UPDATE: TUI Travel Raises Dividend, Outlook Confident
19 Maggio 2009 - 10:07AM
Dow Jones News
TUI Travel PLC (TT.LN), Europe's largest travel operator,
Tuesday raised its dividend and said it remains confident of
meeting its full year targets as it continues to manage capacity to
meet the current downturn, but reported wider first-half
losses.
TUI Travel Chief Executive Peter Long said: "Despite the ongoing
economic weakness, we are encouraged by current trading patterns
and consumer sentiment across the breadth of the group."
The company, which has managing to cut costs and raise prices by
reducing the availability of holidays, said that it will further
assess capacity and will use its dominant position to reduce hotel
rates in the next financial year.
It said it still has the ability to align supply with demand
given that third party flying accounts for about 30% of its tour
operator capacity, while only about 20% of bed stock is
committed.
Still, some analysts warned that the company is still facing
challenges.
Mark Brumby, analyst at Blue Oar Securities, said holiday
decisions are often made up to a year in advance and warned 2010
may be a tough year "when taxes, interest rates, pension
contributions and unemployment could be rising." He reiterated a
sell recommendation.
At 0719 GMT, the company's shares were down 2 pence, or 0.7%, at
256 pence, underperforming a 1.2% rise in the FTSE 250, as it
reported wider losses for the fiscal first half.
The company said its pretax loss widened to GBP455.3 million for
the six months to March 31, from GBP424.8 million a year earlier,
as it booked a GBP30 million foreign exchange impact.
Earnings were also hit by the timing of Easter, which this year
fell in the company's fiscal second-half, weak trading in Canada
and disruptions in France and the Nordic region.
However, due to seasonal distortions associated with the leisure
industry, travel operators usually make a loss in the first half of
the year.
Its operating loss for the period widened to GBP411.6 million,
from a GBP380.8 million loss a year earlier, even though revenue
rose to GBP5.38 billion, from GBP5.15 billion, on the back of the
price increases for its holidays.
Although holiday bookings are still down on the year, TUI Travel
said it has beenencouraged that better demand in February and March
continued into April and May.
The company proposed an interim dividend of 3 pence, up 7% from
the 2.8 pence it paid last year.
Itsnet debt position widened to GBP1.10 billion at March 31, up
from GBP896 million a year earlier, due to sterling's weakness, a
later summer booking profile and lower capacity.
Company Web site: www.tuitravelplc.com
-By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299;
kaveri.niththyananthan@dowjones.com
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