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August 7, 2013 9:15 am
Tui Travel, Europe’s largest tour operator by sales, on Wednesday declared it was “very confident” of hitting its target to increase underlying operating profit by 10 per cent in 2012-13.
“Given our current position we remain very confident of achieving full-year underlying operating profit growth of at least 10 per cent on a constant currency basis,” said Peter Long, chief executive.
However, James Hollins, an analyst at Investec, said investors may be disappointed that the company had not raised its profit guidance for 2012-13.
“This could reflect a marginal weakening of trading, as we see it, into summer 2013,” he added.
Shares in Tui Travel, which have more than doubled in price over the past year, closed down 5 per cent in London to 380.8p.
Tui Travel was formed from the merger of the UK’s First Choice with the tourist business of Tui.
Mr Long said in April there had been a renaissance in package holidays because people saw a “a lot of hassle” organising their own trips.
Tui Travel’s summer holiday sales were up 4 per cent compared with last year, with bookings in the UK and the Nordic region rising 4 and 7 per cent respectively.
However, bookings in Germany and France fell 5 and 22 per cent, respectively, with the company saying it was reshaping its French programme, partly by reducing its emphasis on North African destinations.
Tui Travel – whose brands include Thomson and Arke – reported revenue of £3.9bn for the three months to June 30, up 5 per cent compared with the same time last year, and partly boosted by favourable currency movements.
Underlying operating profit rose 18 per cent to £87m, supported by a cost-saving programme.
For the nine months to June 30, the company reported revenue of £9.3bn, up 1 per cent, and a pre-tax loss of £369m. This was an improvement on the £454m pre-tax loss recorded in the first nine months of 2011-12.
Net debt stood at £183m at June 30, compared with £556m a year ago. The company has signed a new £300m bank credit facility to enable it, if necessary, to redeem a convertible bond that matures next year.
The company said it had seen an encouraging start to trading for winter of 2013-14, with holiday sales up 13 per cent compared with this time last year.
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