TUI makes a comeback

2023-05-12T16:37:33+00:00 May 12th, 2023|Finance|

Giant German leisure group, TUI has reported revenue for the second quarter of its fiscal year 2023 of €3.2 bill, compared with €2.1 bill in 2Q23.

Underlying EBIT improved by €88 mill to a negative €242 mill in 2Q23, which is typically a weaker quarter for the industry. With the exclusion of exceptional items in the previous year, this was an improvement of €181 mill.

Holiday Experiences segment, including hotels, cruises and activities recorded an underlying EBIT of €80 mill, an improvement of €148 mill.

Net debt was reduced to €3.1 bill pro forma, including proceeds from capital increase.

TUI CEO, Sebastian Ebel, said: “Strong booking development and significantly improved quarterly figures underline our expectations: it will be a strong summer and a good financial year 2023 with a significantly higher operating result. Our strategic initiatives are taking effect, the state debts have been repaid. Our goal: return to former strength and profitable growth.”

A strong booking trend and a significantly improved second financial quarter underline TUI’s positive expectations: the tourism group expects a strong summer this year and a significant year-on-year increase in operating profit for the full year.

Revenue climbed by around €1 bill year-on-year to €3.2 bill in 2Q23 (January to March). Underlying Group EBIT improved significantly to minus €242 mill in the seasonally weaker second financial quarter, while the number of customers travelling with TUI in the period rose to 2.4 mill.

Ebel added: “We have significantly increased our results in the second quarter, the completed winter season has developed in line with our expectations with good prices. The strong booking trend, especially in the last six weeks, and the significantly improved quarterly figures confirm our expectations.

“We expect a strong summer and a good 2023 financial year with significantly higher operating profit. Our strategic initiatives are taking effect, we have repaid the WSF aid and are gearing everything towards profitable growth. We want to return to our former strength. That is our ambition and our promise to customers, employees, partners and shareholders that made the successful capital increase possible,” he said.

TUI has swiftly repaid the Corona aid provided by the German state. The roadmap, which was agreed with the Economic Stabilisation Fund (WSF) and announced in December, 2022 for the full repayment of the stabilisation aid received from the WSF, was already initiated in the period under review.

To finance the repayments, a capital increase with subscription rights was successfully completed last month. The gross proceeds amounted to around €1.8 bill. The proceeds were used to fully repay the remaining WSF stabilisation measures and significantly reduce the KfW credit line.

Cruises, which is in the Holiday Experiences segment, comprises the joint venture TUI Cruises in Germany, which operates cruise ships under the Mein Schiff and Hapag-Lloyd Cruises brands, plus UK-based Marella Cruises.

In 2Q23, the entire fleet of 16 ships operated. Operations were limited in Q2 2022 and only gradually ramped up as COVID 19 restrictions were relaxed.

This division’s underlying EBIT improved significantly to €14.8 mill from a loss in 2Q22 of €73.5 mill.

Occupancy in the three brands ranged between 67% and 95%, while available passenger days rose by 47% to 2.4 mill.

The cruise business continues to recover and achieved its fourth consecutive positive quarter in terms of earnings, with TUI Cruises generating after-tax earnings of €18 mill for TUI Group during the period.

For the second half of financial year 2023, the average daily rate for TUI Cruises is currently 1% higher year-on-year, with occupancy at 23% higher than in the same period last year.

For the current financial year 2023, the Group expects a strong summer with very good bookings overall.

Summer bookings were running at 13% above the previous financial year and at 96% of the summer of 2019 in all sectors.

TUI said that it was on track for profitable growth and a significantly higher operating profit in 2023 with an increase in revenue and significantly higher earnings.