Cost savings came through quicker than expected at TUI Travel (TT.) this year - about £46m in all - and, even without a £34m currency tailwind, underlying operating profit grew 13 per cent in the year to £555m. That comfortably beat both management's own target of 7-10 per cent growth and upgraded expectations of "at least" 11 per cent growth.
Much of that progress reflected a strong summer in the UK where the operating margin grew 110 basis points to 6.5 per cent, driving profit here up 27 per cent to £251m. Returns increased in Germany, too - thanks largely to higher-margin breaks in Greece - and profit marched 30 per cent higher to £113m. Margins here, however, are still less than half that of the UK and a top manager from the highly successful Nordics region has dropped in to shake things up. Further restructuring savings will help.
TUI's numbers would have been even better, but for a £60m loss in France after violence erupted in former French favourites, Egypt and Tunisia. Still, TUI has halved capacity to Egypt and has already sold 60 per cent of its mainstream winter breaks. Sensibly, it's keeping summer capacity unchanged, too, and holidays are selling well.
After upgrading forecasts by 4 per cent, broker Panmure Gordon expects adjusted pre-tax profit of £515m for 2014, giving adjusted EPS of 33.1p (from £473m and 30.8p in 2013).
TUI TRAVEL (TT.) | ||||
---|---|---|---|---|
ORD PRICE: | 380p | MARKET VALUE: | £4.25bn | |
TOUCH: | 379-380p | 12-MONTH HIGH: | 402p | LOW: 274p |
DIVIDEND YIELD: | 3.6% | PE RATIO: | 70 | |
NET ASSET VALUE: | 130p* | NET CASH: | £2m** |
Year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2009 | 13.4 | -94.0 | -4.80 | 10.7 |
2010 | 13.5 | -73.0 | -11.1 | 11.0 |
2011 | 14.7 | 144 | 7.70 | 11.3 |
2012 | 14.5 | 201 | 12.5 | 11.7 |
2013 | 15.1 | 181 | 5.40 | 13.5 |
% change | +4 | -10 | -57 | +15 |
Ex-div: 5 Mar Payment: 9 Apr *Includes intangible assets of £4.4bn, or 392p a share **Excludes £145m of restricted cash |