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TUI Group: Good year expected

CEO Fritz Joussen: “Transformation is successful, seasonal swing has been reduced. We expect a strong year“.
Fritz-Joussen
Fritz Joussen
Q3 2016/17: Turnover up 16.4 per cent1
Underlying EBITA up 18.7 per cent2 in the period under review
Positive underlying EBITA delivered in the 9M period for the first time
Good trading performance – Summer 2017 continues to trade in line with expectations
Full-year turnover guidance: now more than 3 per cent growth expected
Clear alignment: TUI now pure play tourism group – Sale of Travelopia and disposal of stake in Hapag-Lloyd AG successfully completed
CEO Fritz Joussen: “Transformation is successful, seasonal swing has been reduced. We expect a strong year“.
“2016/17 will be another good year for TUI Group. We are delivering growth and reiterating our guidance. We expect turnover growth of more than three per cent, our underlying operating result is expected to grow by at least ten per cent1 in the full year“, said TUI Group CEO Fritz Joussen at the presentation of the Q3 2016/17 results.

TUI delivered an increase in underlying EBITA of 18.7 per cent2 and turnover growth of 16.4 per cent1 in the period under review. Moreover, the Group’s cumulative 9M operating result (underlying EBITA) was positive for the first time. Joussen: “This good performance reflects our successful transformation and focus on own hotel and cruise brands. We have significantly reduced the seasonal swing of our business. For the first time, we have delivered a positive operating result for the first nine months of a financial year. TUI is in excellent shape about to fulfil its objectives. That is good for our shareholders and our Group’s 67,000 employees. Our customers benefit from the market presence of our tour operators in many European source markets, the enormous diversity of our offering in more than 100 countries and from quality standards set by our Group brands such as RIU, Robinson, TUI Blue, TUI Cruises and Hapag-Lloyd Cruises. TUI is on track, both strategically and operationally“.

Overview Q3 2016/17



In the period under review, TUI Group recorded turnover growth of 16.41 per cent to 4.94 billion euros (previous year 4.24 billion euros). Including foreign exchange translation, turnover rose by 12.6 per cent to 4.78 billion euros. Underlying EBITA climbed 18.7 per cent2 to 191.0 million euros (previous year 160.9 million euros). Including foreign exchange translation and the timing impact of Easter, it rose by 37.7 per cent to 221.6 million euros.

Clear alignment: TUI is pure play tourism group – One brand – Digital

In Q3 2016/17, TUI Group continued its transformation as a fully integrated tourism group. Joussen: “We successfully completed the sale of our Travelopia specialist tour operator business in Q3 and the remaining stake in Hapag-Lloyd AG in July 2017. This completes the transformation of the former diversified conglomerate to tourism group TUI. The rebranding has also been very successful in all countries and has strengthened TUI both at the global and local levels. The UK will be the last market to roll out the rebranding in autumn 2017. We will then consistently operate under the TUI brand in all Source Markets. Our clear focus on the high-growth and high-margin Hotels & Resorts and Cruises segments has proven to be the right strategy and has been very successful. The digitalisation of our businesses and services is progressing well. We are embracing new technologies such as Blockchain, and have already started to apply it in our hotel businesses. Moreover, our modern CRM systems enable us to gain a single view of the customer.”

Geopolitical challenges: Balanced portfolio of more than 100 destinations ensures TUI’s resilience

TUI was and remains prepared for shifts in demand for individual destinations. Lower demand for Turkey was already taken into account when planning the summer 2017 programme, as demand for Turkey had declined as early as 2016. This factor was fully offset by additional offerings to alternative destinations. However, late bookings reflect a renewed popularity of Turkey and North African destinations among customers. TUI benefits from its strong presence in more than 100 countries in the world. In Q3, the Group again reported very strong demand for holidays to Spain, Greece and Italy, for long-haul travel and for cruises.

Overview of the segments

Hotels & Resorts: Sustained strong performance, increased average revenue per bed – Continued organic growth
Reporting for the Hotels & Resorts segment covers the core brands RIU, Robinson, TUI Blue and TUI Magic Life as well as stakes in other hotels. Since H1 2016/17 this segment has also included the results of Blue Diamond hotels, which are part of the Canadian Sunwing Group. TUI holds a 49 per cent stake in Sunwing.
Hotels & Resorts delivered significant growth in its operating result in Q3 2016/17:

Underlying EBITA +15.8 per cent2 to 66 million euros / previous year: 57.0 million euros, Including foreign exchange translation/Easter timing impact: +35.8 per cent to 77.7 million euros
Average revenue per bed +2 per cent3 to 54.6 euros
Average occupancy +3 percentage points to 74 per cent3
Following the opening of TUI Blue Selection in Tuscany in April and TUI Blue Jadran in Croatia in July, five further new hotels of the core brands of TUI Hotels & Resorts will open in the forthcoming winter season, including two Robinson Clubs, one in the Maldives and one in Thailand, one RIU hotel in Mexico and two Blue Diamond hotels in the Dominican Republic. Moreover, existing hotels will be repositioned as TUI Blue hotels.

Cruises: Growth path successfully continued
Since H1 2016/17, TUI Group’s Cruises segment has comprised the results of all three cruise lines: TUI Cruises, Thomson Cruises and Hapag-Lloyd Cruises. In Q3 2016/17, Cruises continued its growth path and delivered a strong improvement in its operating result:

Underlying EBITA +54.2 per cent1 to 69.4 million euros / previous year: 45.0 million euros Including foreign exchange translation +49.1 per cent to 67.1 million euros
Average rate per passenger per day:
TUI Cruises +2 per cent / Thomson Cruises +6 per cent / Hapag-Lloyd Cruises +3 per cent
Average occupancy:
TUI Cruises 101 per cent / Thomson Cruises 100 per cent / Hapag-Lloyd Cruises 73 per cent
TUI Cruises launched Mein Schiff 6 in June 2017. In 2018 and 2019, TUI Cruises will launch two further new builds of its Mein Schiff fleet. Thomson Cruises also continues to grow: In the period under review, it launched TUI Discovery 2. In 2018, Thomson Cruises will include TUI Explorer (currently operated by TUI Cruises as Mein Schiff 1) in its fleet, and in 2019 it will take over Mein Schiff 2 also from TUI Cruises. Hapag-Lloyd Cruises will also expand and modernise its fleet in the medium term: In calendar year 2019, the new builds, “Hanseatic nature” and “Hanseatic inspiration” will join the fleet of luxury expedition ships.

Regions: Strong performance in Germany and the Nordics – Bookings in the UK as high as previous year despite weakness of sterling
The tour operating business (sales & marketing) in the three Source Market Regions delivered a positive performance in Q3 2016/17:

Underlying EBITA +7.1 per cent2 to 73.9 million euros / previous year: 69.0 million euros
Including foreign exchange translation/Easter timing: +35.7 per cent to 93.6 million euros
Total turnover +12.6 per cent1 to 4.22 billion euros / previous year: 3.74 billion euros
Blue Diamond hotels and Thomson Cruises numbers have not been separately reported in Northern Region (UK & Ireland, Nordics, Canada, Russia) since H1 2016/17. In the UK, summer bookings remain flat at the high level recorded in the previous year despite the price inflation caused by the weakness of sterling. Due to the later timing of Easter into Q3, customer numbers in the UK were 5 per cent up year-on-year. The Nordics delivered a strong performance in the period under review, benefiting from the TUI rebranding and an improved trading performance from the new Yield Management System. The successful change in the product mix, reflecting an expansion of the offering to Greece and the Canaries to offset subdued demand to Turkey, had a positive impact.

Underlying EBITA Northern Region -1 million euros2 year-on-year
In Central Region (Germany, Austria, Switzerland, Poland), Germany reported a very strong performance. Partly driven by the late timing of Easter and Pentecost, customer numbers grew by 11 per cent year-on-year. Germany also saw an improvement in its trading performance. In the period under review, TUI Group and Etihad Aviation Group also announced the end of their talks about a joint venture between the German TUI fly airline and Niki airline.

Underlying EBITA Central Region +17 million euros2 year-on-year
The result of Western Region (Belgium, the Netherlands, France) reflected the first-time inclusion of Transat including a small seasonal EBITA loss. It was also affected by the marketing costs for the TUI rebrand in Belgium.

Underlying EBITA Western Region -11 million euros2 year-on-year
Good trading performance – Summer 2017 fully in line with expectations

Current trading for Summer 2017 is good and fully in line with the Group’s own expectations:

Trading revenue Source Markets +8 per cent1
Customer numbers +4 per cent
Lower cumulative bookings for some destinations including Turkey are offset by strong demand for Greece, Spain, the Cape Verde Islands, Croatia, Italy, Bulgaria and long-haul destinations including the Caribbean.

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