The number of Brits abroad is on the rise, reckons holiday operator TUI Travel (TT.). Growing demand from holidaymakers has allowed the group - which has already sold 60 per cent of its summer 2014 season - to push UK prices up by 5 per cent.
The story was different in continental Europe: increasing competition in the Nordic regions drove bookings down 7 per cent in spite of flat prices. As a result, summer capacity has been cut by 3 per cent. Similarly, bookings in Germany were flat and prices were only raised by 1 per cent. The number of bookings from French customers also fell as political unrest continued to hurt Egypt's popularity as a French tourist hot-spot. Chief executive Peter Long insisted the French business will still break-even, but not until 2016 - a year later than originally thought.
The company is still happy with broker estimates for 7 to 10 per cent growth in underlying operating profit this year. Losses at the half-year stage are to be expected, as the bulk of TUI's profits are made from summer holidays. And while underlying operating losses of £298m appear to have widened, adjust for the timing of Easter - which slipped into the second half - and underlying losses actually narrowed by 4 per cent.
Broker Numis Securities expects pre-tax profits of £534m for the full year, giving EPS of 33.8p, up from £473m and 30.8p in 2013.
TUI TRAVEL (TT.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 435p | MARKET VALUE: | £4.86bn | |
| TOUCH: | 435-436p | 12-MONTH HIGH: | 451p | LOW: 329p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 91 | |
| NET ASSET VALUE: | 85p* | NET CASH: | 60% | |
| Half-year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 5.40 | -410 | -24.0 | 3.75 |
| 2014 | 5.19 | -386 | -24.6 | 4.05 |
| % change | -4 | - | - | +8 |
Ex-div: 3 Sep Payment: 3 Oct *Includes intangible assets of £4.39bn, or 392p a share | ||||
