p16 City jan23 21/1/09 20:41 Page 16
City & finance
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Tui AG shares
plummet 11%
TUI TRAVEL shares dipped last week as majority
shareholder Tui AG recorded its largest one-day
fall in 15 years.
Tui AG shares fell 11% after the sale of its
shipping arm Hapag-Lloyd appeared to be
threatened when Royal Bank Of Scotland said it
was pulling out of a consortium behind the deal.
Tui Travel shares in London fell by just over
11p, or about 0.5%, before recovering slightly.
With the shipping industry suffering in the
downturn, the value of the business is now thought
to be less than the price agreed in October. Dame Helen Mirren at last April’s christening of P&O Cruises’ Ventura, one of Carnival’s latest ships that is “driving growth”
City analysts predicted Tui AG would use
proceeds from the sale to buy the remaining
49% of Tui Travel, although it has denied this.
Nick Batram, analyst at KBC Peel Hunt, said
Carnival ‘cautious’
the possibility of a Tui Travel takeover by Tui AG
was now less likely if the Hapag-Lloyd deal falls.
Lee Hayhurst.
allowing for yield erosion of 6-10% that gives
“Tui Travel is seen as a potential takeover CARNIVAL UK is not expecting good economic earning per share of $2.15 to $2.75 and a mid-
target by many. What better time could there be news for at least two years but insists Carnival’s point profit of around $2bn in what we assume
given that Tui AG is euro-based and Tui Travel sheer size will see it ride out the global recession. will be a tough year.”
sterling-based. The purchase would be cheaper David Dingle, Carnival UK’s chief executive, Dingle would not say exactly how profitable
than before the euro became so strong.” said cruising was a “highly profitable business” the UK arm of Carnival was, but said results were
Batram said Tui Travel and Thomas Cook shares demonstrated by the market capitalisation of in proportion to group profits and that it could
had proved to be resilient in the last few weeks. parent Carnival Corporation. absorb “significant yield erosion” and zero
It is unclear if RBS can withdraw from the The firm has 80% of its shares listed on the growth in the UK in 2009 and still be profitable.
Hapag-Lloyd deal. A Tui AG spokesman claimed New York Dow Jones stock exchange. The One indication of the pressure on profits is the
RBS could not get out before the deal was closed. remaining Ftse-listed 20% makes it bigger than reduction in the number of new ships, which
Tui Travel and Thomas Cook. each cost around £500m, on order after 2012.
This values Carnival Corporation at $24bn and If no new orders are placed in the first quarter
the Ftse PLC at £3.2bn, placing it in the top 60 of of 2009, the forward order book for ships will
the Ftse 100, and 60% bigger than British Airways. stand at a four-year low.
Carnival posted profits of $2.3bn in 2008, just However, speaking at an E-tid briefing last
$0.1bn down on 2007 due to fuel high costs. week, Dingle said it was new ships, some built for
“This year is hard to predict,” he said. “We the UK such as P&O Cruises’ Ventura, that had
have the benefit of lower fuel costs but we are driven average annual growth of 12% since 2000.
Dingle’s predictions for the rest of the travel industry
THE TRAVEL industry’s bigger companies and “Some niche specialists should continue to
those that specialise are well set to beat the do well. They typically have higher margins
BUYING INTO THE BRAND: Thomas Cook recession, but firms that have grown by because they are tailoring their products more
boss Manny Fontenla-Novoa has spent chasing volumes will struggle, Dingle predicted. successfully to individual clients.
£600,000 of his own money buying shares The big two would fair well, he said, adding: “If you are in the middle, especially if you
in the company. Finance director Jurgen “They have scale and currency balance have risen from being small to medium-sized
Buser also invested £250,000. Reports between the euro and other currencies, and on the basis of higher volumes and lower
said if the operator hits targets, the pair the ability to be flexible in their capacity. margins, you are in trouble.”
will treble their investment in three years.
16 23.01.2009
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