, with at least ten per cent underlying EBITA CAGR1 over the three years to 2017/18."

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