Dow Jones received a payment from EQS/DGAP to publish this press
release.
TUI AG (TUI)
TUI AG: Annual Financial Report - Part 1
13-Dec-2018 / 08:00 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
13 December 2018
TUI GROUP
Full year results to 30 September 2018
HIGHLIGHTS
? Fourth consecutive year of double-digit earnings growth post-merger,
with 10.9% increase in underlying EBITA1 and continued strong ROIC
performance.
? TUI's sustained strong performance in a challenging market environment
demonstrates its successful transformation as an integrated provider of
holiday experiences, with strong strategic positioning and double
diversification across destinations and markets.
? Looking ahead, we continue to expect to deliver superior annual earnings
growth with improved seasonality, strong cash conversion and strong ROIC
performance. This will be driven by the benefits of our digitalisation
efforts, efficiency measures and differentiation strategy through the
disciplined expansion of own hotel and cruise offering, plus destination
experience content.
? Based on our growth strategy, we reiterate our guidance of at least 10%
CAGR in underlying EBITA for the three years to FY201,2. In the nearer
term, we expect to deliver at least 10% underlying EBITA growth in
FY191,3, with growth from investments, digitalisation and efficiency, as
well as our double-diversified business model, helping to mitigate market
challenges.
KEY FINANCIALS
Year ended
30
September
EURm 2018 2017 Change Constant
currency
change1
Turnover 19,524 18,535 +5.3% +6.3%
Underlying 1,147 1,102 +4.1% +10.9%
EBITA4
Reported 1,060 1,027 +3.3% +10.4%
EBITA5
Underlying 1.17 1.14 +2.6% +10.5%
earnings
per share6
Earnings 972 1,080 -10.0% -3.7%
before tax7
Group 732 645 +13.6% +22.7%
profit
attributabl
e to
shareholder
s of TUI AG
Leverage 2.7 times 2.5 times -0.2 times n/a
ratio8
Return on 23.0% 23.6% -0.6% points n/a
invested
capital
(ROIC)9
Dividend EUR0.72 EUR0.65 +10.9% n/a
per share
1 Based on constant currency growth
2 Three year CAGR from FY17 base to FY20
3 The FY18 base for underlying EBITA guidance is EUR1,187m, which excludes
EUR40m adverse impact from the revaluation of Euro loan balances in Turkish
hotel entities.
4 Underlying EBITA has been adjusted for gains/losses on disposal of
investments, restructuring costs according to IAS 37, ancillary acquisition
costs, conditional purchase price payments under purchase price allocations,
amortisation of intangibles from purchase price allocations, and other
expenses and income from one-off items
5 Reported EBITA comprises earnings before net interest result, income tax
and impairment of goodwill and excluding the result from the measurement of
interest hedges
6 For calculation of underlying earnings per share please refer to page 39
of the Annual Report
7 For reconciliation of earnings before tax to underlying EBITA, please
refer to page 65 of the Annual Report
8 Leverage ratio is calculated as the ratio of gross debt (including net
pension liabilities and discounted value of operating leases) to reported
EBITDAR
9 ROIC (return on invested capital) is calculated as the ratio of underlying
EBITA to the average for invested interest bearing capital for the Group or
relevant segment
Annual Report and Investor & Analyst Presentation and Webcast
A full copy of our Annual Report can be found on our corporate website:
http://www.tuigroup.com/en-en/investors [1]. A presentation and webcast for
investors and analysts will take place today at 09:30 GMT / 10:30 CET. The
presentation will be made available via our website beforehand. Details of
the webcast, which will be available for replay, will also be available
there.
FY18 RESULTS
? We have delivered a fourth consecutive year of strong earnings growth,
with underlying EBITA increasing to EUR1,147m, up 10.9% on prior year at
constant currency rates. This sustained strong performance demonstrates
TUI's successful transformation as an integrated provider of holiday
experiences, with strong strategic positioning and double diversification
across markets and destinations.
In EURm
Underlying EBITA FY17 1,102
Holiday Experiences +176
Markets & Airlines (formerly Sales & Marketing) -44
All other segments -22
Riu gains on hotel disposals (net of lost earnings) +43
Niki bankruptcy -20
Airline disruption -13
Underlying EBITA FY18 excluding FX translation 1,222
Foreign exchange translation10 -75
Underlying EBITA FY18 1,147
Rebase for Turkish revaluations +40
FY18 rebased for FY19 guidance 1,187
10 Includes EUR40m adverse non-cash impact from the revaluation of Euro loan
balances within Turkish hotel entities. The adverse impact was driven by the
weaker Turkish Lira. The FY18 base for underlying EBITA guidance is
EUR1,187m, which excludes this impact
? The significant growth in underlying EBITA was driven by a strong
Holiday Experiences performance, with continued high demand for our
portfolio of hotels and clubs, cruises and destination experiences.
Markets & Airlines delivered 4.7% growth in customers, further increases
in direct and online distribution, and with all markets now successfully
rebranded as TUI. As previously flagged in our Q3 results and pre-close
trading statement, the ability of Markets & Airlines to outperform was
limited by the prolonged hot weather this Summer in Northern Europe and
significant levels of airline disruption, in what continues to be a
challenging market environment.
Underlying FY18 at FY17 Variance at FY18 at Variance at
EBITA in EURm constant constant actual actual
currency currency rates rates
rates1 rates
Hotels & 494.5 356.5 +138.0 425.7 +69.2
Resorts
Cruises 324.6 255.6 +69.0 324.0 +68.4
Destination 46.9 35.1 +11.8 44.7 +9.6
Experiences
Holiday 866.0 647.2 +218.8 794.4 +147.2
Experiences
Northern 251.1 345.8 -94.7 254.1 -91.7
Region
Central Region 89.4 71.5 +17.9 89.1 +17.6
Western Region 109.3 109.2 +0.1 109.3 +0.1
Markets & 449.8 526.5 -76.7 452.5 -74.0
Airlines
All other -94.1 -71.6 -22.5 -99.9 -28.3
segments
Total TUI 1,221.7 1,102.1 +119.6 1,147.0 +44.9
Group
? Hotels & Resorts delivered strong earnings growth, with segmental ROIC
increasing to 14.5% (versus segmental WACC of 7.9%).
? Our portfolio strategy continues to pay off - the increase in earnings
(excluding net gains on disposals) was driven by a significant
improvement in earnings in our Turkish and North African hotels, as
demand increased significantly, as well as strong demand for Greece and
continued high demand for the Caribbean. Spain remains a key
destination, with demand normalising as expected in FY18.
? Occupancy rate increased from 79% to 83%, and average rate per bed by
2%.
? ROIC increased for the fourth successive year to 14.5%, demonstrating
the attractiveness of our portfolio of hotel and club brands across
multiple destinations, the benefit of having high levels of our own
distribution, and our disciplined approach to investment.
? We have opened 44 hotels since merger. Around 60% of these openings
are lower capital intensity (management contracts and 50% of owned
hotels due to joint venture structures). We remain on track to open
around 60 new hotels by the end of FY19.
? For further commentary on Hotels & Resorts, please see page 68 of the
Annual Report.
? Cruise delivered another year of strong growth, with record ROIC of
22.8% (versus segmental WACC of 6.2%).
? Growth was driven by new ship launches in Germany and UK, with
continued high occupancy and average daily rates across the fleets.
? Average daily rates increased across all three fleets, despite the
increase in capacity, demonstrating the strength of demand for our
brands.
? Segmental ROIC grew to a record 22.8%, reflecting our equity
participation in TUI Cruises as well as strong performances by our
Marella Cruises and Hapag-Lloyd Cruises subsidiaries.
? For further commentary on Cruise, please see page 69 of the Annual
Report.
? Destination Experiences delivered a significant increase in underlying
EBITA, with a strong ROIC of 26%.
? Performance was driven by higher volumes in Turkey, Greece and North
Africa, efficiencies in Spain, Portugal and Greece, and the inclusion of
earnings of Destination Management following completion of the
acquisition from Hotelbeds in August 2018.
? For further commentary on Destination Experiences, please see page 70
of the Annual Report.
? Markets & Airlines (formerly Sales & Marketing) delivered further growth
in customer volumes, as well as growth in earnings in several source
markets, in a challenging market environment.
? Despite the Summer heatwave and airline disruption, we delivered
earnings growth in several source markets, as well as an overall 4.7%
increase in customer volumes.
? Direct and online distribution mix increased to 74% (from 73%) and 48%
(from 46%) respectively, and the TUI rebrand has now been successfully
completed in all relevant markets.
? Continued high net promoter score of 50, demonstrating the strength of
our customer offer and focus on their holiday experience.
? We are focused on delivering further efficiency improvements through
the harmonisation of our three regional businesses, as well as the
benefits of digitalisation. Having successfully delivered the TUI
rebranding, we now have one common Markets & Airlines CEO, and have
identified further potential for harmonisation in business processes and
overheads. In addition, we will continue to expand the synergies from
One Aviation.
? For further commentary on Markets & Airlines please refer to page 70
of the Annual Report.
? The underlying EBITA result for All Other Segments reflects the impact
of a planned airline maintenance event at the start of the year, and an
aircraft towing incident in Q4, both in Corsair.
? Reported EBITA increased significantly, by 10.4% at constant currency
rates, as a result of the strong underlying performance and disciplined
management of separately disclosed items (SDIs). For further detail on
Adjustments, please refer to page 66 of the Annual Report. In order to
deliver further business harmonisation and efficiency in Markets &
Airlines, we expect an elevated level of Adjustments in FY19 of
approximately EUR125m.
? Underlying EPS increased to EUR1.17, or 10.5% growth at constant
currency rates. This was driven by a strong earnings performance, the
effect of more efficient financing, and continued low underlying effective
tax rate of 20%. For the calculation of underlying EPS, please refer to
page 39 of the Annual Report.
? The year on year reduction in EBT relative to the strong EBITA
performance reflects the inclusion in prior year EBT of EUR172m gain on
disposal of shares in Hapag-Lloyd AG, partly offset by lower net financing
costs.
? We operate within a clearly defined and disciplined capital allocation
framework. Our strong cash generation allows us to invest, pay dividends
and strengthen the balance sheet. Since the merger, we have generated
around EUR2 billion of disposal proceeds, which we have reinvested
primarily into our higher margin, lower seasonality and better quality
Holiday Experiences business, with a ROIC hurdle rate for growth
investments of at least 15% on average. We also invest via ring-fenced
joint ventures, make use of highly efficient asset finance and other
finance instruments, as well as more "asset light" hotel management
contracts, to optimise the cash flow available to shareholders. Finally,
we have a clear financial policy to ensure balance sheet stability,
targeting a leverage ratio of 3.0 times to 2.25 times and coverage ratio
of 5.75 times to 6.75 times.
DIVID
We remain committed to delivering attractive returns to our shareholders,
with a proposed dividend which has grown in line with underlying EBITA at
constant currency rates. The Executive Board and the Supervisory Board are
recommending a dividend of 72 cents per share in respect of the financial
year 2018. Subject to approval at the Annual General Meeting on 12 February
2019, shareholders who held relevant shares at close of business on 12
February 2019 will receive the dividend on 15 February 2019 and holders of
depositary instruments will receive the dividend on 26 February 2019.
Looking forward to FY19, we remain committed to growing dividend per share
in line with underlying EBITA1,3.
FUEL/FOREIGN EXCHANGE
Our strategy of hedging the majority of our jet fuel and currency
requirements for future seasons, as detailed below, remains unchanged. This
gives us increased certainty of costs when planning capacity and pricing.
The following table shows the percentage of our forecast requirement that is
currently hedged for Euros, US Dollars and jet fuel for our Markets, which
account for over 90% of our Group currency and fuel exposure.
Winter 2018/19 Summer 2019 Winter 2019/20
Euro 96% 72% 38%
US Dollars 90% 76% 42%
Jet Fuel 92% 87% 56%
As at 6 December 2018
OUTLOOK AND EXPECTED DEVELOPMENT
In FY18 we delivered the fourth consecutive year of double digit earnings
growth since the merger, with a continued strong ROIC performance. TUI's
sustained strong performance in a challenging market environment
demonstrates its successful transformation as an integrated provider of
holiday experiences, with strong strategic positioning and diversification
across destinations and markets. Looking ahead, we expect growth to
continue, driven by the benefits of our digitalisation efforts, efficiency
measures and differentiation strategy through the disciplined expansion of
our own hotel, cruise and destination experience content.
In Hotels & Resorts, our diversified portfolio means we will continue to
benefit from growth in demand for Turkey and North Africa, with a
normalisation in demand for Spain, including the Canaries. Demand also
remains strong for our year round destinations such as Mexico, the Caribbean
and Cape Verde. We will continue to develop our portfolio of destinations,
with a strong pipeline of own hotel openings for FY19 and beyond, and we
remain on track to open approximately 60 additional hotels since merger by
the end of FY19.
We will also launch three ships for our cruise brands in FY19. Bookings for
the new ships and the existing fleet are progressing well, with a continued
strong yield performance. Two ships exited our fleets (Marella Spirit and
Hapag-Lloyd Cruises' Hanseatic) in Autumn 2018. Five further new builds are
on order for TUI Cruises and Hapag-Lloyd Cruises, for delivery between end
of 2019 and FY26, as we continue to build on our leadership position in the
German-speaking cruise market.
We are re-shaping our Destination Experiences business based on the recent
acquisitions of Destination Management and Musement, from 23 to 49 countries
and from an off-line to fully digitalised business. We are also developing
our tailored TUI Tours offer. In order to achieve these strategic goals,
some additional investment into the digital platform (as operating cost)
will be required in FY19.
In Markets & Airlines, we are focussed on delivering business harmonisation,
especially in terms of business processes, overheads and aviation, and the
benefits of digitalisation. We expect the challenging market environment to
continue, and that this will be evident in our Q1/Q2 FY19 results. This
reinforces the importance of TUI's transformation away from the traditional
tour operator space, to become an integrated provider of holiday
experiences, and which helps to mitigate continued market challenges.
Currently Winter 2018/19 bookings are down 1% versus prior year and average
selling prices are down 2% versus prior year, with 60% of the programme
sold, two percentage points behind prior year11. As outlined above, the
programme to North Africa and Turkey has been expanded, offset by a
reduction in the programme to the Canaries. Flight capacity from Nordics has
been proactively reduced, with the planned closure of three airport bases as
we continue to drive efficiency in our airlines, and also following the
prolonged hot weather this Summer which has continued to subdue demand. We
have also reduced our flight capacity from Germany, as we continue to
improve our flight plan efficiency following the bankruptcies of Air Berlin
and Niki. Bookings for next Summer 2019 are at a very early stage. Only the
UK is more than 20% booked, and at this stage bookings are up 5% with
average selling price down 1%.
11 These statistics are up to 2 December 2018, shown on a constant currency
basis and relate to all customers whether risk or non-risk
With regard to the UK's exit from the EU in 2019, the main concern remains
whether our airlines will continue to have access to EU airspace. We will
continue to address the importance of there being a special agreement for
aviation to protect consumer choice with the relevant UK and EU ministers
and officials, and are in regular exchange with relevant regulatory
authorities. We are currently developing scenarios and mitigating strategies
for various outcomes, including a "hard Brexit", depending on the political
negotiations, with a focus to alleviate any potential impacts from Brexit
for the Group.
Based on our growth strategy, we reiterate our guidance of at least 10% CAGR
in underlying EBITA for the three years to FY201,2. In the nearer term, we
expect to deliver at least 10% underlying EBITA growth in FY191,3, with
growth from investments, digitalisation and efficiency, as well as our
double-diversified business model, helping to mitigate market challenges.
Further detail on FY19 expected development is set out in the table below.
FY19 guidance1 FY18
Turnover12 Around 3% growth EUR19,524m
Underlying EBITA At least 10% growth EUR1,187m1
rebased13 3
Adjustments EUR125m EUR87m
Net capex & EUR1.0bn-1.2bn EUR0.8bn
investments14
Leverage ratio 3.0 times to 2.25 times 2.7 times
Dividend per share Growth in line with EUR0.72
underlying EBITA rebased13
12 Excluding cost inflation relating to currency movements
13 Rebased to take into account EUR40m impact of revaluation of Euro loan
balances within Turkish Lira entities in FY18
14 Including PDPs, excluding aircraft assets financed by debt or finance
leases
ANNUAL GENERAL MEETING AND Q1 FY19
TUI Group will hold its Annual General Meeting and issue its Q1 FY19 Report
on 12 February 2019.
ANALYST & INVESTOR ENQUIRIES
Peter Krueger, Member of the Group Tel: +49 (0)511 566 1440
Executive Committee, Group Director of
Strategy, M&A and Investor Relations
Contacts for Analysts and Investors in UK, Ireland and Americas
Sarah Coomes, Head of Investor Tel: +44 (0)1293 645 827
Relations
Hazel Chung, Senior Investor Relations Tel: +44 (0)1293 645 823
Manager
Contacts for Analysts and Investors in Continental Europe,
Middle East and Asia
Nicola Gehrt, Head of Investor Tel: +49 (0)511 566 1435
Relations
Ina Klose, Senior Investor Relations Tel: +49 (0)511 566 1318
Manager
Jessica Blinne, Junior Investor Tel: +49 (0)511 566 1425
Relations Manager
ISIN: DE000TUAG000
Category Code: ACS
TIDM: TUI
LEI Code: 529900SL2WSPV293B552
Sequence No.: 6873
EQS News ID: 757475
End of Announcement EQS News Service
1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=8e080343e3e3e5bb48431aa13ff7cbdd&application_id=757475&site_id=vwd&application_name=news
(END) Dow Jones Newswires
December 13, 2018 02:01 ET (07:01 GMT)
Tui (LSE:TUI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Tui (LSE:TUI)
Historical Stock Chart
From Jul 2023 to Jul 2024
