Thomas Cook shareholders to receive first pay-out for five years

Thomas Cook will make a dividend payment for the first time for five years despite a drop in profits for the full year to the end of September.

Overall, the Group made a post-tax profit of £9 million, down £10 million on 2015, which Thomas Cook said was in line with third quarter expectations.

It said revenue was maintained and the impact of a lack of bookings to Turkey was offset by its shift to offer alternative destinations and currency translations.

An 80 basis point rise in gross margin to 23.4% reflected its improved holiday offering, said the Group.

The underlying earnings before interest and tax was £308 million, just £2 million less than last year.

In the UK, the Group achieved record underlying margins of 6.4% and earnings grew by £33 million to £152 million, but its German airline Condor slipped £10 million into the red after ‘a difficult year’.

Cook’s net debt rose £1 million to £129 million, but it said this represented a £56 million improvement on a  like-for-like basis.

It has recommended a dividend of 0.5p per share.

Chief executive Peter Fankhauser said: "In what’s been a difficult year for tourism, I’m pleased with the progress that we’ve made at Thomas Cook.

"The early actions we took to shift our holiday programme into the Western Mediterranean and long haul, together with the benefits of a stronger Euro, helped us to maintain revenue at Group level.

"Additionally, a focus on holidays to our own-brand and partner hotels delivered record profit margins in our UK and Northern European businesses. Underlying operating profit for the group was £308 million. This reflects the decline in customer demand for Turkey, which impacted Condor in particular, and the effect on our Belgian business of the Brussels attacks.

"Meanwhile, we’ve made big strides towards our target to put the customer back at the heart of the business. Our strategy is clear: to deliver sustainable growth by giving our customers great holidays which inspire them to come back to Thomas Cook and recommend us to their family and friends. This renewed focus on quality and service delivered a six-point increase in customer satisfaction in summer 2016 telling us that the changes we’re making are having an impact where it matters most.

"Right across our business we’re making customers’ experience of our holidays better. By focusing on fewer hotels, we can have a bigger influence on quality and service, whether that’s a promise to fix any issues within 24 hours or the reassurance of regular checks on health and safety standards.

"We’re also building a stronger portfolio of own-brand hotels, with the aim of increasing the proportion that we manage ourselves. This will enable us to offer holidays that are unique to Thomas Cook and to attract a new generation who might have thought a package holiday wasn’t for them. We’re building momentum with 14 new hotels in the pipeline to open in the next two years, including the roll-out of Casa Cook into Kos and Mallorca and a new Ocean Beach Club in Cyprus.

"Our renewed focus on the customer has breathed new energy into the business and I’m proud of the way that our people, in our markets and in resort, have embraced the challenge. It is these efforts to create lifelong advocates for Thomas Cook that will generate greatest value in the future.

"Given the environment, the Board’s recommendation to pay a dividend, our first in five years, reflects confidence in the strategy and the opportunity for sustainable, profitable growth.

"We’re taking a cautious approach to the year ahead. We’ve had an encouraging start to bookings for Summer 2017 in our key markets, but it is early days. In addition, we are addressing the decline in Condor’s profitability with actions that we expect to have a positive impact in the second half of the year. Overall, we are confident that our strategy for profitable growth, focusing on improving our holidays for customers, will help us to achieve a full year operating result in line with current market expectations."