Tui Travel profits in a surprise rebound

LEISURE firm Tui Travel released stronger-than-expected profits yesterday, despite a tough year for UK travel.

The travel group said that its adjusted pre-tax profits rose four per cent in the last fiscal year, ended 30 September, while its underlying full-year operating profit increased by 11 per cent.

The results are from a rough year for Tui Travel. The company suffered as a result of April’s Icelandic volcano disruption which cost the group £104m.

Pre-tax loss narrowed from £94m to £36m. Adjusted for exceptionals, including the impact of the volcanic eruption, underlying pre-tax profit increased four per cent from £324m to £337m. Overall revenue declined two per cent to £13.5m. But basic earnings per share did increase by 10 per cent, to 22p. Net debt now stands at £249m, down from £338m last year.

Chief executive Peter Long said he was pleased with the results: “In a difficult trading environment we have continued to achieve incremental synergy benefits and made good progress in delivering the turnaround opportunity during the year.”

Tui is expected to have a better year this year than last year. While the UK market is maturing, Tui expects to grow in Germany as its economy experiences a manufacturing boom.

Tui is also expected to experience low cost inflation next year, said analysts at Numis. Costs are expected to rise just two per cent, compared with four per cent at rival Thomas Cook. Tui is also reaping cost savings after its merger with First Choice Holidays in 2007.