TUI’s share price rose this morning as the travel giant reported a rise in profits just shy of 11% despite a ‘challenging year’.
The group said its transformation as a ‘developer, investor and operator of hotels and cruise ships’ is paying off, helping it achieve double-digit earnings for the third year running.
Revenue for the year to September 30 grew 5.3% to €19.52 billion and underlying EBITA rose 10.9% to €1.22 billion on a constant currency basis, just ahead of guidance.
The news saw TUI’s share price jump 6.4%, in stark contrast to the sharp fall of Thomas Cook’s share price last month when it announced a £163 million loss in a ‘disappointing year’.
TUI CEO Fritz Joussen agreed 2018 had been a challenging year, particularly for tour operators, but said the group was better placed to ride the storm.
"The weakness of pound sterling resulting from the Brexit vote, prolonged air traffic disruption caused by French air traffic controller strikes and a prolonged heatwave in Northern and Central Europe impacted the entire sector and were also reflected in the operating result delivered by Markets & Airlines, which fell short of the previous year’s levels," he said.
"We are investing, we are growing with TUI’s high-margin products and services and our businesses are increasingly scaling.
"Today, our own Holiday Experiences content account for more than 70 per cent of our earnings: hotels, cruises, excursions and destination activities. This enables us to clearly differentiate ourselves from the competition. With more than 20 million customers, use of state-of-the-art IT and intelligent customer systems, we have considerable potential for new business, turnover and earnings. We will continue our successful transformation: The next step will transform TUI into a digital and platform organisation."
He said in the financial year 2019, the TUI Executive Board expects to deliver growth in underlying earnings of at least 10% in a continuing ‘challenging market environment’.
