Thomas Cook’s cost cuts deliver return to profit
29 November 2013 1:06am
THOMAS Cook shares leapt 14.7 per cent yesterday after the travel group said the first full year of Harriet Green’s turnaround plan had produced more cost savings than expected.
The firm also beat forecasts with a 49 per cent rise in underlying earnings to £263m, while revenues rose 1.3 per cent to £9.3bn.
On a statutory basis, the tour operator posted earnings of £13m – its first such profit since 2010.
Green, who took over as chief executive 16 months ago, said the results put the company “back on a firm trajectory of profitable growth”.
Thomas Cook now aims to cut costs by £440m by 2015, or 10 per cent more than expected. It also announced a second wave of savings that will shave a similar sum from expenses by 2018.
The firm has more than halved its net debt to £421m. Thomas Cook recently streamlined its brands from 85 to 30 and changed its logo as it tries to entice more customers to its online sales channels, which now make up 36 per cent of sales.
The 172-year-old group, which completed a £1.6bn refinancing over the summer, has also cut 2,500 jobs and closed a fifth of its high street stores.
A slew of asset sales, including a stake in the national air traffic controller, have taken its disposals up to £61m, putting it on track to hit a 2015 target of between £100m and £150m.
“The first wave of cost savings was about picking off the low-hanging fruit, and wave two will be about generating savings through better using Thomas Cook’s scale in areas including transportation and purchasing,” Green said.
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