DJ TUI AG: Annual Financial Report - Part 1
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TUI AG (TUI)
TUI AG: Annual Financial Report - Part 1
13-Dec-2017 / 08:00 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
13 December 2017
TUI GROUP
Full year results to 30 September 2017
HIGHLIGHTS
· Third consecutive year of strong earnings growth, with 12% increase in
underlying EBITA1 and 34% increase in underlying EPS1
· Continuing to transform our business - 56% of our earnings are now
delivered from own hotel and cruise brands, with a strong ROIC performance
and less seasonal profile
· Post-merger phase is complete - double digit annual earnings growth with
strong cash conversion and strong ROIC performance continues, driven
increasingly by market demand and digitalisation benefits, as well as
disciplined expansion of own hotel and cruise content
· Strong cash conversion plus EUR2 billion disposal proceeds enable us to
finance growth, pay an attractive dividend and strengthen the balance
sheet
· Trading for future seasons is progressing well overall - our balanced
portfolio of markets and destinations and strong competitive position
leave us well placed to deliver further growth
· Expect to deliver at least 10% growth in underlying EBITA in FY18 1 and
extend our previous guidance of at least 10% underlying EBITA CAGR to
FY201
· Our ambition - strong strategic positioning, strong earnings growth and
strong cash generation, with underlying EBITA doubling between FY14 and
FY20
KEY FINANCIALS
Year ended
30 September
EURm 2017 2016 Change Constant
currency
change1
Turnover 18,535 17,154 +8.1% +11.7%
Underlying 1,102 1,001 +10.2% +12.0%
EBITA2
Reported 1,027 898 +14.3% +16.2%
EBITA3
Underlying 1.14 0.86 +32.6% +33.7%
earnings per
share4
Earnings 1,080 618 +74.6% +76.8%
before tax5
Leverage 2.5 times 3.3 times -0.8 times n/a
ratio6
Return on 23.6% 21.9% +1.7 ppts n/a
invested
capital
(ROIC)7
Dividend per EUR0.65 EUR0.63 12.0%8 n/a
share
1 Assuming constant foreign exchange rates are applied to the result in the
current and prior period
2Underlying EBITA has been adjusted for gains/losses on disposal of
investments, restructuring costs according to IAS 37, ancillary acquisition
costs and conditional purchase price payments under purchase price
allocations and other expenses and income from one-off items
3 Reported EBITA comprises earnings before net interest result, income tax
and impairment of goodwill and excluding the result from the measurement of
interest hedges
4 For calculation of underlying earnings per share please refer to page 58
of the Annual Report
5 For reconciliation of earnings before tax to underlying EBITA, please
refer to page 57 of the Annual Report
6 Leverage ratio is calculated as the ratio of gross debt (including net
pension liabilities and discounted value of operating leases) to reported
EBITDAR
7 ROIC (return on invested capital) is calculated as the ratio of underlying
EBITA to the average for invested interest bearing capital for the Group or
relevant segment
8 Percentage growth in dividend per share is calculated off the base
dividend in respect of FY16 of EUR0.58 per share (excluding the additional
10% announced at the time of the merger)
Annual Report and Investor & Analyst Presentation and Webcast
A full copy of our Annual Report can be found on our corporate website:
http://www.tuigroup.com/en-en/investors [1]. A presentation and webcast for
investors and analysts will take place today at 09:30 GMT / 10:30 CET. The
presentation will be made available via our website shortly beforehand.
Details of the webcast, which will be available for replay, will also be
available there.
FY17 RESULTS
· We have delivered a third consecutive year of strong earnings growth,
with underlying EBITA increasing to EUR1,102m or 12% growth at constant
currency rates. This was driven by growth across the business, including
our own hotel and cruise content, Source Markets and the delivery of the
final tranche of merger synergies. Significant growth in underlying EBITA
was delivered despite the impact of higher than normal levels of sickness
in TUI fly at the start of the financial year (as previously flagged) as
well as the impact of the Air Berlin insolvency (see below for further
detail).
In EURm
Underlying EBITA FY16 1,001
Hotel & cruise content +131
Source Markets & other segments +8
Merger synergies +20
TUI fly sickness (Q1) -24
Air Berlin insolvency -15
Underlying EBITA FY17 excluding FX 1,121
Foreign exchange translation -19
Underlying EBITA FY17 1,102
· Growth in underlying EBITA was driven across our business segments,
demonstrating the strength of our integrated business model and well
balanced portfolio of markets and destinations.
Underlying FY17 at FY16 Variance at FY17 at Variance at
EBITA in EURm constant constant actual actual rates
currency currency rates
Hotels & 362 304 +58 357 +53
Resorts
Cruises 263 191 +72 256 +65
Source Markets 532 554 -22* 526 -28*
Northern 351 383 -32 346 -37
Region
Central Region 72 85 -13* 71 -14*
Western Region 109 86 +23 109 +23
Other Tourism 18 8 +10 13 +5
Total Tourism 1,175 1,057 +118 1,152 +95
All Other -54 -56 +2 -50 +6
Segments
Total TUI 1,121 1,001 +120 1,102 +101
Group
* includes the adverse impact of higher than normal levels of sickness in
TUI fly at the start of the financial year (EUR24m) and the impact of the
Air Berlin insolvency (EUR15m); excluding these items, and at constant
currency, Source Markets variance was +EUR17m and Central Region variance
was +EUR26m
· Hotels & Resorts delivered a strong performance, with segmental ROIC
increasing to 13.2% (versus segmental WACC of 8.5%).
· We opened ten new hotels this year in our core brands, bringing the
total since merger to 28. More than 60% of these are operated with no or
low capital intensity.
· Hotels & Resorts continues to deliver high levels of occupancy, now
79%, thanks to our strong portfolio of brands and destinations, and our
integrated model. Average revenue per bed increased by 6%. The earnings
result reflects a continued strong performance in the Western
Mediterranean and Caribbean, and encouraging improvement in Turkey and
North Africa, as well as earnings from new hotel openings.
· FY17 marks the fourth consecutive year of increasing ROIC for Hotels &
Resorts. This demonstrates the attractiveness of our portfolio of hotel
and club brands, the strength of our distribution capabilities, and our
disciplined approach to investment.
· For further commentary on Hotels & Resorts, please see page 60 of the
Annual Report.
· Cruise delivered another year of strong earnings growth, with strong
segmental ROIC of 19.9% (versus segmental WACC of 5.25%).
· Growth in earnings was driven primarily by the launch of new ships in
Germany and UK.
· Average daily rates increased across all three fleets, despite the
increase in capacity.
· Segmental ROIC remains high, reflecting our equity participation in
TUI Cruises as well as excellent performances by our UK and Hapag-Lloyd
Cruises subsidiaries.
· For further commentary on Cruise, please see pages 60 to 61 of the
Annual Report.
· Our Sales & Marketing in Source Markets delivered a strong portfolio
performance, thanks to their geographic diversity, market leading
positions, popular range of holiday products and focus on efficiency.
· Customer volumes (excluding joint ventures) grew by 6% to 20.2
million, with growth in all three regions.
· Source Markets delivered a high net promoter score of 50 overall, with
year on year increases in most of our markets.
· The TUI rebrand was completed successfully in Nordics and Belgium.
This has helped to drive a further increase in direct and online
distribution, to 73% and 46% respectively. The UK rebrand commenced in
October and is progressing very well.
· Overall, Source Markets delivered a strong portfolio performance this
year, with particularly good operational performances in Nordics,
Germany and Benelux this Summer. As previously flagged, this has helped
to offset the normalisation of UK margins driven by currency cost
inflation and a disappointing Q4 in France.
· As previously communicated the result was impacted by the sickness
incident in TUI fly at the start of the financial year, costing EUR24m.
· The Central Region result also includes an adverse variance to prior
year of c. EUR15m following the Air Berlin insolvency, relating to
receivables for aircraft and crew leased to Air Berlin in FY17 on which
the latter defaulted.
· For further commentary on Source Markets please refer to pages 61 to
63 of the Annual Report.
(MORE TO FOLLOW) Dow Jones Newswires
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DJ TUI AG: Annual Financial Report - Part 1 -2-
· The result for Other Tourism and All Other Segments reflects the
delivery of the final tranche of merger synergies, as well as a good
performance by Destination Services, which delivers a key part of the
customer holiday experience.
· Adjustments between underlying and reported EBITA continued to decrease
this year, driven by continued disciplined management of separately
disclosed items. For further detail on Adjustments, please refer to pages
57 to 58 of the Annual Report.
· Underlying EPS increased to EUR1.14, or 34% growth at constant currency
rates, driven by the strong operational performance outlined above, lower
cost of finance driven by our improved rating, and low underlying
effective tax rate of 20%. For the calculation of underlying EPS, please
refer to page 58 of the Annual Report.
· Earnings before tax therefore also increased significantly, to
EUR1,080m. This included EUR172m gain on the disposal of our remaining
shares in Hapag-Lloyd AG during the financial year.
· We continue to deliver strong cash conversion, driven by our disciplined
management of working capital, separately disclosed items and investments,
as well our low cost of finance and effective tax rate. In addition, we
have generated EUR2 billion from the disposals of Hotelbeds, Travelopia
and Hapag-Lloyd AG since September 2016. Our strong cash flow and disposal
proceeds enable us to finance growth, pay an attractive dividend and
strengthen the balance sheet, with our leverage ratio reducing further
this year.
· We remain committed to delivering attractive returns to our
shareholders, with a proposed dividend of EUR0.65 per share. This is in
line with our guidance to increase the base dividend in line with annual
underlying EBITA growth at constant currency.
TRADING FOR FUTURE SEASONS IS PROGRESSING WELL OVERALL
· Demand for our holidays, hotels and cruise brands remains strong:
· Further growth in own hotel brands, with seven openings scheduled so
far for FY18, continued strong demand for Western Mediterranean and
Caribbean and improving demand for Turkey and North Africa.
· Strong cruise yields and load factors across all three brands, with
ship launches scheduled for 2018 and 2019.
· Source Market volumes and average selling price both up 3% for Winter
2017/18, with percentage sold slightly ahead of prior year; Summer 2018
performing in line with our expectations, albeit at a very early stage.
CURRENT TRADING
Demand for our holidays, hotels and cruises remains strong. In Hotels &
Resorts we have seven openings scheduled to date for our core brands in
FY18. These include Robinson clubs in the Maldives and Thailand, Riu hotels
in Mexico and Bulgaria, two Blue Diamond properties in Dominican Republic
and a Sensatori in Rhodes. We are also continuing to streamline our
portfolio, with further repositionings under the TUI Blue brand currently
planned for four existing hotels. We continue to see strong demand for the
Western Mediterranean and Caribbean, which are already operating at a high
level of occupancy and rate, and expect to see some improvement in demand
for Turkey and North Africa, including from our own Source Markets.
In May 2018 we will launch two ships - the new Mein Schiff 1 for TUI Cruises
in Hamburg, and the Marella Explorer (previously Mein Schiff 1) in Palma de
Mallorca. Further launches will follow in Summer 2019 for TUI Cruises and
Marella Cruises, as well as two new expedition ships for Hapag-Lloyd Cruises
in 2019. Bookings for our new ships and the existing fleet are progressing
very well, with a year on year increase in fleet yield for each of the three
brands.
Source Markets trading is progressing well, in line with our expectations.
Winter volumes are ahead of prior year, with strong growth in bookings for
Thailand, Cape Verde, North Africa and Cyprus. Demand is more subdued for
the Caribbean following the hurricanes in September, however this is offset
by demand for other destinations with overall long haul bookings up 4%. Both
Nordics and Germany have continued their strong performances. In Germany, we
continue to build market share with a good trading margin performance, with
particularly strong demand for Canaries, North Africa and Thailand. In
Nordics, strong volume growth continues and reflects the strategy to grow
early volumes. The rollout of our yield management system is also helping to
drive a strong margin performance. In Benelux, both volumes and average
selling price are ahead of prior year.
Despite the Brexit backdrop, the UK continues to deliver a resilient
performance in line with our expectations. Year on year bookings and selling
price for Winter 2017/18 reflect the very strong start in prior year trading
(when bookings were up 19% including Marella Cruises) and impact of currency
inflation. Load factor and percentage of the UK programme sold remain in
line with prior year. We are also very pleased with the progress of the UK
rebrand, with unaided awareness of the TUI brand performing ahead of our
original expectations for this stage. As expected, although UK demand for
holidays abroad remains strong, margins across the package holiday market
are normalising, primarily as a result of the weaker Pound Sterling.
Nonetheless, our margins remain healthy and we are well positioned
competitively. TUI is the clear market leader in package holidays in the UK,
with a strong net promoter score of 55 in FY17, high levels of direct and
online distribution, and a highly integrated and efficient business model.
Source Markets
- Current
Trading2
Winter 2017/18
..............
YoY Total Total Total Programme
variati sold (%)
on%
Revenue Customers ASP
Northern Region +6 +0 +6 63
UK +3 -4 +8 57
Memo: UK incl. Cruise +7 -3 +10 59
Nordics +10 +7 +3 74
Central Region +7 +8 -1 64
Germany +9 +9 +1 63
Western Region +3 +0 +2 65
Benelux +4 +2 +2 65
Total Source Markets +6 +3 +3 63
Memo: Total Source Markets +7 +3 +3 64
incl. UK Cruise
2 These statistics are up to 3 December 2017, shown on a constant currency
basis and relate to all customers whether risk or non-risk
For Summer 2018, Source Markets trading is performing in line with our
expectations, albeit at a very early stage. As usual for this point in the
booking cycle, only the UK is more than 20% booked. UK booked revenue
(excluding Marella Cruises) is up 2%, with bookings slightly below the
strong start to prior year (when bookings were up 9% including Marella
Cruises) and average selling price up 4%.
FUEL/FOREIGN EXCHANGE
Our strategy of hedging the majority of our jet fuel and currency
requirements for future seasons, as detailed below, remains unchanged. This
gives us certainty of costs when planning capacity and pricing. The
following table shows the percentage of our forecast requirement that is
currently hedged for Euros, US Dollars and jet fuel for our Source Markets,
which account for over 90% of our Group currency and fuel exposure.
Winter 2017/18 Summer 2018 Winter 2018/19
Euro 95% 71% 36%
US Dollars 93% 86% 50%
Jet Fuel 93% 85% 63%
As at 8 December 2017
DIVIDEND
The Executive Board and the Supervisory Board are recommending a dividend of
65 cents per share in respect of the financial year 2017. Subject to
approval at the Annual General Meeting on 13 February 2018, shareholders who
held relevant shares at close of business on 13 February 2018 will receive
the dividend on 16 February 2018.
OUTLOOK
Three years after the merger, we are a stronger, more integrated and better
strategically positioned business. Having delivered the merger synergies in
full and disposed non-core businesses, the post-merger phase is now
complete.
Looking ahead we continue to expect to deliver double digit annual earnings
growth with less seasonality, strong cash conversion and strong ROIC
performance. This will be driven increasingly by market demand and
digitalisation benefits, as well as disciplined expansion of own hotel and
cruise content.
We have a clear ambition - strong strategic positioning, strong earnings
growth and strong cash generation, with underlying EBITA doubling between
FY14 and FY20.
With regard to the ongoing Brexit negotiations between the UK and the EU, we
expect and strongly encourage those involved in the negotiations to have a
workable solution in place for the airlines, including that current
arrangements are extended until such a solution is reached. Whilst we are
not able to control the outcome of these negotiations, we are putting
contingency plans in place in order to manage potential disruption to our
operations.
Trading for future seasons is progressing well overall, and our balanced
portfolio of markets and destinations and strong competitive position leave
us well placed to deliver further growth, despite external factors which
sometimes influence certain parts of the business. We therefore expect to
(MORE TO FOLLOW) Dow Jones Newswires
December 13, 2017 02:00 ET (07:00 GMT)
deliver at least 10% growth in underlying EBITA in FY181 and extend our
previous guidance of at least 10% underlying EBITA CAGR to FY201.
The following detailed guidance is given in respect of FY181:
· Turnover - around 3% growth (excluding cost inflation relating to
currency movements)
· Underlying EBITA - at least 10% growth
· Adjustments - around EUR80m
· Net interest - around EUR120m
· Net capex and investments - around EUR1.2bn, including net pre-delivery
payments and assumed acquisition of Mein Schiff 1 for Marella Cruises, and
phasing of expenditure from FY17
· Year end net debt - slightly negative, reflecting investment in
transformational growth and aircraft order book finance
· Financial targets - leverage ratio 3.0 to 2.25 times, interest coverage
5.75 to 6.75 times.
1 Assuming constant foreign exchange rates are applied to the result in the
current and prior period and based on the current Group structure
ANNUAL GENERAL MEETING AND Q1 FY18
TUI Group will hold its Annual General Meeting and issue its Q1 FY18 Report
on 13 February 2018.
ANALYST & INVESTOR ENQUIRIES
Peter Krüger, Director Investor Tel: +49 (0)511 566 1440
Relations and M&A
Contacts for Analysts and Investors in UK, Ireland and Americas
Sarah Coomes, Head of Investor Tel: +44 (0)1293 645 827
Relations
Hazel Chung, Investor Relations Manager Tel: +44 (0)1293 645 823
Contacts for Analysts and Investors in Continental Europe,
Middle East and Asia
Nicola Gehrt, Head of Investor Tel: +49 (0)511 566 1435
Relations
Ina Klose, Investor Relations Manager Tel: +49 (0)511 566 1318
Jessica Blinne, Junior Investor Tel: +49 (0)511 566 1425
Relations Manager
ISIN: DE000TUAG000, DE000TUAG281, DE000TUAG299
Category Code: ACS
TIDM: TUI
LEI Code: 529900SL2WSPV293B552
Sequence No.: 5006
End of Announcement EQS News Service
638427 13-Dec-2017
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