There was cheer in the cabin at Thomas Cook (TCG) as the recently loss-making airline returned to the dividend roster after suspending payouts in 2011. Revenue and operating profit dropped marginally, but the latter was supported by a net £26m benefit from its cost-cutting drive. This helped offset reduced demand for holidays to Turkey and the impact on its Belgian business from the Brussels airport attack.
There are other encouraging signs from an operational perspective. Gross margins rose 80 basis points to 23.4 per cent thanks to record underlying profit margins in its UK and northern European divisions. This suggests it managed capacity well - providing more space on routes to places such as the Canary Isles and the US as terrorist-hit locations suffered - and greater use of its own-brand hotels.
Its fuel costs dropped by £90m in the year and should fall another £35m in the current financial year. Earnings should also be supported by the positive translation of its euro-based income into sterling, which provided a £39m boost this term.
Analysts at Numis expect pre-tax profit of £203m in the year to September 2017, leading to EPS of 11.1p, compared with £168m and 8.5p in FY2016.
| THOMAS COOK (TCG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 78.45p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 78.45-78.6p | 12-MONTH HIGH: | 125p | LOW: 53p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 98 | |
| NET ASSET VALUE: | 24p* | NET DEBT: | 33% | |
| Year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 9.20 | -337 | -50.1 | nil |
| 2013 | 9.31 | -158 | -16.7 | nil |
| 2014 | 8.59 | -114 | -8.2 | nil |
| 2015 | 7.83 | 50 | 1.6 | nil |
| 2016 | 7.81 | 42 | 0.8 | 0.50 |
| % change | -0 | -16 | -50 | - |
Ex-div: 9 Mar Payment: 5 Apr *Includes intangible assets of £3.1bn, or 200p a share | ||||
