- Full year 2014/15: Outperformance of earnings guidance – very successful economic performance despite geopolitical challenges and crises
- Growth in underlying EBITA of +22.9 per cent to 1.069 billion euros (by 15.4 per cent to 1.004 billion euros at constant currency) - Growth drivers are Northern Region, Hotels & Resorts, and Cruises
- Group turnover growth of 8.0 per cent to 20.01 billion euros; up 8.0 per cent (growth of +3.6 per cent to 19.20 billion euros at constant currency)
- Dividend of 0.56 euros proposed to Annual General Meeting
- Outlook for 2015/16: At least 10 per cent* growth in underlying EBITA / Turnover growth of at least three per cent*
- Joussen: “First year post-merger with very successful economic performance – ambitious targets outperformed. Strategy to deliver sustainable profitable growth confirmed.”
The TUI Group has outperformed its earnings guidance for the full financial year. “The first year following the restructuring of the TUI Group was completed with a very strong set of results,” said Fritz Joussen, CEO TUI Group. The operating result (underlying EBITA) climbed by 22.9 per cent to 1.069 billion euros (previous year 870 million euros). It amounted to 1.004 billion euros on a constant currency basis, up 15.4 per cent. The results thus also outperformed the announced corridor (12.5 to 15.0 per cent). Growth in Tourism was driven by Northern Region, Hotels & Resorts and Cruises, which achieved substantial earnings growth. The Group implemented the planned value increase based on profitable growth: Group turnover rose by 8.0 per cent to 20.01 billion euros (previous year 18.54 billion euros). At constant currency, it grew by 3.6 per cent to 19.20 billion euros. Due to the very strong operating performance, lower interest payments and positive tax effects, Group profit before minority interests and discontinued operations grew by 56.7 per cent year-on-year to 448.4 million euros (previous year 286.2 million euros). Fritz Joussen: “With the support of our 76,000 employees in 130 countries, we implemented our post-merger integration and delivered growth despite various geopolitical challenges. We have delivered on our promises, outperforming our ambitious targets. Our integrated business model and the new structures have strengthened our Group and accelerated growth. We are headed in the right direction. I am confident that we will continue to deliver sustainable profitable growth for our Group. This will create value for our shareholders and our employees. TUI today is in very good shape. We are the global market leader in tourism and remain set for growth.”
Tourism: Northern Region creates positive overall performance
In Tourism, which comprises all source markets, the enlarged Hotels & Resorts operations and Cruises since the end of the first half of financial year 2014/15, growth was driven by Northern Region, Hotels & Resorts and Cruises. Northern Region (UK & Ireland, Nordics, Canada, Russia) benefited from a very strong trading performance in source market UK & Ireland, in spite of the tragic events in Tunisia in the summer. Customer volumes rose by 5 per cent in the period under review. The Nordic countries also contributed to the positive development, achieving improvements in margins and operational efficiency.
By contrast, the performance of Central Region (Germany, Austria, Switzerland, Poland) was adversely impacted by competitive market conditions in Germany, higher margin pressure, further investment in distribution and additional pension charges at TUIfly in the final quarter. The performance of Western Region (Netherlands, Belgium, France) was impacted by weak demand in France for northern African destinations. Moreover, rebranding costs were incurred in the Netherlands to launch the TUI brand. The TUI Netherlands team implemented the brand migration project very swiftly and successfully. Overall, the operating result of Western Region decreased year-on-year. However, taken together, the Regions reported considerable improvements in results: Turnover grew by 6.3 per cent to 15.52 billion euros (previous year 14.60 billion euros), with underlying EBITA climbing by 9.3 per cent to 702.6 million euros (previous year 643.0 million euros).
Hotels & Resorts: Robust growth pillar – operating result +15.7%
The strong performance of the Hotels & Resorts segment was again driven by core brands RIU and Robinson. RIU hotels, in particular, achieved increases in occupancy and average rates, despite the impact of the tragic events in Tunisia. Underlying EBITA by the segment rose to 234.6 million* euros (previous year 202.8 million euros) in the period under review. This is an increase of 15.7 per cent.
Cruises: Eightfold increase in underlying EBITA, Hapag-Lloyd completes turnaround
At the same time, the activities of the Cruises segment also generated very significant earnings growth (+70.8 million euros). TUI Cruises completed the first full year of operation of ‘Mein Schiff 3’. In June 2015, the newbuild ‘Mein Schiff 4’ was added to the fleet. Hapag-Lloyd Cruises completed its turnaround in the period under review, achieving increases in its average rate, occupancy and operating result. Cruises generated underlying EBITA of 80.5 million euros overall (previous year 9.7 million euros). Cruises remains a growth segment for the TUI Group. In the current financial year, ‘Mein Schiff 5’ will be delivered to TUI Cruises, and ‘Mein Schiff 6’ to ‘Mein Schiff 8’ will be launched in the period from 2017 to 2019.
oneTUI strategy programme successfully implemented - Merger synergies being leveraged
We also achieved the targets of the oneTUI strategy programme in financial year 2014/15. Fritz Joussen had launched the programme when he took over as CEO of TUI AG in the spring of 2013. OneTUI defined clearly stated goals for the Group in order to increase the Group’s value and create a sustainable dividend policy for the Group. In launching oneTUI, Joussen had announced the target of increasing the underlying EBITA to around one billion euros by the end of financial year 2014/15. This target was achieved and outperformed. Based on the strong development of earnings and the Group’s profitable growth, the target of a continuous and sustainable dividend policy was also achieved.
The synergies announced at the end of 2014 in the framework of the merger are successfully being delivered step by step. Apart from reducing the corporate centre costs, hotel occupancy improved by 1.7 percentage points. Moreover, the underlying effective tax rate declined to 25 per cent. The Group also carried nearly half of the merger-related one-off costs in the period under review.
Dividend: Executive Board and Supervisory Board propose 0.56 euros per share
At the time of the merger between TUI AG and TUI Travel PLC, the Executive Board had announced that the dividend was to grow in line with the growth of the new Group’s underlying EBITA at constant currency plus an additional 10 per cent to be paid on the base dividend in respect of the completed and the current financial years. The dividend proposal is based on the dividend last paid by TUI Travel before the merger, accounting for 0.445 euros per TUI AG share. The strong growth in earnings of 15.4 per cent and the additional increase of 10 percent on the base dividend thus result in a dividend of 0.56 euros. The Executive Board and the Supervisory Board will submit a corresponding dividend proposal to the Annual General Meeting in February 2016.
Hotelbeds Group: Carve-out of Destination Services almost completed – Options for the future of the business examined
Bedbank market leader Hotelbeds Group increased its underlying EBITA in financial year 2014/15. The operating result of the segment including Destination Services rose by 14.8 per cent to 117 million euros (previous year 102 million euros). The total transaction volume (TTV) of the bedbank climbed by 26.2 per cent year-on-year. Turnover improved by 22.7 per cent to 1.22 billion euros (previous year 999.7 million euros). The Hotelbeds Group is managed as an independent company outside core business Tourism in order to leverage the full potential of the business. TUI is also carrying out a strategic review to maximise the further development of the Hotelbeds Group. Bank of America/Merrill Lynch and Deutsche Bank have been mandated in this regard.
In Q1 2015/16, the carve-out of Destination Services from the Hotelbeds Group and its integration in TUI’s core business Tourism was initiated. The process is expected to be completed at the end of 2015/beginning of 2016. In financial year 2014/15, Destination Services contributed around 40 per cent to the underlying EBITA of the Hotelbeds Group.
TUI Group outlook: On track for sustainable growth; growth in underlying EBITA of at least +10 per cent*; turnover growth of at least +3 per cent*
The Group is on track to sustain its profitable growth in the long term, based on the integrated business model and the successful, faster-than-expected implementation of post-merger integration. In the current financial year 2015/16, the TUI Group’s Executive Board expects underlying EBITA to grow by at least 10 per cent*. Turnover is expected to climb by at least 3 per cent* within the same period of time. The Group also confirmed its medium-term goal of delivering annual underlying EBITA CAGR of at least 10 per cent* until 2017/18.
New performance indicator: Brand growth
In the period under review, TUI and its subsidiaries achieved turnover growth of 3.6* per cent. However, a significant portion of turnover growth is also attributable to TUI’s joint ventures. In future, TUI will therefore also report “Brand turnover”, which will comprise the turnover of TUI Cruises and the source market Canada. The goal is to achieve profitable turnover growth ahead of market growth with the TUI brand. In the current financial year 2015/16, brand growth is to account for a minimum of five per cent.
* at constant currency