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TUI AG (TUI)
TUI AG: Annual Financial Report - Part 2
13-Dec-2018 / 08:00 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Financial Highlights
EUR million 2018 2017 Var. % Var. % at
constant
currency
Turnover 19,523.9 18,535.0 + 5.3 + 6.3
Underlying EBITA1
Hotels & Resorts 425.7 356.5 + 19.4 + 38.7
Cruises 324.0 255.6 + 26.8 + 27.0
Destination Experiences 44.7 35.1 + 27.4 + 33.6
Holiday Experiences 794.4 647.2 + 22.7 + 33.8
Northern Region 254.1 345.8 - 26.5 - 27.4
Central Region 89.1 71.5 + 24.6 + 25.0
Western Region 109.3 109.2 + 0.1 + 0.1
Markets & Airlines 452.5 526.5 - 14.1 - 14.6
All other segments - 99.9 - 71.6 - 39.5 - 31.4
TUI Group 1,147.0 1,102.1 + 4.1 + 10.9
Discontinued operations - - 1.2 n. a. -
Total 1,147.0 1,100.9 + 4.2 + 11.0
EBITA2, 4 1,060.2 1,026.5 + 3.3 + 10.4
Underlying EBITDA4 1,563.9 1,541.7 + 1.4
EBITDA4 1,498.5 1,490.9 + 0.5
EBITDAR4 2,219.9 2,240.9 - 0.9
Net profit for the 780.2 910.9 - 14.3
period
Earnings per share4EUR 1.18 1.36 - 13.2
Equity ratio (30 Sept.) 27.8 24.9 + 2.9
3 %
Net capex and 827.0 1,071.9 - 22.8
investments (30 Sept.)
Net cash (30 Sept.)4 123.6 583.0 - 78.8
Employees (30 Sept.) 69,546 66,577 + 4.5
Differences may occur due to rounding
This Annual Report of the TUI Group was prepared for the financial year (FY) from 1 October 2017 to 30 September 2018. The
terms for previous years were renamed accordingly.
In FY 2018 we have adjusted our segmental reporting to reflect the growing strategic importance of the services delivered
in our destinations. Destination Experiences is now reported separately in the segmental structure, and within Holiday
Experiences together with Hotels & Resorts and Cruises. The further businesses of former Other Tourism and All other segments
have been combined into All other segments. There are no changes to the total numbers. The prior year's reference figures
were restated accordingly.
1 In order to explain and evaluate the operating performance by the segments, EBITA adjusted for one-off effects (underlying
EBITA) is presented. Underlying 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 for and income from one-off items.
2 EBITA comprises earnings before interest, taxes and goodwill impairments. EBITA includes amortisation of other intangible
assets. It does not include the result from the measurement of interest hedges, and in the prior year did not include results
from container shipping operations.
3 Equity divided by balance sheet total in %, variance is given in percentage points.
4 Continuing operations
»We are on track because we have undergone a transformation. This year,
in particular, has shown that the realignment we launched in 2014 to focus on the hotel, cruise and destination business has
now become TUI's special strength. Only five years ago, a similar summer would have left its mark on TUI, too. We have now
become an integrated hotel and cruise group. We develop,
we invest and we operate. And we
are increasingly becoming a digital and platform organisation.«
Friedrich Joussen, CEO of TUI AG
LETTER TO OUR
SHAREHOLDERS
Dear shareholders,
2018 was another growth year for TUI. We delivered on our promises in a challenging market environment. Our operating result
again delivered double-digit growth for the fourth time in a row - it grew by nearly eleven per cent at constant currency in
the completed financial year.
The robust results delivered in 2018 are particularly gratifying given that we were operating under exceptional circumstances
last year. In the UK, the exchange rate and purchasing power of sterling were adversely affected by Brexit. Air traffic in
Europe faced particular challenges. And in our European home markets, we experienced a record summer - with a summer heatwave
lasting right into the autumn. This brought its weight to bear on results in our sector in the course of the financial year.
I would like to extend a special word of thanks to our customers who chose to travel with TUI and its brands, and to you, our
shareholders, for your loyalty to TUI. Let me also thank all the employees who looked after our guests and again created
unforgettable moments during their holidays in 2018. The Executive Board and the Supervisory Board will be proposing another
increase in the dividend to 0.72 euros for the completed year to the Annual General Meeting.
We are on track because we have undergone a transformation. This year, in particular, has shown that the realignment we
launched in 2014 to focus on the hotel, cruise and destination business has now become TUI's special strength. Only five years
ago, a similar summer would have left its mark on TUI, too, as the Group's focus and earnings structure were too one-sided and
above all excessively geared to our classical tour operation business. We have now become an integrated hotel and cruise
group. We develop, we invest and we operate. And we are increasingly becoming a digital and platform organisation.
Today's success is important. However, what do we need to do to stay on track and keep growing? We used 2018 to define our
position. Are we fit for further growth? How are we going to further enhance the quality, efficiency and strength of today's
businesses? And where do our strong global TUI brand and the increasing digitalisation of our businesses create new growth
areas for the Group? Let me comment on some of the decisions we took:
Our classical tour operation business is characterised by strong competition, seasonality and low margins in European source
markets. That is why we must identify synergies and enhance our efficiency. Since the summer, we have clustered the Group's
worldwide tour operators and airlines into Markets & Airlines, managed by an Executive Board member. We have to learn more
from one another, rapidly transfer successful models from one market to another and harmonise non-customer-facing activities.
This transformation has begun and will enhance the efficiency and competitiveness of our classical tour operation business.
Where markets have already achieved the required level of maturity, TUI is already fully digital. TUI Nordic in Scandinavia is
an example of that. We will not ignore the social and cultural particularities of our markets and customers, but we will be at
the forefront of this transformation in other countries, too.
Today, 70 per cent of our operating result is delivered by holiday experiences developed and designed by us: hotels, cruise
ships, excursions and activities in the holiday regions. This is where customers experience the strength of the TUI brand.
These holiday moments make holidays with TUI so special and personal. We are growing and investing in this segment so as to
strengthen it. Despite the large variety of holiday experiences offered by TUI Group, we want them to display a distinctive
signature. This includes our Group's own hotel brands such as TUI Blue, Riu, Robinson, TUI Magic Life, hotel concepts such as
TUI Sensimar, TUISensatori and TUI Family Life, global hotel purchasing with our partners, the cruise lines and destination
activities.
This is where we are seeking further growth. We know our customers very well, we know when they travel where, and what
services they appreciate, be it holiday destinations, hotel rooms, cruise suites, excursions or activities. If we put this
knowledge to smart use, we can create great value added for our customers - and for us, as we will be able to generate
additional turnover and earnings. We have paved the way for that growth through our comprehensive digitalisation strategy and
our investments in IT as well as new technologies, which are increasingly paying off. Here, too, our transformation as a
digital company has progressed and opened up new growth areas.
The destination activities market, in particular, is delivering extremely strong growth, promising highly attractive returns
and still typically features many small, local providers. With more than 27 million customers - thereof around 21 million
guests from our European source markets, a highly professional international team on the ground, a strong digital
infrastructure and networked customer systems, we are well placed to take a leading international position in this market for
tours and excursions and to deliver very profitable growth. Usually, several months pass after a holiday booking before our
customers depart for their trip. That period offers us great potential to submit personalised offerings for activities in the
destination to our customers - from the 'Select your room' option via special excursions through to reservations for
restaurants, sporting programmes and wellness facilities.
Having identified the growth potential in this area, we made investments in the completed year by purchasing two companies. By
acquiring destination management from Hotelbeds Group, we doubled the footprint of Destination Experiences from 23 to 49
countries. We now have a team on the ground in almost every major destination in the world and are able to develop new
products and services for our customers. This summer, we purchased the Milan-based technology start-up Musement. The Italian
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