TIDMTT.
RNS Number : 4062Z
TUI Travel PLC
06 February 2014
6 February 2014
TUI Travel PLC
("TUI Travel")
First Quarter Results ended 31 December 2013 and Interim
Management Statement
-- Q1 underlying operating loss reduced by GBP8m to GBP108m(1)
-- Robust current trading with a strong performance in the key January
booking period
-- Demand for our unique holidays continues to grow
-- Strong growth in online bookings
-- Confident of delivering full year underlying operating profit growth
of between 7% to 10%(2)
Peter Long, Chief Executive of TUI Travel PLC, commented:
"We are very pleased with our current position having reduced
the operating loss in the first quarter against a strong prior year
performance. We have delivered further efficiency savings in France
and an improved result in Specialist & Activity. Our digital
transformation continues to gather pace, with a very successful
online performance across Mainstream throughout the key January
booking period. We also continue to see strong growth in our
Accommodation Wholesaler business. Our strategy is delivering
sustainable growth, with a robust business model focused on growing
unique holidays and online distribution. Overall, trading remains
in line with our expectations and we are confident of delivering 7%
to 10% growth in underlying operating profit during the year(2)
."
Highlights
-- Q1 Results
* Underlying operating loss reduced by GBP8m to GBP108m
(Q1 2013: loss of GBP116m) against a strong prior
year performance.
* France restructuring and capacity management helping
to drive a reduction in operating loss.
* Strong trading in Accommodation Wholesaler continues,
while Specialist & Activity has delivered an improved
performance.
-- Robust current trading - strong performance in key January booking
period
* Winter 2013/14 is closing out in line with our
expectations - 85% of the programme sold, with higher
average selling prices in most source markets.
* Pleased with Summer 2014 trading, in particular our
performance in the key January booking period, with
higher average selling prices and Mainstream volumes
up by 1% against tough comparatives.
* Excellent online performance with Mainstream Summer
2014 online bookings up by 8%.
* Continued growth in sales of unique holidays which
account for 74% of Mainstream Summer 2014 bookings,
up two percentage points on prior year.
-- Accommodation Wholesaler growth
* Continues to build on its global leadership position.
* TTV up by 45% in early Summer 2014 trading.
-- Growth roadmap
* In the second year of our five-year growth roadmap
our strategy continues to deliver and we remain
confident of achieving our growth targets.
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: 32894378
A presentation to accompany the conference call will be made
available at 8.00 am (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: 32894378
Pre-close Trading Update
TUI Travel will issue a pre-close trading update on Wednesday
26th March 2014.
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
Sarah Coomes, Investor Relations Manager Tel: +44 (0)1293 645 827
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 7710 8911
(1) Underlying operating loss excludes separately disclosed
items, acquisition related expenses, impairment of goodwill and
interest and taxation of results of the Group's joint ventures and
associates
(2) Constant currency basis assumes that constant foreign
exchange translation rates are applied to the underlying operating
result in the current and prior year
CURRENT TRADING & OUTLOOK
Winter 2013/14
The Winter 2013/14 season is closing out as expected, with 85%
of the programme sold and strong pricing across most of our source
markets. We have reshaped our programme in select markets,
including capacity reductions to Egypt. We continue to focus on
growing our core package holiday offering. Overall Mainstream
bookings are in line with expectations, down by 4% excluding Egypt
with average selling prices up 4%.
We continue to deliver sustainable growth through our unique
holiday experiences, increasingly distributed online. Unique
holidays account for 71% of all Mainstream bookings, up three
percentage points compared with this time last year, whilst online
sales continue to grow, accounting for 39% of Winter holidays
booked, up by five percentage points. In Accommodation Wholesaler,
TTV is up by 21%, driven by Latin America and Asia, whilst trading
in Specialist & Activity is in line with expectations.
Current Trading(1) incl Egypt Winter 2013/14
YoY variation% Total Total Total Programme sold (%)
ASP(2) Sales(2) Customers(2)
MAINSTREAM
UK +4 +1 -2 77
Nordics -1 -3 -2 93
Germany +6 -5 -10 83
France tour operators +13 -28 -36 92
Other(3) +3 +1 -2
Total Mainstream +3 -4 -7 85
Accommodation Wholesaler(4) Flat +21 +21
------------------------------- -------- ---------- -------------- -------------------
(1) These statistics are up to 2 February 2014 and are shown on
a constant currency basis
(2) These statistics relate to all customers whether risk or
non-risk
(3) Other includes Austria, Belgium, Netherlands, Poland and
Switzerland
(4) These statistics refer to online accommodation businesses
only; Sales refer to total transaction value (TTV) and customers
refers to roomnights
Summer 2014
For Summer 2014, we remain pleased with trading, with overall
Mainstream bookings up by 1% against tough comparatives, and
average selling prices up by 3%. We continue to see strong demand
for our unique holidays, which account for 74% of Mainstream
bookings, up two percentage points. Mainstream online bookings are
up 8%. Within this, UK online bookings increased by 12% during the
key January booking period, with traffic to our newly optimised
mobile and tablet websites up by 45%. Overall trading in Mainstream
is in line with our expectations and, to date, approximately 33% of
the overall Mainstream Summer programme has been sold, in line with
this time last year.
Our Accommodation Wholesaler business has had a strong start to
the year, with TTV for Summer 2014 up by 45%, driven by growth in
Asia and Latin America and a rebound in Spain. Our restructured
Specialist & Activity business has started the year well with
sales up by 4%.
Fuel/Foreign exchange
Our strategy of hedging the majority of our fuel and currency
requirements for future seasons, as detailed below, remains
unchanged. This 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 2013/14 Summer 2014
Euro 94% 83%
US Dollars 95% 89%
Jet Fuel 91% 83%
As at 31 January 2014
----------------------- --------------- ------------
Outlook
We remain pleased with trading for the Summer, particularly in
Germany and the UK, despite strong comparatives overall. We are
also encouraged by an improved performance by our French tour
operator and Specialist & Activity Sector. Our Accommodation
Wholesaler business also continues to achieve sustained
double-digit growth, driven by Asia and Latin America. We expect to
deliver a H1 result broadly in line with last year, excluding the
timing of Easter which falls in the second half of the year.
Our strategy is delivering sustainable growth, with a robust
business model focused on growing both unique products and online
distribution. Momentum in our digital transformation strategy
continues to gather pace, delivering an enhanced customer
experience which is central to our strategy. Overall we remain
confident of consistently achieving our five-year annualised growth
target of between 7% to 10% underlying operating profit growth on a
constant currency basis.
BUSINESS AND FINANCIAL REVIEW
Group Performance
First quarter ended 31 December 2013
Underlying results(1) Statutory results
GBPm Q1 14 Q1 13 Change% Q1 14 Q1 13
Revenue 2,731 2,718 Flat 2,731 2,718
Operating loss (108) (116) +7% (134) (149)
---------------- ------- ------- -------- --------- ---------
(1) Underlying operating loss excludes separately disclosed
items, acquisition related expenses, impairment of goodwill and
interest and taxation of results of the Group's joint ventures and
associates
Group revenue during the quarter was flat on the prior year at
GBP2,731m (Q1 2013: GBP2,718m). The Group's underlying operating
loss decreased to GBP108m (Q1 13: loss of GBP116m). Our business
improvement programme is progressing to plan with GBP4m delivered
in the quarter.
The main drivers of the year-on-year decrease in underlying
operating loss were:
GBPm
Q1 13 underlying operating loss (116)
Trading 7
Investment in Accommodation OTA (1)
Business improvement 4
FX translation (2)
-------------------
Q1 14 underlying operating loss (108)
The reconciliation of underlying operating loss to statutory
operating loss for the three-month period ended 31 December 2013 is
as follows:
Q1 14 Q1 13
GBPm GBPm
Underlying operating loss (108) (116)
Separately disclosed items (7) (9)
Acquisition related expenses (15) (17)
Impairment of goodwill - (7)
Taxation on profits and interest of joint ventures (4) -
and associates
------ ------
Statutory operating loss (134) (149)
------ ------
Quarterly 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 14 3,370 - - 218 - 3,588
Q1 13 3,573 - - 254 - 3,827
Change % -6% - - -14% - -6%
Revenue (GBPm)
Q1 14 2,292 - 173 266 - 2,731
Q1 13 2,305 - 146 267 - 2,718
Change % -1% - +18% Flat - Flat
Underlying operating (loss)/profit (GBPm) (1)
Q1 14 (83) (5) 6 (16) (10) (108)
Q1 13 (86) (4) 5 (22) (9) (116)
Change % +3% -25% +20% +27% -11% +7%
------------------ ----------------- ----------------- ----- ----------- -------- ------------
(1) Underlying operating (loss)/profit excludes separately
disclosed items, acquisition related expenses, impairment of
goodwill and interest and taxation of results of the Group's joint
ventures and associates
Mainstream Sector
Mainstream Sector underlying operating loss reduced by GBP3m to
GBP83m (Q1 2013: loss of GBP86m). This included a GBP2m adverse
impact from foreign exchange translation.
In the UK, our Q1 performance was in line with the same period
last year. We continued to see strong demand for unique holidays,
accounting for 85% of departures in Q1, up four percentage points
on the prior year. The result also benefited from a three
percentage point increase in direct distribution to 90%. Online
bookings accounted for 50% of all bookings during the first
quarter, up six percentage points year-on-year. These improvements
were offset by the impact of a decline in demand for holidays to
Egypt, as a result of unrest in the region.
The Nordics' Q1 result was down on the prior year, driven by
weaker pricing due to a significant reduction in the Egypt
programme, political unrest in Thailand and a more competitive
environment. Unique holidays accounted for 91% of departures in Q1
2014. Direct distribution increased by two percentage points to
89%. Online distribution continues to grow, standing at 67% of
holidays in Q1, up four percentage points over the prior year.
The Q1 result in Germany was ahead of last year driven by robust
trading margins. Unique holidays accounted for 52% of departures in
Q1 2014, up four percentage points over the prior year. Online
bookings accounted for 9% of bookings during the first quarter, up
two percentage points year-on-year.
France reported a decrease in operating loss, driven by a
significant reduction in capacity on loss-making routes and the
successful delivery of efficiency savings from the business
improvement programme. During the quarter, we continued to remix
our tour operator away from North African destinations and we
reduced capacity on seat-only and long-haul destinations. We remain
on target to reduce losses significantly in the French tour
operator this year. The Airline performance was down on the prior
year, due to the timing of maintenance events.
Emerging Markets
The Emerging Markets Sector delivered an underlying operating
loss of GBP5m (Q1 13: loss of GBP4m), primarily due to a
significant reduction in the Egypt programme of our Russian
business.
Accommodation & Destinations (A&D) Sector
The A&D Sector reported an underlying operating profit of
GBP6m (Q1 13: GBP5m). This was driven by the Accommodation
Wholesaler division, where volumes increased due to continued
growth in the source markets and destinations of the Americas and
Asia. This helped to offset Accommodation OTA investment relating
to our MalaPronta business and the impact on our agency business of
unrest in Egypt and Tunisia.
Specialist & Activity Sector
The Specialist & Activity Sector reported an underlying
operating loss of GBP16m (Q1 13: loss of GBP22m). The GBP6m
improvement in operating loss relates to positive underlying
trading across the Sector and good progress in consolidating
finance and reservation systems across multiple brands. We reported
a particularly strong performance from North American Specialist
due to strong trading in our Quark polar cruising business and the
timing of departures within Starquest (private jet tours). We
remain confident of delivering underlying annualised profit growth
of 8-10% on a constant currency basis.
Separately Disclosed Items (SDIs)
Separately disclosed items in the quarter totalled a GBP7m
expense (Q1 13: GBP9m). This expense primarily relates to costs
arising from the ongoing restructuring in Marine and France
totalling GBP4m, and GBP3m of entry into service costs for B787
Dreamliners in the UK and Belgium.
Acquisitions
The Group acquired the majority shareholding in Le Passage to
India Tours and Travels Private Limited (LPTI).
Financing
We remain satisfied with our funding and liquidity position. We
have three main sources of long-term debt funding - these include
the external bank revolving credit facilities totalling GBP1,120m
which mature in June 2015, a GBP350m convertible bond (due October
2014) and a GBP400m convertible bond (due April 2017). The external
bank revolving facilities are used to manage the seasonality of the
Group's cash flows and liquidity.
We signed a medium-term GBP300m bank credit facility in 2013,
maturing in April 2016. This was to ensure the Group was in a
position, if required, to redeem the GBP350m convertible bond that
matures in October 2014. We expect to refinance our bank revolving
credit facility approximately 12 months ahead of its maturity
date.
Consolidated income statement (unaudited)
for the 3-month period ended 31 December 2013
3-month 3-month
period period
ended ended
31 December 31 December
2013 2012
(restated)
GBPm GBPm
----------------------------------------------------------- ------------ ------------
Revenue 2,731 2,718
Cost of sales (2,575) (2,574)
----------------------------------------------------------- ------------ ------------
Gross profit 156 144
----------------------------------------------------------- ------------ ------------
Administrative expenses (287) (294)
Share of (loss) / profit of joint ventures and associates (3) 1
----------------------------------------------------------- ------------ ------------
Operating loss (134) (149)
----------------------------------------------------------- ------------ ------------
Analysed as:
Underlying operating loss (108) (116)
Separately disclosed items (7) (9)
Acquisition related expenses (15) (17)
Impairment of goodwill - (7)
Taxation on (loss) / profit and interest of joint
ventures and associates (4) -
(134) (149)
----------------------------------------------------------- ------------ ------------
Financial income 5 4
Financial expenses (37) (36)
----------------------------------------------------------- ------------ ------------
Net financial expenses (32) (32)
----------------------------------------------------------- ------------ ------------
Loss before tax (166) (181)
Taxation 55 61
----------------------------------------------------------- ------------ ------------
Loss for the period (111) (120)
----------------------------------------------------------- ------------ ------------
Attributable to:
Equity holders of the parent (111) (121)
Minority interest - 1
----------------------------------------------------------- ------------ ------------
Loss for the period (111) (120)
----------------------------------------------------------- ------------ ------------
Basis of preparation (unaudited)
The unaudited financial information in this report relates to
the 3-month periods ended 31 December 2013 and 31 December 2012.
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 2013 and 31
December 2012 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 2013, except for that the Group has adopted IFRS 13 as
well as a number of amendments to existing standards, the most
notable of which is the adoption of IAS 19 (revised 2011) 'Employee
benefits'.
As disclosed in the Group's 2013 consolidated financial
statements, the most significant impact for the Group of IAS 19
(revised 2011) is in relation to the accounting treatment for
financial income and expenses, whereby the interest expense is now
calculated on the net defined benefit liability by applying the
discount rate to the net defined benefit liability. This replaces
the interest cost on the defined benefit obligation and the
expected return on plan assets. The adoption of this revised
standard is required to be applied retrospectively. Accordingly,
the comparative information in respect of the 3-month period to 31
December 2012 has been restated. Financial income has been restated
from GBP21m to GBP4m and financial expenses have been restated from
GBP50m to GBP36m. Net financial expenses therefore increases from
GBP29m to GBP32m and the taxation credit increases from GBP60m to
GBP61m. This restatement has had no effect on total comprehensive
income as the increased net cost in the consolidated income
statement is offset by a credit in other comprehensive income.
This information is provided by RNS
The company news service from the London Stock Exchange
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