Tourexpi
TUI Group closed financial Q4 well after a strong summer, achieving its
own target of a significantly positive operating result for the full year.
Operations in a largely normal environment only started for the Group with the
last financial quarter due to late lifted Corona restrictions, the impact of
the Ukraine war as well as external operational challenges at the start of the
summer, especially at airports. 7.6 million guests traveled with TUI in the
months from July to September. At 7.61 billion euros, revenue more than doubled
year-on-year (3.37 billion euros). Underlying EBIT reached 1.04 billion euros
in Q4. Excluding the costs incurred for additional flight disruptions of 58
million euros, underlying EBIT was 1.1 billion euros.
Sebastian Ebel, TUI Group CEO, said: "We had a strong summer, a
very good quarter and we achieved the announced target of significantly
positive underlying EBIT. Tourism remains a long-term and attractive growth
sector. All fundamental data point to this, and the long-term megatrends from
which our industry particularly benefits, remain intact. We also expect 2023 to
be a solid and good year, but we are very aware of external market factors.
With our strong brand, resilient business model, increased flexibility and
dedicated teams, we are very well positioned to benefit from market
opportunities in the current financial year and beyond. Our strategic focus is
on a broader product offering that will enable us to attract new customers –
combined with the brand values expected of TUI: consistently high quality,
flexibility and customer focus. Our formula for creating the basis for future
profitable growth in the Group is in a nutshell: new products, new customers,
more market share."
Mathias Kiep, Chief Financial Officer of TUI Group: "We
significantly improved all relevant key figures for the year as a whole
compared with the previous year – despite some challenges and a difficult
environment. We almost quadrupled our revenue, underlying operating profit is
significantly positive again and we generated solid cash flow. This also enabled
us to significantly reduce our net debt. However, the market environment
remains difficult, which is why we are systematically pursuing our course. We
have now agreed the next steps with the WSF and want to rapidly reduce debt
further and significantly reduce our dependence on the state."
Growth strategy: new products, new customers, more market share
TUI intends to significantly broaden its product portfolio by making the
traditional package tour, which is made up of previously purchased components,
much more flexible and individual, and thus more dynamic. Customers will be
able to combine hotel allotments and flights available at short notice
according to their individual wishes. This will create new and additional
offerings, such as city breaks, with which the Group can also attract new
customers.
In addition, travel components such as hotel accommodation and flights,
or additional services such as rental cars or excursions, will be offered
separately and individually throughout the Group in the future. The growth
strategies already initiated for the Group's own brands in the Holiday
Experiences segment will be continued. TUI intends to further expand its hotel
and hotel brand offering and increase its market presence. In Hotels &
Resorts, the asset-right strategy, which was already launched in 2019, will
continue to be implemented. New properties will be added to the portfolio
worldwide, whereby TUI does not necessarily own the property but develops and
designs the hotel experience itself with its own brands and, for example,
through management contracts or joint ventures. The portfolio of hotels is also
to be expanded via the recently launched TUI Global Hotel Fund.
In the cruises sector, the successful joint venture TUI Cruises is due
to deliver three new cruise ships already commissioned before the
pandemic.
The strategically important and particularly fast-growing TUI Musement
sector will also significantly broaden its range of products and services. For
example, the new platform for the individual compilation of round trips was
recently launched. The "TUI Tours" offering will initially be piloted
to Belgian guests and will also be offered in other markets, including Germany,
from 2023. In addition, the segment is also growing with stronger demand from
tour operators in the markets.
Debt significantly reduced – Agreement with WSF: way forward for full
repayment of Corona aid, Group also to reduce KfW credit lines
Solid operating cash flow in Q4 led to full-year cash flow of 1.7
billion euros in 2022. Net debt was reduced significantly, to 3.4 billion euros
at 30 September 2022, compared with 5.0 billion euros a year earlier. At the
same time the Group continues to have a strong liquidity position of 3.7
billion euros and therefore sufficient financial resources to cover the
typically weaker seasonal winter. In order to further reduce debt and lower the
interest burden, TUI has agreed a path with the Economic Stabilization Fund
(WSF) to repay the Corona aid in full. By the end of 2023, Silent Participation
I for a nominal amount of 420 million euros and the remaining convertible
portion of the warrant-linked bond subscribed in full by the WSF for a nominal
amount of 59 million euros are to be repaid. In addition, the Group also
intends to significantly reduce the KfW credit lines (currently 2.1 billion
euros). To finance the repayment, TUI initially plans to reduce its capital
stock, to be approved by the Annual General Meeting in February 2023. The
reduction is to be achieved through two capital increases in the framework of a
rights offering and the volume of shares already authorized.
Results of the segments in Q4: underlying EBIT rises to over 1 billion
euros – 7.6 million guests and normalised market environment ensure positive
results in all segments of the Group – Hotels & Resorts five consecutive
quarters with positive earnings – Hotels & Cruises: higher occupancy and
higher average rates per night and bednight
At 7.6 million, guest numbers in Q4 reached 93 percent of Q4 2019 levels
on a like-for-like basis. For the full Summer 2022, TUI recorded 13.7 million
guests. Revenue more than doubled, from 3.37 billion euros in the year-ago
quarter to 7.61 billion euros. If the costs incurred as a result of the delays
and disruptions, particularly at the airports, are disregarded, underlying EBIT
amounts to 1.1 billion euros. Including these costs of 58 million euros,
underlying EBIT in the reporting period is 1.04 billion euros.
In the core segment Holiday Experiences with Hotels &
Resorts, Cruises and the TUI Musement activities, underlying EBIT for the
sector reached 433 million euros in the reporting period, compared with 64
million euros in the prior-year quarter.
The strong development was driven in particular by Hotels &
Resorts, which recorded its fifth positive quarterly result in a row. As of 30
September 2022, 344 hotels were in operation, representing around 97 percent of
the Group's portfolio of 353 owned hotels. Underlying EBIT increased
year-on-year to 291 million euros (previous year: 116 million euros). This is
also the second consecutive quarter of earnings above the pre-crisis level in
2019. Capacity utilization improved by 27 percentage points year-on-year to 92
percent. The average rate per bed per night increased by 10 percent to 80
euros.
The Cruises sector, comprising TUI Cruises, Hapag-Lloyd Cruises and
Marella Cruises, sailed its full fleet of 16 ships in Q4 and reported a strong
increase in underlying EBIT to 103 million euros – following a loss in the
previous year (-43 million euros). The significant year-on-year improvement is
supported by the fact that all ships in the fleet were in service. TUI Cruises
also achieved its second positive quarter in terms of earnings after taxes (66
million euros). At 2.4 million, the number of available passenger days was 30
percent up on the previous year. Load factors also improved, ranging from 80 to
93 percent across all cruise brands, compared to 39 to 53 percent in the same
period last year. Rates also increased significantly year-on-year.
TUI Musement's Tours & Activities segment benefited in particular
from the recovery of the Markets & Airlines segment in the period under
review, recording a significantly higher number of travelers using TUI
Musement's services and products in summer. In Q4, underlying EBIT was positive
at 39 million euros – compared with a loss of 9 million euros a year earlier.
The increase reflects the benefits of our integrated model and the growth of
third-party distribution via the TUI Musement platform. TUI Musement carried
out 11 million transfers to guests in destinations compared to 5 million in the
prior-year quarter. In addition, 3.2 million experiences were sold in the
quarter under review, more than three times as many as in the prior-year
quarter (1.0 million).
The Markets & Airlines segment with TUI tour operators in
the Northern regions with the markets UK, Ireland and Nordics (Sweden, Norway,
Finland, Denmark), Central (Germany, Austria, Switzerland, Poland) and Western
(Netherlands, Belgium and France) recorded a strong business performance across
all markets. For the first time since the pandemic, all regions contributed to
a positive underlying EBIT. Markets & Airlines achieved an improvement in
underlying EBIT to 612 million euros in Q4 compared with the prior year (-138
million euros). The result also includes costs of 58 million euros incurred due
to the impact of externally driven flight disruptions, particularly in the
Northern region, and savings achieved through the global realignment program in
all markets.
Outlook: Travel winter 2022/23 stable, programme planned at pre-crisis
level – average fares significantly above 2019 and previous year
The business environment remains challenging in the current winter
2022/23, mainly due to external factors. In particular, the impact of the war
in Ukraine and the ongoing impact of the Corona pandemic are factored into the
outlook, along with inflation, high energy prices and exchange rate
fluctuations. TUI's tour operators (Markets & Airlines) are planning a
programme for the current Winter 2022/23 that is roughly in line with
pre-crisis levels. However, the Group reserves the right to flexibly adjust
capacity to customer demand.
Currently, 2.7 million bookings have been received for the 2022/23
winter season and 52 percent of the programme has been sold. As a result,
cumulative bookings are at 134 percent of the previous 2021/22 Winter season
and 84 percent of the 2018/19 Winter season, with 1.4 million bookings added
since the September booking update. The U.K. remains the most advanced with +5
percent booking levels and average prices of +23 percent compared to winter
2018/19. The trend towards a higher share of short-term bookings, already
prevalent in summer, continues in winter, with overall volumes in the last four
weeks at -4 percent, almost the same as in winter 2018/19. Average prices are
+28 percent higher than winter 2018/19 and 7 percent higher than winter
2021/22, which will help cushion the impact of exchange rate volatility and
currently higher inflation.
Outlook for fiscal 2023
For the current fiscal year 2023, the Group expects a strong increase in
revenue and a significant increase in underlying EBIT.
Image Credit: © TUI
Group
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