TUI Has Surprise Profit as Joussen’s Turnaround Shows Effect

Dec 18, 2013 3:07 am ET

(Updates with segment performance in ninth paragraph, Hapag Lloyd merger talks in 10th.)

Dec. 18 (Bloomberg) -- TUI AG, Europe’s largest tour operator, reported a surprise full-year profit and said earnings will continue to rise as a turnaround plan gains speed.

Net income was 4.3 million euros ($5.92 million) in the fiscal year ended Sept. 30, compared with a of 15.1 million euros a year earlier, TUI said today. Analysts surveyed by Bloomberg had predicted a loss. Sales were little changed at 18.5 billion euros.

Chief Executive Officer Friedrich Joussen, who took over 10 months ago, initiated an efficiency plan that includes cutting more than half of the jobs at the headquarter, ending sponsoring agreements, selling the corporate jet and generating 1 billion euros in operating profit by fiscal 2015. He pledged to fix ailing hotel brands and turn around the loss-making cruise business to make the company a stable payer of dividends.

“We deliver on our promises,” Joussen said in a release today. “Our good operating results enable us to pay a dividend to our shareholders earlier than promised.”

The stock rose as much as 41 cents, or 3.6 percent, to 11.65 euros. Before today, the shares had returned 45 percent this year, outpacing the 28 percent gain in the 11-member Bloomberg Europe Leisure Time Index.

Dividend Plan

Underlying earnings before interest, taxes and amortization, which the Hanover, Germany-based company calls operating profit, rose 2.2 percent to 761.9 million euros ($1 billion). That compares with the average estimate for 754.5 million euros by 11 analysts collected by Bloomberg.

TUI yesterday said the supervisory board approved a management proposal to pay a dividend of 15 euro cent per share for the year, ahead of plan and the first time since 2007 the company offers investors a cash payout.

Operating profit will rise 6 percent to 12 percent this fiscal year as the efficiency measures come into effect, while sales will rise 2 percent to 4 percent on rising guest numbers at its main travel unit, TUI said.

TUI Travel Plc, the tour operator in which TUI owns 54.48 percent, on Dec. 10 said operating profit rose 13 percent on better bookings from customers in the U.K. and Scandinavia.

At its hotel unit, TUI’s operating profit rose 10 percent after the company sold a hotel in Spain for 15 million euros. Average revenue per bed climbed 3 percent to 53.12 euros, TUI said, lead by a 13 percent increase at its Grecotel brand, while occupancy remained at 80 percent. The cruise unit reported a loss as it took a new ship into operation and a fire damaged another during a dry-dock stay.

Hapag-Lloyd, the German container shipper in which TUI owns 22 percent, should still prepare for a public listing while it explores the possibility of merging with Cia. Sud Americana de Vapores SA of Chile, TUI said. TUI today reiterated it plans to sell the stake to an investor or via an IPO.

--Editor: Benedikt Kammel