Hanover, 12 February 2019

TUI Group: 1. quarter of financial year 2019 in line with our expectations: Turnover and customer volumes up, underlying EBITA down year-on-year1

  • Q1 2019: Underlying EBITA -83.6 million euros (previous year -36.7 million euros)
  • Group turnover grows by 4.4 per cent to 3.70 billion euros
  • Customer volumes across all markets climb by 1.2 per cent to 3.7 million
  • Sector challenges continue in particular in the traditional tour operating business (Markets & Airlines)
  • Holiday Experiences segment with Hotels & Resorts, Cruises and Destination Experiences delivers continued strong operational performance
  • Adjusted guidance for full year 2019: TUI expects its underlying earnings to be broadly stable based on constant currency compared with record year 20182
  • CEO Fritz Joussen: “Global trends for tourism remain intact. TUI is financially strong with a sound strategic and operational positioning. We are continuing to deliver our transformation as a digital platform company.“

After the record performance delivered in 2018, TUI Group’s start to the new financial year 2019 was in line with its own expectations: turnover growth, volume growth, but lower margins. At -83.6 million euros, the seasonal underlying EBITA loss increased year-on-year in Q1 2019 (previous year -36,7 million euros). The main reasons for the decline in earnings included the unusually long and hot summer in Northern Europe. In addition, strong bookings to Turkey and North Africa caused overcapacity in other destinations such as the Canary Islands, which went hand in hand with lower margins in the tour operating business. At the same time, the British pound remained weak as a result of the Brexit decision. The consistent transformation of TUI launched in 2014 involving a realignment to focus on the Group’s own holiday experiences (Holiday Experiences segment) – the hotel companies, cruise lines, activities and services in the destinations – has proven to be the right approach. These businesses now account for nearly 70 per cent of the Group’s result. The growth strategy for this segment remains intact. Traditional tour operators and airlines tend to be more vulnerable to external factors. “The overall trends for our sector are intact. Travel and tourism remain a growth market. Customers continue to travel, but they are currently resistant to increases in price. During this consolidation phase in our sector, it is particularly important to adequately participate in market growth. TUI has a good strategic and operational positioning, and the transformation of the Group as a digital platform company is progressing. We have paved the way with our investments in hotels and ships, our IT and digital strategy and the acquisition of the Italian digital platform Musement in 2018,” said Fritz Joussen, CEO TUI Group, at the presentation of the Group’s Q1 results on the day of the Annual General Meeting held in Hanover.

Overview Q1 2019

In the period under review (1 October to 31 December 2018), TUI Group delivered turnover growth of 4.4 per cent to 3.70 billion euros (previous year 3.55 billion euros). At -83.6 million euros underlying EBITA, the seasonal loss widened year-on-year (-36.7 million euros). Customer volumes grew by 1.2 per cent versus the prior year.

The Holiday Experiences segment with Hotels & Resorts, Cruises and Destination Experiences, which accounted for around 70 per cent of the Group’s operating result in the completed financial year, again delivered a strong operational performance in the reporting period. At 111.0 million euros, the segment’s underlying EBITA was down year-on-year (125.9 million euros) on a constant currency basis. However, a one-off gain on disposals worth 38.0 million euros had been carried in the prior year. On a like-for-like basis, underlying EBITA was up year-on-year.

At -177.7 million euros at constant currency, the Markets & Airlines segment recorded an increase in the seasonal loss, customary in the tour operating business, in Q1 versus the prior year’s comparative (-140.8 million euros).

Overview of the segments – Holiday Experiences

Hotels & Resorts: strong operational performance, in particular in Turkey and North Africa
TUI Group’s successful transformation launched in 2014 creating a focus on hotels continues to pay off: In Q1 2019, Hotels & Resorts improved its operating result by 27.5 per cent to 68.7 million euros on a like-for-like basis. Including last year’s 38 million euro gain on three hotel disposals in Riu carried in Q1 2018, underlying EBITA by Hotels & Resorts was 25.2 per cent down year-on-year (91.9 million euros). In the period under review, the segment achieved an increase in average hotel occupancy and average revenues per bed. Since the merger between TUI AG and TUI Travel at the end of 2014, a total of 57 new hotels were opened.

  • Underlying EBITA (on a like-for-like basis): +27.5 per cent to 68.7 million euros (previous year 53.9 million euros)
  • Underlying EBITA (including prior-year special gain on disposal): -25.2 per cent to 68.7 million euros (previous year 91.9 million euros)
  • Average revenue per bed: 65 euros (previous year 63 euros)
  • Average occupancy: 76 per cent (previous year 75 per cent)

Cruises: Strong quarter, growth path successfully continued
The Cruises segment continued its growth path. In the period under review, it delivered a significant increase in its underlying result:

  • Underlying EBITA: +25.3 per cent to 47.0 million euros (previous year 37.5 million euros)
  • Average rate per passenger per day:
    • TUI Cruises 149 euros (previous year 149 euros)
    • Marella Cruises 137 GBP (previous year 129 GBP)
    • Hapag-Lloyd Cruises 591 euros (previous year 533 euros)
  • Average occupancy:
    • TUI Cruises 100 per cent (previous year 99 per cent)
    • Marella Cruises 102 per cent (previous year 101 per cent)
    • Hapag-Lloyd Cruises 75 per cent (previous year 76 per cent)

Mein Schiff 2 was launched at the beginning of February 2019. Moreover, Marella Cruises’ fleet in the UK will be complemented by Marella Explorer 2 in summer 2019. In addition, Hapag-Lloyd Cruises will receive two luxury expedition ships in 2019: HANSEATIC nature and HANSEATIC inspiration. HANSEATIC had left the fleet in autumn 2018. The Hamburg-based cruise subsidiary has also announced the sale of its expedition ship BREMEN, due to leave the fleet in May 2021.

Destination Experiences
The TUI Destination Experiences segment is a growth segment, which has been strategically expanded since 2018 through a range of measures including the acquisition of Musement. In the period under review, the segment grew substantially following the acquisitions. The segment delivered a significant increase in the number of activities and excursions sold to 1.3 million (+86 per cent).

  • Underlying EBITA at constant currency: -4.7 million euros (previous year -3.5 million euros)

Markets & Airlines: challenging market environment for traditional tour operators
The Group’s Markets (tour operators) & Airlines segment delivered growth in customer volumes of 1.2 per cent in Q1 2019 and an increase in turnover of 0.8 per cent to 3.06 billion euros (previous year 3.04 billion euros).

  • Underlying EBITA across all regions: -26.5 per cent to -178.1 million euros (previous year -140.8 million euros)
  • Underlying EBITA across all regions on a constant currency basis: -26.2 per cent to -177.7 million euros (previous year -140.8 million euros)

Outlook: bookings broadly in line with previous year, margin performance to fall short of previous year, earnings guidance for full year 2019 was adjusted on 6 February 2019

Current trading for summer 2019 (as at 3 February 2019) is broadly in line with prior year and average selling price is flat year-on-year; however, this does not apply to margins. The market environment for all tour operators remains challenging, as they are simultaneously impacted by several factors:

  • The impact of the unusually long and hot summer 2018, resulting in an increase in the number of late bookings and lower margins in the Markets & Airlines segment.
  • A shift in demand from the western to the eastern Mediterranean, creating overcapacity in other destinations such as the Canary Islands and going hand in hand with lower margins for the Markets & Airlines segment.
  • Moreover, sales of higher-margin products to British customers are adversely affected by the weakness of the British pound.

The Group had previously expected these market challenges to primarily affect the first half (winter) of the financial year. From today’s perspective, however, TUI expects to see additional impacts in the second half of the year (summer) and therefore adjusted earnings guidance for the full year on 6 February 2019. Having previously expected an increase in underlying EBITA of at least 10 per cent on a constant currency basis, TUI now expects its full-year earnings to come in broadly stable versus its record performance delivered in 2018 on a constant currency basis (full year 2018: 1.177 billion3 euros).

All PY reported figures have been adjusted for retrospective application of IFRS 15 (except for the segment cruises)

2 FY18 comparative rebased in December 2018 to € 1,187 m to take into account € 40 m impact for revaluation of Euro loan balances within Turkish Lira entities in FY18, and adjusted further to € 1,177 m for retrospective application of IFRS 15.

3 Rebased to 1.187 billion euros in December 2018 to take into account a negative impact of 40 million euros of the revaluation of euro-denominated loan balances within Turkish hotel entities and to 1.177 billion euros due to the retroactive application of IFRS 15.

About TUI Group

TUI Group is a leading global tourism group and operates worldwide. The Group is headquartered in Germany. TUI shares are listed on the FTSE 250, an index of the London Stock Exchange, on the regulated market of the Hanover Stock Exchange and on the Open Market segment of the Frankfurt Stock Exchange. The TUI Group offers integrated services from a single source for its 21 million customers.

The entire tourism value chain is covered under one roof. This includes over 400 hotels and resorts with premium brands such as RIU, TUI Blue and Robinson and 16 cruise ships, from the MS Europa and the MS Europa 2 in the luxury class and expedition ships to the Mein Schiff fleet of TUI Cruises and cruise ships at Marella Cruises in Great Britain. The Group also includes leading tour operator brands and online marketing platforms across Europe, five airlines with more than 130 modern medium and long-haul aircraft and around 1,200 travel agencies. In addition to expanding its core business with hotels, cruises via successful joint ventures and activities in holiday destinations, TUI is increasingly focusing on the expansion of digital platforms. The Group is transforming itself into a digital company.

Global responsibility for sustainable economic, ecological and social action is at the core of our corporate culture. The TUI Care Foundation, initiated by TUI, focuses on the positive effects of tourism, on education and training and on strengthening environmental and social standards with projects in 25 countries. It thus supports holiday destinations in their development.