TUI announces record UK profit
TUI Travel has announced a record annual operating profit in the UK of £197 million, up from £149 million last year, and announced it is outperforming the market for summer 2013 with a 12% increase in bookings.
Its operating profit margin for the year to the end of September was 5.4%, up from 4.2% in the previous 12 months.
Overall, Europe’s largest tour operator saw operating profits rise 4% to £490m, even though revenue fell 2% to £14.46 billion. Profit before tax was up 8% to £360 million.
Chief executive Peter Long said: "The year has been one of many successes.
"We have delivered record Group profits while the UK achieved outstanding results both in terms of profit and margin all against a backdrop of continued economic uncertainty.
"Our proven strategy continues to evolve and drive strong trading momentum throughout the Group. Overall, with the exception of France, trading for both Winter 2012/13 and Summer 2013 is very encouraging."
Winter bookings in the UK are up 1% with no increase in capacity year on year, and the average selling price is up 4%. Sales of unique holidays are up 5% and account for 78% of all sales. In total, TUI has sold 49% of its winter holidays so far, with 44% of sales coming online.
For next summer, UK bookings are up 12% against a 3% increase in capacity, and 20% of total capacity has been sold to date. "We are significantly outperforming a flat market," it said. Average selling prices are up 3% and sales of unique holidays are up 18% and now account for 83% of holidays sold.
TUI said overall trading remains positive in all major markets, with the exception of France. "Strong trading momentum from summer 2012 has continued into winter 2012/13, particularly in the UK and the Nordics, where our unique holidays are selling well and growth in our direct distribution channels continues to have a positive effect on margins," it said.
"While still early in the booking cycle, the summer 2013 programme in the UK, Nordics and Germany is showing signs of growth with additional capacity in the UK and Nordics.
"Our strategy of increasing our unique holiday offering, selling through direct distribution channels with a focus on online and driving continued operational efficiency throughout the business is paying dividends."
The company said it had the ability to deliver an underlying operating profit of between 7% and 10% over the next five years by growing customer numbers while enhancing the margin within the mainstream business, growth in its Specialist & Activity portfolio, as well as positive contributions from its online accommodation business.
It announced at the start of the financial year plans to cut costs by £107 million over a three year period and today it revealed it had made £42 million of operational efficiency savings in the last 12 months.
By Linsey McNeill
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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