Date: Thursday 27 Sep 2012
Package tour operator TUI Travel has said it remains on track to meet its full year expectations, following strong trading in the summer high season, with improved margins and load factors versus the prior year.
The summer 2012 progamme is now almost fully sold, with load factors ahead of the prior year in its major markets. The firm has fewer holidays left to sell than at this stage last year, which it said has allowed pricing levels to be maintained in the lates market with strong margins.
The company also reported an "encouraging start" to the winter season, saying it has a strong differentiated product and online sales performance, particularly in the UK and Nordics.
In the UK, bookings are up by 2% against a flat capacity. The average selling price is up 3%, partly reflecting the successful pass-through of inflationary cost increases of 2%. Booked load factor is currently 31%. Sales of differentiated product are up 9% compared with this time last year, accounting for 63% of holidays sold to date, up four percentage points on the prior year. Online sales continue to grow, accounting for 41% of winter holidays booked, up by four percentage points on the prior year.
In the Nordic region, bookings are up 4% in line with capacity. Sales of differentiated product are up 16% compared with this time last year, accounting for 69% of holidays sold to date, up seven percentage points on the prior year. Online sales continue to grow, accounting for 62% of winter holidays booked, up by three percentage points on the prior year. Booked load factor is currently 49%.
In Germany, bookings are up 7% with long haul destinations performing particularly well, while booked load factor is currently 27%. In France, the company has re-mixed the programme by reducing capacity to long-haul destinations which tend to book earlier. As a result of this, volumes are down -26%, in line with its expectations and is, the group said, consistent with the booking patterns for the remixed offering. Booked load factor is currently 27%.
In the UK, the company has seen early bookings for summer 2013, which are up 10% on the same period last year, "significantly" outperform the market, particularly for its differentiated product. Average selling prices are up 3%. Sales of differentiated product are up 15% compared with this time last year, accounting for 68% of holidays sold to date, up one percentage points on the prior year. To date 11% of the programme has been sold.
Peter Long, Chief Executive of TUI, said: "We are very pleased with our summer 2012 performance, with most of our programmes now almost fully sold. High demand in the peak summer period, driven by our strategy of differentiated and exclusive product distributed online, has resulted in strong lates margins and load factors.
"We remain on track to meet our full year expectations, with strong underlying trading offset by the impact of re-translation of fourth quarter Eurozone earnings. Our continued outperformance in a challenging macroeconomic environment demonstrates our robust strategy is delivering clear results."
The firm also announced that its Accommodation & Destinations sector has acquired MalaPronta.com, which at the 2011 year-end had gross assets of £0.4m. The purchase is part of its strategy to build its offering and positioning globally particularly in the emerging markets.
Full year results are due out on December 4th. The consensus estimate for full-year earnings before interest and tax (EBIT) is £480m and TUI's management is confident of achieving this despite foreseeing a large negative foreign exchange impact. Broker Jefferies Hoare Govett thinks that a weaker euro could hit fourth-quarter EBIT by up to £40m, implying underlying upgrades of 8%.
Peel Hunt, meanwhile, thinks the group will have had a solid end to its trading year, with stable demand and pricing in all core markets with the exception of France.
The share price rose 3.09% to 237.20p in early trading.
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