The thing to appreciate about travel companies is that they have a lot of moving parts – there’s scope for all sorts of mischief. Then there’s the question of margins. Thomas Cook’s (TCG) restated figures for FY2017 show an adjusted operating margin of 3.6 per cent. That dropped a full percentage point by its September 2018 year-end, leaving little headroom, so a £155m financing charge sent the FTSE 250 constituent into a reported net loss of £163m for 2018.
The problems were foreshadowed in a second profit warning in as many months, released shortly prior to these figures, with underlying profits of £250m, down 58 per cent on a like-for-like basis, and shy of market expectations. Management blamed the hot European summer, which resulted in punters "delaying holiday decisions as they enjoyed record temperatures at home", with the domestic market the chief culprit, as increased discounting in the 'lates' market constricted profitability at the tour operator segment.
Prior to these figures, Numis was guiding for adjusted EPS of 9.4p for the March 2019 year-end, rising to 10.5p in FY2020.
| THOMAS COOK (TCG) | ||||
| ORD PRICE: | 36.6p | MARKET VALUE: | £562m | |
| TOUCH: | 36.5-36.6 | 12-MONTH HIGH: | 150p | LOW: 33p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 19p* | NET DEBT: | £389m | |
| Year to 30 Sept | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 8.59 | -114 | -8.2 | nil |
| 2015 | 7.83 | 50.0 | 1.6 | nil |
| 2016 | 7.81 | 34.0 | 0.3 | 0.5 |
| 2017 (restated) | 9.01 | 43.0 | 0.7 | 0.6 |
| 2018 | 9.58 | -53.0 | -10.6 | nil |
| % change | +6 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes £3.1bn of intangible assets, or 202p a share | ||||
