TIDMTT.
RNS Number : 3205X
TUI Travel PLC
07 February 2013
7 February 2013
TUI Travel PLC
("TUI Travel")
First Quarter Results ended 31 December 2012 and Interim
Management Statement
-- Outperformance in UK & Nordic markets
-- Our unique holidays driving increases in UK market share
-- Q1 underlying operating loss reduced by 15%(1)
-- Expect performance towards the top end of roadmap guidance for full
year(2)
Peter Long, Chief Executive of TUI Travel PLC, commented:
"We are pleased to report that our strong trading momentum has
continued with particularly encouraging growth in the UK and
Nordics. Our leading position in the UK has further benefited from
increased market share as a result of higher demand for our unique
holidays. Across all our key markets demand for the overseas
holiday remains strong, despite the overall economic
environment.
"We are confident that our customer focused strategy is driving
performance and based on current trading we expect to be towards
the top end of our roadmap guidance of 7 to 10% underlying
operating profit growth for the 2013 financial year."
Highlights
-- Positive trading momentum
* Operating loss reduced by GBP16m to GBP93m (excluding
the impact of empty leg accounting(1) which has no
full year impact). Underlying Q1 operating loss of
GBP116m (2012: loss of GBP109m).
* Significant continued growth in UK cumulative market
share (GFK Ascent) with Summer 2013 up 4% and the key
January booking period up 2%, gaining on the 7%
increase in the same period last year.
* Strong trading in the Nordic region and Accommodation
Wholesaler.
-- Unique holidays and direct distribution strategies delivering
* Unique holiday bookings in the UK, Nordics and
Germany increased by 15%, 10% and 6% year-on-year
respectively for Summer 2013.
* Direct distribution sales in the UK and Nordics for
Summer 2013 of 90% (2012: 89%) and 85% (2012: 84%)
with online sales accounting for 37% (2012: 36%) and
65% (2012: 63%) respectively.
-- Online Accommodation growth
* Accommodation Wholesaler continues to build a global
leadership position with TTV up by 9% for Summer 2013
driven by Latin America and Asia where TTV is up by
23%.
-- Strong current trading
* Winter 2012/13 - 83% sold with higher margins and
average selling prices in key source markets.
* Strong Summer 2013 bookings in the UK and Nordics, up
9% and 10% respectively.
* Summer 2013 margins ahead of prior year in key source
markets.
(1) Figure excludes impact of empty leg accounting. Empty legs
relate to the cost incurred by aircraft returning from the
beginning and end of each season without customers (an empty leg of
a round trip). As a result of the change in estimate in empty leg
accounting referred to in the year-end accounts, the phasing of the
empty leg costs will change in each quarter but there will be no
full-year cost impact.
(2.) Based on current trading
Investor and Analyst Conference Call
A conference call for investors and analysts will take place
today at 8.15am (GMT). The dial-in arrangements for the call are as
follows:
Telephone: +44 (0)1452 555 566
Participant Code: 94124221
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: 94124221
Pre-close Trading Update
TUI Travel will issue a pre-close trading update on Wednesday
27th March 2013.
Enquiries:
Analysts & Investors
Andy Long, Director of Strategy & Investor Tel: +44 (0)1293 645 795
Relations
Tej Randhawa, Investor Relations Manager Tel: +44 (0)1293 645 829
Press
Lesley Allan, Corporate Communications Director Tel: +44 (0)1293 645 790
Mike Ward, External Communications Manager Tel: +44 (0)1293 645 776
Michael Sandler / Katie Matthews (Hudson Sandler) Tel: +44 (0)20 7796 4133
CURRENT TRADING
Winter 2012/13
Overall 83% of the Mainstream programme has been sold to date
with higher average selling prices and margins across our key
source markets.
Current Trading(1) Winter 2012/13
YoY variation% Total ASP(2) Total Total Risk Only
Sales(2) Customers(2)
Capacity(3) Left to sell(3)
MAINSTREAM
UK +4 +4 Flat Flat -2
Nordic region +5 +9 +4 +4 +7
Germany +8 +4 -4 -3 -21
France tour operators +7 -25 -29 -33 -35
Other (4) +1 Flat -1
Total Mainstream +5 +1 -4
SPECIALIST & ACTIVITY N/A -3 N/A
Accommodation Wholesaler (5) +8 +24 +15
------------------------------ ------------- ---------- -------------- ------------ ----------------
(1) These statistics are up to 3 February 2013 and are shown on
a constant currency basis
(2) These statistics relate to all customers whether risk or
non-risk
(3) These statistics include all risk capacity programmes
(4) Other includes Austria, Belgium, Netherlands, Poland and
Switzerland and excludes Emerging Markets
(5) These statistics refer to online accommodation wholesaler
only; Sales refer to total transaction value (TTV) and customers
refers to roomnights
In the UK, bookings are flat in line with capacity. We are
pleased with our price performance, with average selling prices up
4% reflecting inflationary cost increases of circa 2% and improved
mix towards unique holiday sales. Sales of unique holidays
(differentiated and exclusive product combined) are up 3% compared
with this time last year and account for 78% of holidays sold to
date, up two percentage points on the prior year. Online sales
continue to grow, accounting for 46% of Winter holidays booked, up
by two percentage points on the prior year. To date, 73% of the
overall programme has been sold.
In the Nordic region, bookings are 4% ahead of the prior year,
in line with its capacity increase. Average selling prices are up
5%. Sales of unique holidays (differentiated and exclusive product
combined) are up 5% compared with this time last year, accounting
for 90% of holidays sold to date, up one percentage point on the
prior year. Online sales continue to grow, accounting for 64% of
Winter holidays booked, up by three percentage points on the prior
year. To date, 92% of the overall programme has been sold.
In Germany, bookings are down 4% broadly tracking capacity cuts.
Average selling prices are up 8%. The volume decline is driven by
the performance of our Specialist Tour Operators where demand for
Egypt and last minute bookings in L'Tur have been down year on
year. The Mainstream Tour Operator continues to perform well and
sales of unique holidays (differentiated and exclusive product
combined) account for 48% of holidays sold to date, up two
percentage points on the prior year. To date, 81% of the overall
programme has been sold.
In France, we have reduced capacity by 33%, with sizeable
reductions in capacity to Egypt and a number of long-haul
destinations. Therefore, bookings are down by 29%, in line with our
expectations. To date, 76% of the overall programme has been
sold.
In Accommodation Wholesaler, TTV is up by 24%, driven by Latin
America and Asia where TTV increased by 41%. Bookings (room nights)
are up by 15% with average selling prices up by 8%.
Specialist & Activity sales is down by 3%. The Specialist
Holidays Group is benefitting from an improved ski season driven by
better snow conditions and higher levels of direct
distribution.
Summer 2013
Since our last announcement, trading in the UK and Nordic source
markets has been particularly strong, with all other source markets
performing in line with expectations. Average selling prices and
margins across our key source markets are up year-on-year. To date
32% of the overall Mainstream Summer programme has been sold.
Current Trading(1) Summer 2013
YoY variation% Total ASP(2) Total Total Risk Only
Sales(2) Customers(2)
Capacity(3) Left to sell(3)
MAINSTREAM
UK +4 +13 +9 +3 Flat
Nordic region +5 +15 +10 +7 +6
Germany +5 +3 -1 +1 +2
France tour operators -3 -11 -8 -12
Other(4) Flat -3 -3
Total Mainstream +4 +6 +2
SPECIALIST & ACTIVITY N/A -4 N/A
Accommodation Wholesaler(5) +6 +9 +3
----------------------------- ------------- ---------- -------------- ------------ ----------------
(1) These statistics are up to 3 February 2013 and are shown on
a constant currency basis
(2) These statistics relate to all customers whether risk or
non-risk
(3) These statistics include all risk capacity programmes
(4) Other includes Austria, Belgium, Netherlands, Poland and
Switzerland
(5) These statistics refer to online accommodation businesses
only; Sales refer to total transaction value (TTV) and customers
refers to roomnights
In the UK, bookings are up by 9%, ahead of a 3% increase in
capacity. Turn of year trading has been ahead of expectations with
a sustained increase in demand for holiday packages. We continue to
take market share in the UK as outlined in the table below. In the
month of January we have taken further market share, gaining on an
increased share in the same period last year.
Cumulative Month of January
Summer 2012 Summer 2013 Summer 2012 Summer 2013
------------ ------------ ------------ ------------
UK Market Share +1 ppt +4 ppt +7 ppt +2 ppt
Gain(1)
(1) GFK Ascent
Average selling prices are up by 4%, reflecting cost base
inflation of approximately 2% and the continued increase in unique
holiday sales. Sales of unique holidays (differentiated and
exclusive product combined) are up by 15% compared to the same
period last year accounting for 84% of holidays sold to date, up by
three percentage points. Online sales account for 38% of Summer
holidays booked, up one percentage point on the prior year. To
date, 39% of the overall programme has been sold.
In the Nordic region, bookings are up 10% with average selling
prices up by 5%. Sales of unique holidays (differentiated and
exclusive product combined) are up by 10% compared to the same
period last year, accounting for 95% of holidays sold to date, up
by one percentage point. Online sales continue to grow, accounting
for 66% of Summer holidays booked, up by two percentage points on
the prior year. To date, 33% of the overall programme has been
sold.
In Germany, bookings are down by 1% with average selling prices
up 5%. Sales of packages are up year-on-year, however our Overland
programme is down. Sales of unique holidays (differentiated and
exclusive product combined) continue to perform well and are up 6%
over the same period last year and account for 56% of all packages
sold, an increase of five percentage points over the prior year. To
date 33% of the overall programme has been sold.
In France, we have reduced capacity by 12%, primarily to
longhaul destinations, as a result of this bookings are down 8%,
which is inline with our expectations. To date 20% of the programme
has been sold.
In Accommodation Wholesaler, TTV is up by 9%. The Latin America
and Asian markets continue to drive TTV growth, which is up by 23%,
offsetting a weaker performance from Spain and Portugal driven by
weak demand from the domestic market.
In Specialist & Activity, whilst sales in North American
Specialist and Adventure are robust, trading conditions remain
challenging in a number of other segments and as a result overall
sales are down by 4% on the prior year.
Fuel/Foreign exchange
We have hedged the majority of our fuel and currency
requirements for the seasons currently on sale, which gives us
certainty of costs when planning capacity and pricing. The
following table shows the percentage of our forecast requirement
that is currently hedged for Euros, US Dollars and jet fuel.
Winter 2012/13 Summer 2013
Euro 97% 95%
US Dollars 97% 88%
Jet Fuel 94% 84%
As at 24 January 2013
----------------------- --------------- ------------
Outlook
Positive trading momentum continues for Summer, with a third of
Mainstream Summer holidays sold to date. Customer demand for our
unique holidays has allowed us to increase capacity in the UK,
Nordics and Germany. In the UK we have again increased our market
share year on year as a result of increased demand for our unique
holidays.
We are confident that our strategy is driving performance and
based on current trading we expect to be towards the top end of our
roadmap guidance of 7 to 10% underlying operating profit growth for
the 2013 financial year(1) .
(1) Based on current trading.
FIRST QUARTER BUSINESS AND FINANCIAL REVIEW
Group Performance
First quarter ended 31 December 2012
Underlying results(1) Statutory results
GBPm Q1 13 Q1 12 Change% Q1 13 Q1 12
Revenue 2,718 2,845 -4% 2,718 2,845
Operating loss (116) (109) -6% (149) (131)
---------------- ------- ------- -------- --------- ---------
(1) Underlying operating profit excludes separately disclosed
items, amortisation of business combination intangibles,
acquisition related expenses, impairment of goodwill and available
for sale financial asset and interest and taxation of results of
the Group's joint ventures and associates
Group revenue declined by 4% from the prior year at GBP2,718m
(2012: GBP2,845m). This result was driven by a foreign currency
translation impact of -4%.
The Group's underlying operating loss increased to GBP116m (Q1
12: loss of GBP109m). However, this included a GBP23m impact from
empty leg accounting(1) as outlined at the FY12 preliminary
results. On an underlying basis, excluding the impact from empty
leg accounting, underlying operating loss reduced by GBP16m to
GBP93m.
Our business improvement programme is progressing to plan with
GBP6m delivered in the quarter.
The main drivers of the year on year increase in underlying
operating loss were:
GBPm
Q1 12 underlying operating loss (109)
Trading 10
Investment in Accommodation OTA (2)
Business improvement 6
FX translation 2
--------------------
Q1 13 underlying operating loss (excluding empty legs) (93)
Empty leg accounting (23)
--------------------
Q1 13 underlying operating loss (116)
A reconciliation of underlying operating loss to statutory
operating loss is as follows:
Q1 13 Q1 12
GBPm GBPm
Underlying operating loss (116) (109)
Separately disclosed items (9) (5)
Acquisition related expenses (17) (17)
Impairment of goodwill (7) -
------ ------
Statutory operating loss (149) (131)
------ ------
(1) Empty leg accounting. Empty legs relate to the cost incurred
by aircraft returning from the beginning and end of each season
without customers (an empty leg of a round trip). As a result of
the change in estimate in empty leg accounting referred to in the
year-end accounts, the phasing of the empty leg costs will change
in each quarter but there will be no full-year cost impact.
Segmental Performance
Segmental performance is based on underlying financial
information (which excludes certain items, including separately
disclosed items and acquisition related expenses).
Total Mainstream Emerging Markets A&D Specialist Central Total Group
Customers ('000)
Q1 13 3,573 - - 254 - 3,827
Q1 12 3,699 - - 242 - 3,941
Change % -3% - - +5% - -3%
Revenue (GBPm)
Q1 13 2,305 - 146 267 - 2,718
Q1 12 2,401 - 151 293 - 2,845
Change % -4% - -3% -9% - -4%
Underlying operating (loss)/profit (GBPm) (1)
Q1 13 excl empty leg accounting (63) (4) 5 (22) (9) (93)
Q1 13 empty leg accounting (23) - - - - (23)
Q1 13 (86) (4) 5 (22) (9) (116)
Q1 12 (85) (9) 8 (15) (8) (109)
Change % -1% +56% -38% -47% -13% -6%
---------------------------------- ----------------- ----------------- ------ ----------- -------- -------------
(1) Underlying operating profit excludes separately disclosed
items, amortisation of business combination intangibles,
acquisition related expenses, impairment of goodwill and available
for sale financial assets and interest and taxation of results of
the Group's joint ventures and associates
Mainstream Sector
Mainstream sector operating loss reduced by GBP22m to GBP63m
(excluding the impact of empty leg accounting which has no full
year impact). Underlying Mainstream sector Q1 operating loss was
GBP86m (2012: loss of GBP85m).
In the UK, we delivered an improved Q1 performance on the back
of increased margins and load factors. We continued to see strong
demand for unique holidays, accounting for 81% of departures in Q1,
up three percentage points on the prior year. The result also
benefited from a three percentage point increase in direct
distribution to 87% compared with the prior year. Online bookings
accounted for 44% of all bookings during the first quarter, up two
percentage points year-on-year.
The Nordic region result was up, excluding the impact of empty
leg accounting, driven by improved trading in the tour operator. We
remodelled our Winter programme, remixing it towards a higher
number of medium-haul destinations. Unique holidays accounted for
92% of departures in Q1 FY13, up two percentage points over the
prior year. Direct distribution increased by one percentage point
to 87%. Online distribution continues to grow, standing at 63% of
bookings in Q1, up two percentage points over the prior year.
The result in Germany was broadly flat, excluding the impact of
empty leg accounting. Long haul performed particularly well, with
strong demand to Thailand, USA and Cuba. Unique holidays accounted
for 48% of departures in Q1 FY13, up three percentage points over
the prior year.
France reported a small improvement in operating loss. This was
driven by the successful delivery of efficiency savings from the
business improvement programme. The tour operator continues to be
impacted by low demand from North Africa and general consumer
weakness. We have reduced our loss-making long-haul programme,
removing unprofitable routes and destinations from the portfolio.
The airline saw changes to the fleet composition during the
quarter, with the first of our new A330-300s aircraft arriving in
November 2012. A smaller, more flexible fleet will help to reduce
risk within the programme.
Emerging Markets
In the Emerging Markets Sector, our Russian business delivered
an improvement on underlying trading leading to an operating loss
of GBP4m (Q1 12: loss of GBP9m).
Accommodation & Destinations (A&D) Sector
The A&D Sector reported an underlying operating profit of
GBP5m (Q1 12: GBP8m). In the Accommodation Wholesaler division,
volumes increased due to continued growth in the source markets and
destinations of the Americas and Asia.
Volumes in the Accommodation OTA division also improved, driven
by the expansion and roll out of the AsiaRooms brand, with
significant market share gains in key markets such as Singapore and
Malaysia. This positive performance was partly offset by a further
GBP2m investment in the Accommodation OTA in the quarter.
Specialist & Activity Sector
The Specialist & Activity Sector reported an underlying
operating loss of GBP22m (Q1 12: loss of GBP15m). The adverse
variance to the prior year was driven primarily by North American
Specialist where Starquest (private jet tours) offered one less
tour in Q1 compared to the prior year. The Specialist Holiday Group
benefited from an improved ski season driven by better snow
conditions and higher levels of direct distribution.
Separately disclosed items (SDIs)
SDIs in the quarter net to a GBP9m expense (Q1 12: GBP5m
expense). These charges relate primarily to the removal of the
sector management layer in the Specialist & Activity Sector,
and the on-going restructuring in France.
Goodwill Impairment
Due to on-going trading difficulties in the Languages businesses
in the Specialist & Activity Sector, we have reassessed the
level of goodwill associated with those businesses and concluded
that it was appropriate to impair it by GBP7m.
Cash and liquidity
We remain pleased 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
GBP1,020m which mature in June 2015, a GBP350m convertible bond
(due October 2014 and which we will be refinancing during the 2013
financial year) and a GBP400m convertible bond (due April 2017).
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 2012
3 month 3 month
period ended period ended
31 December 31 December
2012 2011
GBPm GBPm
------------------------------------------- ------------------- ------------------
Revenue 2,718 2,845
Cost of sales (2,574) (2,705)
------------------------------------------- ------------------- ------------------
Gross profit 144 140
------------------------------------------- ------------------- ------------------
Administrative expenses (294) (268)
Share of profit /(loss) of joint ventures
and associates 1 (3)
------------------------------------------- ------------------- ------------------
Operating loss (149) (131)
------------------------------------------- ------------------- ------------------
Analysed as:
Underlying operating loss (116) (109)
Separately disclosed items (9) (5)
Acquisition related expenses (17) (17)
Impairment of goodwill (7) -
(149) (131)
------------------------------------------- ------------------- ------------------
Financial income 21 21
Financial expenses (50) (48)
------------------------------------------- ------------------- ------------------
Net financial expenses (29) (27)
------------------------------------------- ------------------- ------------------
Loss before tax (178) (158)
Taxation 60 55
------------------------------------------- ------------------- ------------------
Loss for the period (118) (103)
------------------------------------------- ------------------- ------------------
Attributable to:
Equity holders of the parent (119) (103)
Minority interest 1 -
------------------------------------------- ------------------- ------------------
Loss for the period (118) (103)
------------------------------------------- ------------------- ------------------
Note 1. Basis of preparation (unaudited)
The unaudited financial information in this report relates to
the 3 month periods ended 31 December 2012 and 31 December 2011.
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 2012 and 31
December 2011 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 2012, 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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