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Shareholders should want better disclosure – although that might not be positive for the share price. In the meantime, the company presentations bear little relation to economic reality. We expect the shares to continue to flatline, and reiterate our Hold recommendation and 560p target price.
TUI AG
Turning around – TUI’s share price performance has been has been weak this year, reflecting macro concerns and, perhaps, the outperformance of Jet2 and easyJet in the UK. The shares appear to be cheap on a multiple basis but, despite that, we do not find the valuation compelling. We reiterate our Hold recommendation and 560p TP.
Key Stocks Dunelm # (DNLM LN) (Buy, TP 1,375p) - Home & dry (Wednesday 14 February, 1H results) SEGRO (SGRO LN) (Add, TP 790.0p) - 2H23 stabilisation in values expected (Friday 16 February, FY results) Moneysupermarket.com (MONY LN) (Add, TP 305.0p) - Insurance leading the way (Monday 19 February, FY results) Bunzl (BNZL LN) (Add, TP 3,200p) - No change to FY24E guidance expected (Monday 26 February, FY results) CVS Group # (CVSG LN) (Buy, TP 2,750p) - Strong acquisition pipeline and healthy LFL sales (Thursday 29 February, 1H results) Stocks Previewed accesso Technology, Antofagasta, Bunzl, CVS Group #, dotdigital, Dunelm #, Empiric Student Property #, Gleeson, Hammerson, InterContinental Hotels Group, Jupiter Fund Management, Keywords Studios, Man Group, Moneysupermarket.com, Morgan Sindall, Pan African Resources #, Plus500, SEGRO, Shaftesbury Capital #, TBC Bank, Team17 #, TUI, Unite
TUI DNLM PAF GLE SGRO TBCG MONY ANTO IHG PLUS JUP MGNS BNZL UTG CVSG HMSO EMG SHC ESP ACSO DOTD KWS TM17
Summer 23 closed out largely in line with trends it reported earlier in August, leading to management reiterating guidance for EBIT to "significantly increase" yoy (NUMe €982m, +140% yoy). Winter has started well with a significant increase in capacity and pricing remaining positive. We are therefo
Looking over the horizon – the share price has been notably weak since 1 August (down 26%), perhaps as investors’ attention has begun to shift to the macro challenges to the business in FY24E. In light of those risks we reiterate our Hold recommendation and 560p target price.
Share price outperformer – TUI has outperformed the FTSE250 (and Jet2 and On the Beach#) over the past three months as news about summer holiday demand has improved. The 3Q23 results will give us an opportunity to reassess whether our Hold recommendation is too cautious.
TUI is returning to normality after Covid-19 – The April rights issue facilitated the return of state aid. TUI has a positive story to tell about the digital transformation of the business since 2019. It remains to be seen if this can offset the challenges of running the legacy business.
Interim results were broadly in line but the lack of an earnings upgrade in an otherwise vibrant sector has led to the shares continuing to underperform. Nevertheless, now at 5.2x FY23E P/E, we see risk-reward more balanced and cautiously upgrade to Hold.
Ahead of the completion of the rights issue and the interim results, and pending a fresh review on our part, we are putting our target price, recommendation and forecasts under review.
We increase our TP from 148p to 1560p – our new target price and our Hold recommendation reflect our inability to see past the impact of the rights issue. We will review this once we have seen the prospectus, expected later this year.
TUI delivered a consensus-beating top-line but a higher-than-expected underlying EBIT loss in the year-end quarter. The market nonetheless reacted positively thanks to the buoyant up-to-date booking trends despite the inflationary concerns. We may need to cut our estimates as the recovery seems less rapid than had been expected.
Meeting Notes - Dec 19 2022
TUI BOWL RNK
TUI has agreed to repay the government support required during Covid by raising at least €1.5bn. This is positive progress but in our view still leaves leverage too aggressive, at more than 4.5x if adjusting for customer cash. Our preference remains Jet2 and OTB.
TUI JET2 OTB
The rights issue will define TUI as an investment until it is completed. Holders and non-holders alike may assume that they will be offered shares at a discount next year. We all may as well wait and see what we can learn from the prospectus. We reiterate our Hold recommendation and 148p target price.
Despite the consensus-breaking FY22 results and encouraging FY23 outlook, TUI’s mid-term ambitions look prudent compared to the market expectations. The share reaction was further negatively impacted by the dilution effect from the €1.6-1.8bn rights issue plan, which was set to support the exposure reduction to the German state rescue measures. We expect a decrease in the consensus and our target price.
TUI has reached agreement with the German WSF to fully repay the pandemic-related stabilization measures with a €479m nominal value of c.€730m and the price could increase to as much as €957m, subject to market conditions. A rights issue of €1.6-1.8bn (c.50-60% of TUI’s current market cap) is planned for early 2023 to support the WSF repayment, following the implementation of a capital reduction. The recap will also be used to partially redeem the remaining KfW credit lines of €2.1bn.
Yesterday TUI announced that it plans to repay German Government support received during the pandemic at a total cost of €730m (but potentially up to €957m) and to finance this with a rights issue, yet to be announced, which could target raising approximately €1.4bn. In light of the continuing uncertainty, we have lowered our target price to the current price (148p) from 190p.
Meeting Notes - Nov 29 2022
TUI OTB JET2 QQ/ BT/A WTC WWG WISE WIHN 002253 WISE WIST WISE 065370 273060 9918 5245 WISM SHB TIFS BPT RNWH GBG DNLM FUTR RSW 2839
Meeting Notes - Aug 11 2022
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Three divisions reported quarterly profits but €75m of flight disruptions kept the group loss-making and have led to further FY downgrades. With tour operator cost inflation (fuel and hotels) and a squeeze on customer spending likely over the next 12 months, we retain our cautious stance.
Despite a promising summer outlook, TUI’s trading update did not convince the market due to a high level of uncertainties related to airport chaos, geopolitics and inflation, etc. The financial guidance remains vague for the same reason and its balance sheet still needs meaningful strengthening. We expect a downgrade in the FY22 consensus but no major changes to our current estimates.
Down at the Peel Hunt Arms: A pint of for Richer or Porter Ale Some of our best conversations take place at the pub. This week, we discuss: the underperformance of Travel & Leisure shares so far this year; why we believe the 2-3-year outlook is much better, in part due to the likelihood that the government will take action to support growth. We discuss Entain, Hollywood Bowl, Hostelworld, Loungers#, On the Beach#, Rank#, SSP Group, Ten Entertainment# and TUI, among others. Ivor.Jones@peelhunt.com, Douglas.Jack@peelhunt.com To watch the video of Ivor and Doug down at the Peel Hunt Arms, please open the note and click on the image like the one below. #Corporate client of Peel Hunt
TUI OTB ENT BOWL HSW LGRS RNK SSPG TEG
Down at the Peel Hunt Arms: A pint of Summer lovin' The package holiday market has been buoyant. After two Covid-19-disrupted years, consumers are seizing the opportunity to head for the beach. With travel restrictions to Spain and Greece recently reduced, we expect bookings to accelerate further as we enter the crucial ‘lates’ market. Please watch our video to see Alex and Ivor discuss: the historical performance of the holiday market in periods of economic disruption; the news we have had so far this year; and prospects for Summer 2022 and beyond. We discuss easyJet, Jet2, On the Beach# and TUI. Ivor.Jones@peelhunt.com, Alexander.Paterson@peelhunt.com, Douglas.Jack@peelhunt.com To watch the video of Douglas and Ivor down at the Peel Hunt Arms, please open the note and click on the image like the one below. #Corporate client of Peel Hunt
TUI OTB JET2 EZJ
Waiting for a corporate Heimlich manoeuvre Despite excellent trading news from TUI with the interims, we can’t quite get out a Buy recommendation. It seems likely that the remaining government “Silent Participation” will convert into a c.20% increase in TUI’s shares. We do not know what will happen to the new shares nor to the c.31% of the shares subject to sanctions. We are lowering our rather stale FY22E forecasts, and our TP from 260p to 190p while reiterating our Hold rating. Ivor.Jones@peelhunt.com, Douglas.Jack@peelhunt.com
Down at the Peel Hunt Arms: A pint of Hofmeister Some of our best conversations take place at the pub. This week, we discuss: the underperformance of Travel & Leisure shares so far this year; the sharp decline in UK consumer confidence; the, apparently contradictory, strong demand for overseas holidays reflected in trading at Hostelworld and TUI; we preview the SSP Group interim results and Restaurant Group AGM statement; and put the gambling subsector share price performances in the context of company changes in market capitalisations. We discuss Hostelworld, TUI, SSP Group and Restaurant Group, among others. Ivor.Jones@peelhunt.com, Douglas.Jack@peelhunt.com To watch the video of Douglas and Ivor down at the Peel Hunt Arms, please open the note and click on the image like the one below.
TUI HSW SSPG RTN
The market cheered TUI’s consensus-beating H1 results, improving the net debt position and accompanied by upbeat FY guidance. The favourable market conditions and the group’s strong pricing power should support sparkling summer trading and allow for a further strengthening of the balance sheet, although the only-limited fuel hedging could neutralize part of this expected vitality.
TUI's top line trend is positive, particularly its Markets & Airlines division which given the recovery in bookings and c.20% higher average selling price implies a record 4Q. However, conversion to profitability remains somewhat opaque given product mix and higher fuel costs. Trading on 8x FY2
TUI’s Q1 results missed the consensus again while its liquidity and net debt positions remained comfortable. The current trading of summer bookings is mixed as the average prices remain buoyant but the booking volumes have slowed. Regardless, the target of summer bookings volume is maintained, due to later booking profiles and rising consumer confidence. The group’s plan to repay part of the state aid and to reach 90% of its permanent cost reduction by FY22 should be considered as positive.
Too much Covid-19 in the hold to fly higher We believe that TUI, and the package holiday industry in general, have a very good summer ahead, as consumers spend their savings and head for some sunshine. However, the rate of progress in a highly competitive market remains uncertain, and TUI continues to be burdened by the financing that enabled it to survive Covid-19. Reflecting the reduced risk, we increase our target price from 210p to 260p and retain our Hold recommendation. Ivor.Jones@peelhunt.com, Douglas.Jack@peelhunt.com
Taking the long route back The route back to normality is uncertain, even more so since the emergence of Omicron. While we are currently expecting strong demand for holidays in summer 2022, there is potential for this to be thrown off course over the next few months. In addition, the impact of the cost-cutting and transformation programmes that underpin our recovered profits forecast have yet to be tested in earnest. In light of these uncertainties we have set a target price of 210p, based on an FY23E EV/EBIT multiple of 4.8x, and initiate coverage with a Hold recommendation. Ivor.Jones@peelhunt.com, Douglas.Jack@peelhunt.com 25-page note
Near term momentum slowing but optimistic outlook
TUI’s FY21 results came in below consensus and no meaningful short-term catalysts were seen. The group may have to trim further its winter schedule due to the new Omicron variant, which has already weighed on recent bookings. The summer 2022 bookings seem encouraging but visibility remains limited in effect.
TUI launched a €1.1bn share placing to reduce financial interest expenses and improve its debt profile. The recapitalisation is necessary, which should not surprise the market, and will supportively strengthen TUI’s vulnerable balance sheet. Due to a larger-than-expected dilution effect, we will have a lower target price after integrating this capital increase.
Q3 results showed incremental improvement over a weak Q2, but further downgrades and continued uncertainty over its balance sheet means it is too early to turn more positive. Trading on 16x FY23E, we reiterate our Reduce.
TUI’s Q3 results update was encouraging, due to a meaningful business restoration, improved cash generation and promising summer outlook, despite a narrowed Q4 capacity schedule. However, a plan of the critical balance sheet repairment is still missing.
Meeting Notes - Jun 01 2021
TUI GLV LMP BIFF SAA BGEO BMY
TUI has disposed of its 49% stake in RIU SA for €670m, continuing its 'asset-right' programme to shore up its balance sheet. Given near-term trading uncertainty, this is welcome, but TUI is still not out of the woods. Our preferred leisure travel picks remain Jet2 and OTB.
TUI’s H1 results release frustrated the market today, due to its downward-adjusted FY revenue guidance and mediocre cash burn rate, despite the prospect of a bright summer recovery. Consensus might go down.
Meeting Notes - Apr 23 2021
TUI SPT VANQ LSL HSW PSON
Near term holiday bookings have never been so uncertain and therefore a flexible business model with ample liquidity headroom is imperative. Whilst we are confident there is pent-up demand, questions around outbound and inbound restrictions (quarantine, testing) mean travel is likely to recovery on
TUI delivered a weak Q1 as expected, with an unexpectedly improved cash burn rate, but the latter should be considered as a one-off item since no improvement has been included in the guidance. The group’s current liquidity position should be adequate at least until the summer, while its heavy leverage is a concern instead. It continues betting on a summer recovery, whereas we still consider the near-term market conditions as highly uncertain.
TUI’s FY20 results disappointed the market, with a further trimmed business assumption for FY21. It doesn’t expect a return to profitable growth until FY22.
The COVID-19 crisis is likely to persist for longer, although TUI sees early signs of enthusiasm for leisure in next summer. The second stabilisation package of €1.2bn has been granted to support TUI’s wait until holidaymakers show up again.
Activities are planned to resume from mid-June, but all rely on whether travel restrictions and border rules can be lifted before that. TUI Group’s current liquidity reserves should allow another three to four months of survival amidst business shutdowns.
TUI Group was under pressure in Q1 due to the grounded 737Max and unfavourable FX. Now the group sees a very supportive summer trading, despite 737Max’s prolonged grounding, benefiting from the bankruptcy of Thomas Cook and the boosted demand for travel in Europe following the coronavirus outbreak in Asia.
TUI Group has sold its subsidiary Hapag-Lloyd Cruises to its 50/50 JV with Royal Caribbean Cruises for an EV of €1.2bn (no net debt communicated). It is set to cash in €700m and does not plan to share this with shareholders.
TUI has announced that TUI Cruises, a 50% JV with Royal Caribbean (RCL), is to acquire Hapag Lloyd Cruises, TUI’s wholly owned luxury and expedition cruise brand, for €1.2bn on a cash and debt-free basis. The transaction, which is expected to complete later this year, improves the group’s (on) balance sheet metrics and supports our thesis that the current price is failing to reflect the value of its cruise and hotel assets
TUI’s annual results for the year to September brought some relief, after what has been a difficult year for the industry. Operating profit was slightly above expectations (and broadly flat on an underlying basis), profit guidance points to year-on-year growth in FY2020 and current trading (especially in the UK) is reassuring. Somewhat offsetting this, the dividend reset was a disappointment, with the ongoing airline replacement programme (as it moves from an operating leased to owned model) continuing to expand debt metrics, and the timing of the 737-Max return remains unclear. Even so, on just 11x forward earnings, we would focus on the long-term value particularly in the company’s hotel and cruise operations. BUY.
Largely impacted by the 737Max grounding, TUI reported frustrating results in FY19. The forecasts also have many uncertainties, despite the healthy momentum in the core holiday businesses.
Our previous short report included a comment on TUI’s shareholding structure which needs to be clarified as any discussion about shareholding in a pre-Brexit context is bound to be a complex one.
Our meeting with TUI’s IR has confirmed our positive view of the stock on fundamentals; however, numerous uncertainties related to Brexit and B737 MAX are making us flinch.
2019 has proven a difficult year for TUI, with a tough trading backdrop in its Markets & Airlines segment, coupled with the grounding of the Boeing 737-Max, leaving full year earnings (we forecast €0.87 per share) back down to 2016 levels. Operating profit from this channel is estimated to have fallen by some €500m during the last two years masking continued progress in higher quality Holiday Experiences, where the contribution is estimated to have more than doubled to over €1 per share since 2016. With 22m customers and £10bn of revenue, is the demise of Thomas Cook a game changer? At the very least, tighter market conditions, coupled with the unwinding of 737-Max costs, supports a recovery in profitability going forward. We do not believe that this opportunity is being reflected in the current valuation (12x 2019F EPS), with the higher quality cruise and hotels worth c1,150p per share alone. A full recovery in Markets & Airline (improving earnings to c€1.50 per share) increasing fair value to near 1,600p per share.
TUI has announced this morning that the closing of its summer trading is coming out in line with expectations, supported by the solid performance in both Hotels and Cruises, along with the significantly improved summer bookings. Therefore, the group has reiterated its FY19 EBITA guidance. Although we believe that TCG’s collapse could benefit TUI and certain European short-haul airlines, the collapse has also sounded the alarm bell for the entire traditional travel services industry.
As expected, the group’s operating profit has continued to be impacted by the weak volume in tour operator activity and the B737 MAX grounding. However, the Hotels and Cruises businesses continued to perform well, benefiting from the diversification of product and locations. The group has maintained its FY 19 guidance.
After two consecutive profit warnings due to the 737 MAX grounding and a tough pricing environment resulting from the summer heatwave in 2018, the weak Q2 19 figures were quite in line with expectations.
Unlike its main peer TCG, TUI has continued to benefit from its overall integrated model. The group finished the year with solid figures above guidance and in line with the market’s expectations. The weak performance in the late-booking market in northern Europe due to the warmer summer has been fully offset by the continued strong demand for hotel and club activities, along with solid growth momentum in the cruise business.
TUI reported a mixed set of Q3 figures with revenue growth above consensus expectations and margins under pressure due to cost inflation in the UK. Despite the challenging market conditions this year, the continuing strong demand in the Cruise business and increasing additional capacity offer a better mid-term outlook.
Due to a change in sector focus Cenkos Securities plc has suspended coverage of the following stocks (see table 1). Our previous recommendation and forecasts can no longer be relied upon. Please contact Cenkos for further information.
TUI CCL CPG DOM GNK JDW JE/ MARS MERL MAB FLTR PTEC RTN TCG WTB WMH IHG SSPG
Q2 18 revenue was up +6.3% to €3.3bn and the underlying EBITA loss has improved from €157m to €134m, both broadly in line with consensus and our expectations. Management reiterated 2018 guidance: • Revenue growth at c. +3% (lfl, CER); • Underlying EBITA to grow at least 10%.
TUI Group Flash : Q1 trading supports FY expectations
TUI AG Flash : FY17 EBITA & FY18 outlook in-line. Better net interest guidance
TUI AG : FY17 EBITA & FY18 outlook in-line. Better net interest guidance (13-Dec-2017)
Q4 underlying EBITA was in line. TUI released guidance of underlying EBITA 2018 growing at least 10%, in line with the medium-term targets, and extended its expectation of an EBITA CAGR of at least 10% until 2020 (from 2019). Although we may slightly increase our estimates, all in all TUI looks well valued.
The company confirmed its guidance of at least 10% EBITA growth in 2016-17, broadly in line with consensus estimates. The bookings for future seasons are consistent with TUI’s expectations.
Q3 revenue stood at €4.8bn (+13% yoy). The underlying EBITA came in at €236m (+20%). The company confirmed its guidance of at least 10% EBITA growth in 2016-17 and at least 10% CAGR for 2018-19. On the other hand, TUI now expects turnover growth of above +3% (vs. c.+3% previously).
Interims confirm modest profit growth in H1 but solid bookings for peak Summer trading (revenue +9%), with FY outlook reiterated. No change to estimates expected, or much share price response. Our SELL rating reflects concern over increasingly capital intensity to support growth, and the impact for ROCE. Presentation 9:45am.
Summer bookings +4% with pricing +5% in Source Markets is a solid position for his time of the year (programme 48% sold), whilst Hotels & Resorts are trading well overall and new ships drive continued Cruise growth. FY17 guidance reiterated for underlying EBITA growth of at least 10%. With complicated hotel/cruise ownership, following the cash is paramount, and FCF is weak, not covering the dividend. The valuation looks vulnerable to us, not heeding increased capital intensity, hence our SELL rating – the catalyst being ROCE rolling over, which we continue to monitor closely.
Summer bookings +4% with pricing +5% is a solid position for this time of the year (programme 35% sold) although exuberant early UK bookings have tapered rather. The seasonal Q1 loss has narrowed and management reiterates FY17 guidance for underlying EBITA growth of at least 10%. The sale of Travelopia is confirmed for €381m, perhaps a touch light at 7.7x trailing EBITDA. With complicated hotel/cruise ownership, following the cash is paramount, and FCF is weak, not covering the dividend. The valuation looks vulnerable to us, not heeding increased capital intensity, hence our SELL rating.
TUI Group has released a Pre-Close Trading Update for the twelve months ending 30 September 2016 (which will be published on 8 December 2016). The performance is better than expected with very good developments in the UK and in Cruises. The guidance for the full-year results is now for 12-13% growth in underlying EBITA (10% previously).
TUI Group posted positive H1 16 figures, in line with our expectations. The FY16 guidance was maintained (+10% in underlying EBITA, +10% underlying EBITA CAGR over 2017-18). Sales rose by 2.7% lfl while the seasonal operating loss narrowed by 16.3% (underlying EBITA at €237m). Summer 16 trading in line with expectations A strong UK market but Turkey has subdued the Nordic and the German markets Trends pointed to a 1% and 2% rise in bookings and sales respectively (bookings up 8% excluding Turkey), boosted by long-haul hotels (in the Caribbean) and cruises, while short and medium haul growth was fuelled by a strong demand for Spain, Greece and Cyprus. In the Source markets, the strong UK (+7% in bookings, 65% of the programme sold, ahead of the previous year) helped the Northern Region to deliver broadly flat performances. The UK benefited from a strong long-haul programme (Mexico, Dominican Republic and Jamaica being the most popular destinations) and the addition to the fleet of TUI Discovery. The Nordic market (-4% in sales, -9% in bookings) was penalised by the lower demand for Turkey (c.20% of Nordic customers in Summer 15), impacting sharply the trading (bookings up 12% excluding Turkey). A deterioration was seen in Central Europe, which was penalised by the tough German market (60% of the programme sold, sales and bookings down 2% and 3% respectively) which is being restructured and which suffered from a lower demand for Turkey. Western Europe also showed lower performances due to less demand for North Africa and the closure of Brussels airport, despite some improvements seen in the French market. Popular Caribbean and Mediterranean Coast: a strong support to Hotels & Resorts’ occupancy The Hotels & Resorts business experienced robust performances (€84m of EBITA vs €56m in H1 15, +2% in capacity, +4% in occupancy, +8% in average price/ bed). RIU was a strong support, reporting a 2% rise in capacity, 4% rise in occupancy and an 8% jump in price/ bed, reflecting its strong exposure to the popular Caribbean (44% of hotels in portfolio) and the Western Mediterranean region (28%). Robinson has, however, felt the pain of the under-occupancy costs in Tunisia (15% of hotels located in North Africa) and the anticipated lower demand for Turkey. The Cruises segment (€40m of EBITA vs €18m in H1 15, including profits from the JV TUI Cruises) benefited from the strong start of Mein Schiff 5 in July 2016 (booked load factor of 85% in H1 16) launched in June 2015 and the refinancing of Europa 2 (€5m benefit). The Specialist Group posted a €18m EBITA loss (flat yoy), which was contained by the exclusion of PEAK losses in 2014/15 (exit from the strategic venture in Summer 15).
A strategic move, above all TUI Group announced the sale of its platform company, the Hotelbeds Group for €1,191m, to the private equity house Cinven. The disposal was on target by the TUI Group which had already announced a carve-out of the business as part of its FY15 results for strategic reasons (different business models and strategies between the online platform and TUI’s Tourism business). TUI Group will remain focused on hotels and cruise ships while cutting back the online booking operations which proved difficult in the light of the hefty competitors including Booking.com or Expedia. Proceeds will be dedicated to investing in future growth opportunities and to strengthen TUI’s balance sheet. The disposal is due to be completed by the end of September 2016. The growth potential of the business is behind the fair transaction multiple The Hotelbeds Group offers hotel rooms to c.31k B2B online and traditional travel agencies and airlines, benefiting from c.72k hotels in its catalogue. The deal highlights a P/EBITDA multiple of 17.3x which reflects the strong trading which characterised the business in FY15. The division recorded a 26% and 18% rise in TTV (Total Transaction Value) and room nights respectively in FY15 and showed €1,059m of sales and €69m of underlying EBITDA. The Hotelbeds Group has a limited 6% market share, but it stands as a scalable business within a very scattered and growing market which offers consolidation potential.
TUI Group’s Q3 15 results revealed a strong growth in underlying EBITA (+18% yoy excluding Easter's timing and FX) despite headwinds from Tunisia (terrorist attacks in June, €10m impact on EBITA in Q3) and the continuing uncertainties in Greece (macro and political issues). However, the group warned about €25m of fallouts in the Q4 15 earnings. Travel warnings have forced the group to suspend its holiday programme to Tunisia which has been redirected into alternative destinations. Growth seen in the Source Markets operations for summer 2015 (+1% in bookings, +2% in prices) was driven by a strong UK market which showed improved load factors and margins and which made up for the highly competitive German market. The latter forced TUI Group to endorse an investment push in distribution as a response to continued margin pressure. Western Europe suffered from a tough French market, despite continuing restructuring measures, and which was impacted by continued reluctance towards North Africa while Belgium was penalised by the delay of an aircraft in entering service (€4m impact). Hotels & Resorts (+€22m in underlying EBITA in Q3) were fuelled by the strong RIU hotels (revenue/bed +15% yoy) which experienced popular Caribbean and long-haul destinations. Robinson increased capacities by 4% yoy in Q3 (opening of new clubs) while Iberotel showed a 10% rise in revenue/bed, partly attributable to an improvement in Egypt. Hotelbeds delivered €6m of EBITA improvement resulting from a 20% rise in transaction value. Cruises recorded a €21m rise in EBITA, benefiting from the ownership of Europa 2 (formerly owned, €4m impact) along with the contribution of the newly-launched Mein Schiff 4 (in June 2015, Mein Schiff 5 is due to be on sale in 2016 with strong bookings for next year so far) which contributed to €7m of incremental EBITA (out of the expected €25-30m per year). The turnaround of Hapag-Lloyd Kreuzfahrten is also paying off with a €10m EBITA improvement yoy backed by sustained bookings (yields stand above €500/bed/night).
Our positive sentiment on the stock has been confirmed by the H1 15 figures posted last month. The summer 2015 trends were encouraging (+2% in bookings, +1% in ASP) with a strong UK (+6% in bookings ahead of the 4% rise in capacity, flat prices) and Benelux (+2% in sales, despite a challenging French market, particularly to destinations in North Africa). Unique offerings confirmed their success with +5% in bookings across all source markets (up to +17% in Germany). Source markets improved its operating loss by €6m on the back of strong Northern and Western regions which partly offset the dull Central region, hampered by margin pressures in the Canaries. Cruises experienced a €13m rise in profitability (€29m of EBITA, excl. financing for Europa), driven by the launch of Mein Schiff 4 in June for the TUI Cruises division (50/50 JV held with the US shipping company Royal Caribbean Cruises) while Hapag-Llyod Kreuzfahrten (100% held by TUI Group) was announced as on track to reach break-even in FY15 helped by the acquisition of the cruise ship Europa 2 (which is expected to bring c.€20m of incremental EBITA based on full-year operations). The Accommodation wholesaler division (to become ‘Hotelbeds Group’ under the group’s new structure) has also reported a 28% rise in Total Transaction Value for summer 2015. The group’s underlying operating loss was reduced by 14% LFL to €306m. The group reiterated its FY15 guidance of 2-4% of sales growth and 10-15% growth of underlying EBITA.
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