TUI Travel has sunnier earnings forecast because of extended wintry weather
The European tour operator is reducing its retail operations and trying to solicit more online bookings. Sometimes the business climate for TUI Travel seems colder and damper than a British winter.
TUI Travel Plc, Europe’s largest tour operator, said full-year earnings are likely to be higher than previously forecast after wintery weather that persisted until Easter boosted bookings from Britain to Scandinavia.
Annual operating profit will increase at least 10 percent, according to the Crawley, England-based company, which had said on March 27 the advance would be “towards the top end” of a 7 percent to 10 percent range. Analysts had been expecting a gain of 7.5 percent, based on 12 estimates collated by Bloomberg.
A craving for sunshine during a European winter that included the coldest March in living memory allowed TUI to lift prices at least 5 percent in Britain, Germany and the Nordic nations, helping to pare its fiscal first half operating loss 9 percent to 289 million pounds ($446 million). The company raised its interim dividend 10 percent to 3.75 pence a share.
“TUI Travel is well on track given the loss reduction and the increased interim dividend,” Jochen Rothenbacher, an analyst at Equinet Bank in Frankfurt, said in a note to clients. “The strong trading momentum continues.”
TUI Travel shares rose as much as 3.4 percent and traded 1.4 percent higher at 345.50 pence as of 10.43 a.m. in London. The stock has gained 22 percent this year, the best performance in the seven-member Bloomberg Europe Travel & Leisure Index.
Sales in the six months through March 31 rose 10 percent in Scandinavia and 5 percent in the U.K., with gains set to persist in those markets and others including Belgium and Canada.
TUI Travel, which is 54.5 percent owned by Germany’s TUI AG, is seeking to boost the proportion of vacation packages booked online while paring the number of retail outlets.
–Editors: Chris Jasper, Benedikt Kammel.
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