City & Finance -0.5%5,875 TRADING UPDATE


Analysts warn Tui to remain cautious


TUI TRAVEL claims to be “outperforming the market”, but some analysts believe there are reasons to be wary. In its pre-close trading update


the group said winter trading was exceeding expectations. Peter Long, chief executive of Tui


Travel, said: “We are pleased with our winter performance, particularly in the UK, where our focus on differentiated product and online distribution is resulting in us out-performing the market.” He said he was also “pleased” with summer bookings so far. Douglas McNeill, an equity analyst


at Charles Stanley Securities, said there were no surprises, adding that “trading is unfolding as expected”. Greg Johnson, a travel and leisure analyst at Shore Capital, said: “This is a robust statement from Tui Travel, with the improving trends in recent weeks leaving the group well set to deliver on profit expectations.” However, Jamie Rollo at Morgan Stanley reported that although there were a number of positives, there were also reasons to be careful. “Winter


average prices


Peter Long: strong growth 05.04.2012


12


are either unchanged or have weakened in most markets (including the UK), summer volumes remain weak (still negative in most markets).


IAG (BRITISH AIRWAYS) TUI +0.6% £1.84


Keep up to date with the travel industry’s financial news and results at ttgdigital.com/city


Share Watch Prices on April 2 and weekly percentage change FTSE 100 INDEX


+0.9%£1.97


THOMAS COOK -1.1%£0.22


CARNIVAL -1.5%£20.6


IHG +1.9%£14.80


The latest update from Cook’s shows a 10% decline in summer bookings but a 4% increase in average selling price, and the opinion of the City analysts has been split. Patrick Whyte reports


Thomas Cook results get mixed views from City


CITY ANALYSTS are divided on the trading outlook for Thomas Cook after the operator’s latest update. Sam Weihagen, group chief


executive described trading across the group as “stable” and “in line with expectations”. The group said that mainstream summer bookings were down 10%, with capacity reduced by 12%. However, the selling price had increased by 4%. For the winter, UK mainstream bookings were 9% down and up 1% in the specialist and independent part of the business. In total they were down 4%.


On the winter bookings the group said: “The UK programme is 91%


booked which is in line with last year. “Mainstream bookings have


improved since we last reported in February and are now down 9% in line with planned capacity reductions, while overall pricing has remained stable.” Opinion in the city was divided on this latest update. A number of analysts reiterated their “neutral” or “hold” positions, but in a surprise move Investec upgraded the stock from “hold” to “buy”. James Hollins, at Investec, noted


that: “Cook has reported a recent uptick in bookings for the key summer 2012 period and we take encouragement from the outlook and likelihood of disposal proceeds.


This supports our view that Cook has the ability to generate sufficient cash from operational free cash flow and asset sales to manage its debt.” However, Simon French and Lindsey Kerrigan at Panmure Gordon maintained its “sell” position. They said that “while UK summer bookings are said to be on an improving trend, they are actually in a worse position now than at the last update in February”. They added: “More disposals will be needed and we question whether there is a viable sustainable ongoing business.”


CURRENT TRADING (YEAR-ON-YEAR VARIATION) Average selling price Cumulative bookings Planned capacity


UK mainstream (winter 11/12) UK mainstream (summer 12)


-1% 4%


GROUP RATIONALISATION


‘We are optimistic,’ says Travelzest boss


TRAVELZEST HAS reported a 14% decline in revenue, down to £37.7m from £43.8m in 2010. Chief executive Jonathan Carroll,


however, remains “optimistic” about the year ahead despite these preliminary 2011 results.


-9% -10% -8% -12%


Lower merchant sales and


gross profit combined with higher marketing and operating lease expense, and foreign exchange losses resulted in a 32% decrease in underlying operating profit from £6.1m to £4.2m. The group is in the process of selling off some of its poorly performing UK businesses as it looks to concentrate on its Canadian brands, including itravel2000 and


The Cruise Professionals. Carroll said: “We have had to


make some difficult decisions in the period and have focused on those brands that we believe will drive both growth for the business and shareholder value in the longer term. “The simplification of our business, post-rationalisation, will allow us to better focus on what makes us successful and we are already starting to see the benefits.”


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52