Thomas Cook Sees Profit Slump in UK Division

24 November, 2017, 01:29 | Author: Brenda Erickson
  • Thomas Cook

Looking forward, Thomas Cook expects its Continental Europe and Northern Europe tour operator businesses "to continue their good performance", and said it has acted to improve its United Kingdom performance as a result of "challenging conditions".

Chief executive Peter Fankhauser said 2017 was a "milestone year in the strategic development of Thomas Cook". Pre-tax profit of £46 million and after tax of £12 million were both improvements on FY 2016.

Underlying profit in the company's United Kingdom arm fell by £34 million during the period, despite a 3 percent rise in revenues, rippling across the group as overall profit margin declined 23.4 percent to 22.1 percent.

"After four consecutive years of profit growth, margins in our United Kingdom business declined due to a more competitive market environment, especially for holidays to Spain", said Chief Executive Peter Fankhauser.

The group said it was "well positioned" to achieve current market expectations for 2018, given strong early bookings for next summer. Its full-year gross margin edged down to 22.1 per cent from 23.4 per cent last year. Underlying earnings per share were 9.3 pence, compared to 8.1 pence a year ago.

Rising hotel prices, the fall in the pound and competition in the Spanish market all affected the holiday firm.

Underlying EBIT improved to 330 million pounds from 306 million pounds last year, resulting in an underlying EBIT margin of 3.7 percent, same as last year.

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Group revenue increased to 9.01 billion pounds from 7.81 billion pounds a year ago, reflecting strong customer demand for holiday and flight offering.

One positive element was the performance of the group's airline business, which improved profits by 24 million pounds in the year, helped by a recovery for German carrier Condor.

Winter trading for the company is in line with expectations, with 58 percent of the programme sold, in line with a year ago.

Earnings at its United Kingdom division fell by 40% in the year to 30 September to £52m and the company's share price sank by as much as 13% in early trade. Winter trading is in line with expectations, with total bookings up five per cent, boosted by a strong recovery in demand for Egypt.

According to the same report, British bookings for next summer are up 2% while the average selling price is up 6%.

Thomas Cook proposed a recommended dividend of 0.6p per share.

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