Thomas Cook has confirmed a pre-tax loss of £53m in a “disappointing” year for the travel operator, which has seen its value tumble.
The package holiday provider, which issued a profit warning earlier this week, reported the £53m loss today, significantly down on the £43m pre-tax profit it posted in the year to September 2017.
Underlying earnings of £250m were also down from £326m the previous year and net debt rose to £389m, while group revenue was up six per cent on a like-for-like basis at £9.6bn.
Shares fell 23 per cent in a single day earlier this week after the company warned profits would be £30m lower than expectations.
They continued to fall today, sliding 1.7 per cent after the company's annual results.
The results also confirmed that the tour operations arm of the business suffered an £88m drop in profit due to the UK heatwave.
In May this year the stock reached 150p but after a series of profit warnings following the UK's summer heatwave it has dropped to 36p.
Chief executive Peter Fankhauser said: “After a good start to the year, we experienced a larger-than-anticipated decline in gross margin following the prolonged period of hot weather in our key summer trading period.”
He added: “The UK was particularly hard hit with very high levels of promotional activity coming on top of an already competitive market for holidays to Spain.”
But the company remained optimistic on the outlook for 2019, expecting to deliver underlying earnings progress and “substantial” progress on operating profit.
Fankhauser said: “Looking ahead we must learn the lessons from 2018 and go into the new year focused on where we can make a difference to customers in our core holiday offering.
“We will put particular attention on addressing the performance in our UK tour operator where the challenges of transformation in a competitive environment remain significant.”
The company also said it planned to open at least 20 new hotels and build on its partnership with Expedia to boost growth.
Fidelity Personal Investing director Ed Monk said the own-brand hotel strategy could to be tough to pull off.
He said: "The company is trying to make itself more robust with a strategy of offering own-brand hotels where profit margin can be higher, but that’s a steep challenge given Thomas Cook’s reputation for offering low-cost packages."
While analysts also said the wider industry had struggled in a difficult year for travel operators.
"The travel operator has been struggling in 2018, and things are getting worse as the year goes on," CMC Markets analyst David Madden said.
"The industry as a whole has been underperforming. The extreme weather this year hurt the travel industry, as the ‘Beast from the East’ and the heatwave was a double negative for the sector.
"Adding to that, industrial action and the rally in oil price over the summer made matters worse," he added.