DJ TUI AG: TUI GROUP HALF-YEAR FINANCIAL REPORT 1 OCTOBER 2020 - 31 MARCH 2021
TUI AG (TUI) TUI AG: TUI GROUP HALF-YEAR FINANCIAL REPORT 1 OCTOBER 2020 - 31 MARCH 2021 12-May-2021 / 08:00 CET/CEST Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. =---------------------------------------------------------------------------------------------------------------------- TUI GROUP Half-Year Financial Report 1 October 2020 - 31 March 2021 Contents Interim Management Report H1 2021 Summary Report on changes in expected development Structure and strategy of TUI Group Consolidated earnings Segmental performance Financial position and net assets Comments on the consolidated income statement Alternative performance measures Other segment indicators Corporate Governance Risk and Opportunity Report Unaudited condensed Consolidated Interim Financial Statements Notes General Accounting principles Group of consolidated companies Acquisitions - Divestments Notes to the unaudited condensed consolidated income statement of TUI Group Notes to the unaudited condensed consolidated statement of financial position of TUI Group Responsibility statement Review Report Cautionary statement regarding forward-looking statements Financial calendar Contacts Interim Management Report TUI Group - financial highlights EUR million H1 2021 H1 2020 adjusted Var. % Var. % at constant currency Revenue 716.3 6,638.7 - 89.2 - 89.0 Underlying EBIT1 Hotels & Resorts - 198.3 56.1 n. a. n. a. Cruises - 153.3 26.9 n. a. n. a. TUI Musement - 62.0 - 28.9 - 114.5 - 117.6 Holiday Experiences - 413.6 54.2 n. a. n. a. Northern Region - 418.3 - 415.2 - 0.7 - 2.4 Central Region - 272.0 - 179.5 - 51.5 - 51.5 Western Region - 159.8 - 189.6 + 15.7 + 16.6 Markets & Airlines - 850.1 - 784.3 - 8.4 - 9.1 All other segments - 45.1 - 64.6 + 30.2 + 29.9 Underlying EBIT - 1,308.8 -794.8 - 64.7 - 66.5 EBIT1 - 1,298.5 -746.0 - 74.1 Underlying EBITDA - 856.1 -266.0 - 221.9 EBITDA2 - 831.5 - 196.9 - 322.4 Group loss - 1,498.1 - 815.0 - 83.8 Earnings per share EUR - 1.83 - 1.46 - 25.3 Net capex and investment - 108.4 287.2 n. a. Equity ratio (31 March)3 % 1.3 15.6 - 14.3 Net financial position (31 March) - 6,813.1 - 4,902.5 - 39.0 Employees (31 March) 36,029 53,525 - 32.7
Differences may occur due to rounding.
This Quarterly Statement of the TUI Group was prepared for the reporting period H1 FY2021 from 1 October 2020 to 31 March 2021.
1 We define the EBIT in underlying EBIT as earnings before interest, income taxes and result of the measurement of the Group's interest hedges. For further details please see page 14.
2 EBITDA is defined as earnings before interest, income taxes, goodwill impairment and amortisation and write-downs of other intangible assets, depreciation and write-downs of property, plant and equipment, investments and current assets.
3 Equity divided by balance sheet total in %, variance is given in percentage points.
H1 2021 Summary - Group revenue of EUR716m, down 89% as a result of extended travel restrictions imposed across our key European
markets for the majority of the first half. - Within Hotels & Resorts, 122 hotels were open at end of the quarter reflecting both the usual winter seasonality
and limited operations from travel restrictions. - TUI Cruises and Hapag-Lloyd Cruises operated five ships during the first half, offering itineraries to the Baltic
and North Sea, and Greek Islands in the first quarter and to the Canary Islands in the second. - Markets & Airlines, took away 684k customers on holiday during the period, demonstrating the continued desire to
travel when restrictions allow. - Group underlying EBIT loss of EUR1,309m reflecting our continued cost discipline, contribution from operational
opportunities, helping to reduce average monthly underlying EBIT loss to EUR218m per month. - During the second quarter, we concluded all elements of our third support package of EUR1.8bn, including >EUR500m fully
subscribed rights issue. - Additionally, we successfully placed EUR400m convertible bonds post balance sheet date. - Our available liquidity1 as at 7 May 2021 amounts to EUR1.7bn. - Global Realignment Programme on track to achieve our cost savings target of EUR400m p.a by FY2023. Reflecting our
accelerated plans to transform into a more agile and leaner business, we expect to deliver 50% of our targeted
savings by end of FY2021. - Pipeline of 2.6m customers booked for Summer 2021 season. Planned capacity of 75% (of Summer 2019) for our upcoming
peak Summer months (Q4), with our re-opening portfolio focused on destinations such as Greece, Balearics and
Canaries with anticipated good vaccinations rates and low infection rates. - The continued vaccination progress across our key customer markets and destinations, combined with more testing,
and comprehensive hygiene measures throughout our eco-system, should enable the safe return to holidays this
Summer. - Insight survey2 results tell us our customers value a strong brand, flexibility, comprehensive health and safety
protocols with a good customer experience during these unprecedented times. TUI, with its integrated model, strong
brand, and in-destination service and online 24/7 support, is the model of choice for many holiday makers.
1 Available liquidity defined as unrestricted cash plus committed lines including third support package (contains KFW credit facility provided by KfW of EUR200m as of end of May) and convertible bonds
2 TUI Consumer Travel Behaviour Survey, August 2020
Completion of Third Support Package
Our third support package as announced on 2 December 2020 amounting to EUR1.8bn, agreed with our shareholders, a syndicate of underwriting banks, KfW and the German government (WSF) was successfully concluded in the period, comprising the following components: - a capital increase with subscription rights of >EUR500m - a silent participation, convertible into shares by the WSF of EUR420m (IFRS equity accounted) - a non-convertible silent participation by the WSF of EUR671m (IFRS equity accounted) - an additional credit facility provided by KfW of EUR200m
EUR400m placement of convertible bonds
Post balance sheet date on 16 April 2021, we successfully completed the placement of senior unsecured convertible bonds for EUR400m. These bonds have been offered at a coupon rate of 5% and were 2 times oversubscribed. They utilise 68% of authorised capital resolved at our recent AGM, representing around 75m underlying shares.
Unless previously converted, redeemed or repurchased and cancelled, the convertible bonds will be redeemed at their principal amount on 16 April 2028. Investors also have the possibility to convert the bonds into new and/or existing no-par value ordinary registered shares of TUI. The initial conversion price was set at 5.3631 EUR, representing a conversion premium of 25% above the reference share price of 4.2905 EUR.
With the successful offering, we plan to start the refinancing of loans from the COVID-19 support packages, in addition to strengthening our liquidity in the short-term.
Liquidity Position/Cash Outflow
Available liquidity1 as at 7 May 2021 amounts to EUR1.7bn. Bearing in mind the typical seasonal swings, and combined with clear signs of pent-up demand as evidenced by the immediate spike in bookings when a destination is re-opened, we are fully confident that the typical seasonal inflow usually seen in Q2, will materialise as we head towards the peak Summer season.
Our assumption for Q3 FY2021, is for departure volumes being muted in the light of travel restrictions. We however anticipate significant working capital inflow once reopening of markets are confirmed and destinations are announced, in line with our planned capacity for Q4.
Our assumption for Q4 FY2021, is for significant positive contributions from strong volumes and normalised level of operations.
1 Available liquidity defined as unrestricted cash plus committed lines including third support package (contains KFW credit facility provided by KfW of EUR200m as of end of May) and convertible bonds
Net debt
Net financial position improved to EUR6,813m versus our net debt position of EUR7,177 as at 31 December 2020 (Q1). The EUR364m decrease in net debt in the second quarter predominantly reflects net cash proceeds from our capital raise and the silent participations of the WSF.
The WSF measures comprise a silent participation convertible into shares in TUI of EUR420m (Silent Participation I) and a second silent participation of EUR671m. At 31 March 2021, Silent Participation I was fully paid in and Silent Participation II in the amount of EUR500m. In the IFRS consolidated financial statements, the silent participations are shown as equity due to their nature and are therefore not included in the Group's net debt.
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With the successful placement of EUR400m convertible bonds post balance sheet date, we have taken the first step towards refinancing our government facilities. As international leisure travel resumes and global markets begin to recover, it is our priority to rebuild a robust financial profile and return to a gross leverage ratio target of less than 3x. The Group continues to explore measures to accelerate de-leveraging and ensure the appropriate capitalisation to support growth over the longer term.
Trading Update - Summer 2021 bookings1 including amendments and voucher re-bookings, down 69% versus Summer 2019 (undistorted by
COVID-19). - 2.6m customers booked for our Summer 2021 programme, which is a small reduction since our Q1 update, reflecting
customers choosing to defer their booking to future seasons due to the lack of clarity provided by governments on
lifting of travel restrictions. - Our capacity plans of 75% (for Q4 peak summer, compared to 2019 programmes) remains in line with our AGM update on
25 March 2021. We will be focussed on a reopening portfolio of destinations with expected well vaccination and low
incidence rates. Destinations will include the Greek islands, the Balearics, the Canaries and Portugal. More than
60% of our planned capacity for Summer 2021 are to destinations with anticipated low incidence rates. - Summer 2021 ASP1 is up 22%, and continues to be driven by both pricing and mix, with higher level of packaged
holidays booked versus prior year. - We anticipate TUI Cruises to operate a phased restart with summer itineraries from May, with its full Mein Schiff
fleet of seven ships to be in operation by Q4. Hapag-Lloyd Cruises is currently sailing with Europa 2, with Europa
to resume in Q4. Expedition Class Hanseatic nature and Hanseatic inspiration to resume end of May with short
cruises, with their newest ship Hanseatic spirit scheduled to join from August. - Marella is offering UK cruise itineraries with Explorer and Explorer 2 from end of June. From August, Discovery and
Discovery 2 are scheduled to operate cruises to the Mediterranean. - Continued customer appetite and intention to travel for future seasons: - Winter 2021/22 - UK bookings1 up 17%, - Summer 2022 bookings - UK bookings1 up 293%
1 Bookings up to 2 May 2021 compared to respective bookings for 2019 programmes (undistorted by COVID-19) and relate to all customers whether risk or non-risk
Global Realignment Programme
As one of our self-help measures, we announced our Global Realignment Programme to deliver targeted savings across the group of EUR400m per annum by FY2023. Projects are well underway across core functions, Markets & Airlines and TUI Musement (formerly Destination Experiences) and we are on track to achieve almost 50% of our targeted savings by end of the current financial year. Of the 8k roles potentially impacted as part of the programme, we have to date a reduction of 6k FTEs already agreed.
Report on changes in expected development
It remains difficult to forecast the further course of the pandemic and its impact on customer behavior. In view of these considerable uncertainties, the Management Board continues to believe that it is not in a position to issue a specific forecast for the financial year2021.
The expectations for the financial year 2021made in the Annual Report 2020 have been adjusted in the following points.
Due to the travel restrictions in the first half of the year and the current expectations for the summer season 2021, we now expect TUI Group revenue (IFRS 16) in financial year 2021 to be down year-on-year at constant currency rates.
Based on expected gross capital expenditure, divestments and recoveries from advance payments made for aircraft orders, we expect cash inflow from net investments in property, plant and equipment and financial investments to be at least at the prior-year level in financial year 2021. - See also TUI Group Annual Report 2020 page 50
Structure and strategy of TUI Group
Reporting structure
The present Half-Year Financial Report 2021 is based on TUI Group's reporting structure set out in the Annual Report 2020. - See TUI Group Annual Report 2020 from page 26
Group strategy
TUI Group's strategy set out in the Annual Report 2020 should be continued after the effects of COVID-19 have subsided. - See TUI Group Annual Report 2020 from page 23
Consolidated earnings
Revenue
EUR million H1 2021 H1 2020 Var. %
Hotels & Resorts 83.9 300.2 - 72.0
Cruises 1.5 481.6 - 99.7
TUI Musement 18.6 300.4 - 93.8
Holiday Experiences 104.0 1,082.2 - 90.4
Northern Region 159.1 2,187.0 - 92.7
Central Region 337.4 2,209.9 - 84.7
Western Region 102.1 1,075.1 - 90.5
Markets & Airlines 598.6 5,471.9 - 89.1
All other segments 13.6 84.5 - 83.9
TUI Group 716.3 6,638.7 - 89.2
TUI Group (at constant currency) 732.4 6,638.7 - 89.0
Underlying EBIT
EUR million H1 2021 H1 2020 Var. %
adjusted
Hotels & Resorts - 198.3 56.1 n. a.
Cruises - 153.3 26.9 n. a.
TUI Musement - 62.0 - 28.9 - 114.5
Holiday Experiences - 413.6 54.2 n. a.
Northern Region - 418.3 - 415.2 - 0.7
Central Region - 272.0 - 179.5 - 51.5
Western Region - 159.8 - 189.6 + 15.7
Markets & Airlines - 850.1 - 784.3 - 8.4
All other segments - 45.1 - 64.6 + 30.2
TUI Group - 1,308.8 - 794.8 - 64.7
EBIT
EUR million H1 2021 H1 2020 Var. %
adjusted
Hotels & Resorts - 198.4 56.0 n. a.
Cruises - 153.4 26.9 n. a.
TUI Musement - 67.1 - 39.1 - 71.6
Holiday Experiences - 418.9 43.9 n. a.
Northern Region - 441.0 - 423.4 - 4.2
Central Region - 224.1 - 100.5 - 123.0
Western Region - 166.5 - 199.0 + 16.3
Markets & Airlines - 831.7 - 722.8 - 15.1
All other segments - 48.0 - 67.0 + 28.4
TUI Group - 1,298.5 - 746.0 - 74.1
Segmental performance
Holiday Experiences
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 104.0 1,082.2 - 90.4
Underlying EBIT - 413.6 54.2 n. a.
Underlying EBIT at constant currency - 422.7 54.2 n. a.
Hotels & Resorts
EUR million H1 2021 H1 2020 Var. %
adjusted
Total revenue 146.8 582.4 - 74.8
Revenue 83.9 300.2 - 72.1
Underlying EBIT - 198.3 56.1 n. a.
Underlying EBIT at constant currency - 204.6 56.1 n. a.
Capacity hotels total1 ('000) 9,418 16,634 - 43.4
Riu 4,782 8,199 - 41.7
Robinson 601 1,337 - 55.1
Blue Diamond 2,032 2,298 - 11.6
Occupancy rate hotels total2 40 75 - 35
(in %, variance in % points)
Riu 41 82 - 41
Robinson 48 67 - 19
Blue Diamond 39 75 - 36
Average revenue per bed hotels total3 64 73 - 13.3
(in EUR)
Riu 55 70 - 20.5
Robinson 92 97 - 5.5
Blue Diamond 93 123 - 24.2
Revenue includes fully consolidated companies, all other KPIs incl. companies measured at equity.
1 Group owned or leased hotel beds multiplied by opening days per quarter
2 Occupied beds divided by capacity
3 Arrangement revenue divided by occupied beds
122 hotels were open as at the end of the period (34% of Group hotel portfolio), reflecting both the winter seasonality and travel restrictions currently in place.
Overall H1 occupancy rate declined 35%pts to 40% across our operating portfolio, reflecting the impact of travel restrictions across our key European markets throughout most of H1. Average daily rate declined by 13% to EUR63.5.
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Underlying EBIT loss of EUR198m, down EUR254m versus prior year reflects the factors as outlined above.
Cruises
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue1 1.5 481.6 - 99.7
Underlying EBIT - 153.3 26.9 n. a.
Underlying EBIT at constant currency - 155.2 26.9 n. a.
Occupancy (in %, variance in % points)
TUI Cruises 35 97 - 62
Marella Cruises - 96 n. a.
Hapag-Lloyd Cruises2 33 77 - 44
Passenger days ('000)
TUI Cruises 354 2,854 - 87.6
Marella Cruises - 1,366 n. a.
Hapag-Lloyd Cruises 21 191 - 88.8
Average daily rates3 (in EUR)
TUI Cruises 104 141 - 26.4
Marella Cruises4 (in GBP) - 146 n. a.
Hapag-Lloyd Cruises2 411 611 - 32.7
1 No revenue is carried for TUI Cruises and Hapag-Lloyd Cruises as the joint venture is consolidated at equity
2 Hapag-Lloyd Cruises prior year KPIs restated to align to TUI Cruises methodology
3 Per day and passenger
4 Inclusive of transfers, flights and hotels due to the integrated nature of Marella Cruises, in GBP
In the first quarter, TUI Cruises operated three ships (Mein Schiff 1, 2 and 6), offering short "Blue Cruises" around the Baltic Sea, Greek and Canary Islands. In the second quarter, Mein Schiff 1 and 2 operated with itineraries to the Canaries. H1 average daily rate of the operated fleet was EUR104, down 26% versus prior year (H1 FY2020: EUR141) reflecting the shorter average duration and more local routes of "Blue Cruises". H1 occupancy of the operated fleet was 35%, reflecting the overall more subdued environment for departures as a result of travel restrictions as well as adherence to COVID-19 government safety advice capping the numbers of passengers on board.
Hapag-Lloyd Cruises operated two ships during the first quarter, the Europa 2 and Hanseatic inspiration, which offered sailings to the Baltic Sea and the Canaries. The Europa 2 continued to sail in the second quarter, offering itineraries to the Canary Islands. H1 average daily rate for the operated fleet was EUR411, down 33% versus prior year (H1 FY2020: EUR611), reflecting the pricing of shorter and more local itineraries. H1 occupancy of the operated fleet was 33% (H1 FY2020: 77%).
Marella Cruises (our UK cruise brand) remained suspended throughout the period, in line with UK government travel advice, with our teams in preparation mode for restart towards the end of Q3.
Underlying EBIT loss of EUR153m, down EUR180m versus prior year, reflects the limited capacity operated over the period as a result of travel restrictions. Prior year includes 100% result of Hapag-Lloyd Cruises (H1 FY2020: Underlying EBIT of EUR22m) which is now consolidated at equity within the TUI Cruises Joint Venture.
TUI Musement (formerly Destination Experiences)
EUR million H1 2021 H1 2020 Var. %
adjusted
Total revenue 25.4 423.7 - 94.0
Revenue 18.6 300.4 - 93.8
Underlying EBIT - 62.0 - 28.9 - 114.5
Underlying EBIT at constant currency - 62.9 - 28.9 - 117.6
141K excursions and activities sold, down 90% versus prior year, reflecting the limited operations throughout the period, resulting in an underlying EBIT loss of EUR62m, a decline of EUR33m on prior year.
Online distribution was 50% increasing from 21% in H1 2020, driven by the successful integration of Musement inventory across our TUI source markets App.
Markets & Airlines
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 598.6 5,471.9 - 89.1
Underlying EBIT - 850.1 - 784.3 - 8.4
Underlying EBIT at constant currency - 855.5 - 784.3 - 9.1
Direct distribution mix1,3 76 73 + 3
(in %, variance in % points)
Online mix2,3 56 49 + 7
(in %, variance in % points)
Customers ('000)3 684 6,265 - 89.1
1 Share of sales via own channels (retail and online)
2 Share of online sales
3 Like-for-like basis excluding disposed entities Berge & Meer and Boomerang
As covered above, due to the extended lockdown measures across many of our key source markets, operations have been highly limited for the majority of the first half. A total of 684k customers departed in the first half, down 89% versus prior year, with around half departing in the month of October, prior to more recent restrictions.
Underlying loss of EUR850m reflects the limited capacity operated over the period.
Northern Region
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 159.1 2,187.0 - 92.7
Underlying EBIT - 418.3 - 415.2 - 0.7
Underlying EBIT at constant currency - 425.3 - 415.2 - 2.4
Direct distribution mix1 93 91 + 2
(in %, variance in % points)
Online mix2 76 65 + 11
(in %, variance in % points)
Customers ('000) 119 2,239 - 94.7
1 Share of sales via own channels (retail and online)
2 Share of online sales
Underlying loss of EUR418m, down EUR3m versus prior year. 119K customers departed in the first six months, down 95% versus prior year.
Direct distribution increased by 2%pts to 93% (H1 FY2020: 91%) with online distribution increasing by 11%pts to 76% (H1 FY2020: 65%).
Central Region
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 337.4 2,209.9 - 84.7
Underlying EBIT - 272.0 - 179.5 - 51.5
Underlying EBIT at constant currency - 272.0 - 179.5 - 51.5
Direct distribution mix1,3 63 51 + 12
(in %, variance in % points)
Online mix2,3 37 22 + 15
(in %, variance in % points)
Customers3 ('000) 333 2,196 - 84.9
1 Share of sales via own channels (retail and online)
2 Share of online sales
3 Like-for-like basis excluding disposed entities Berge & Meer and Boomerang
Underlying loss of EUR272m, down EUR93m versus prior year. 333K customers departed in the first six months, down 85% versus prior year.
Direct distribution increased by 12%pts to 63% (H1 FY2020: 51%) with online distribution increasing by 15%pts to 37% (H1 FY2020: 22%).
Western Region
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 102.1 1,075.1 - 90.5
Underlying EBIT - 159.8 - 189.6 + 15.7
Underlying EBIT at constant currency - 158.2 - 189.6 + 16.6
Direct distribution mix1 86 78 + 8
(in %, variance in % points)
Online mix2 72 61 + 11
(in %, variance in % points)
Customers ('000) 232 1,830 - 87.3
1 Share of sales via own channels (retail and online)
2 Share of online sales
Underlying loss of EUR160m, up EUR30m versus prior year. 232K customers departed in the first six months, down 87% versus prior year.
Direct distribution increased by 8%pts to 86% (H1 FY2020: 78%) with online distribution increasing by 11%pts to 72% (H1 FY2020: 61%).
All other segments
EUR million H1 2021 H1 2020 Var. %
adjusted
Revenue 13.6 84.5 - 83.9
Underlying EBIT - 45.1 - 64.6 + 30.2
Underlying EBIT at constant currency) - 45.3 - 64.6 + 29.9
Underlying EBIT loss was EUR45m, up EUR20m versus prior year.
Financial position and net assets
Cash Flow / Net capex and investments / Net debt
In the period under review the TUI Group's operating cash flow continued to be impacted by the travel restrictions imposed by COVID-19 in March 2020.
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