Some don’t like it hot
The summer heatwave has cooled the hopes of travel operator Tui
TUI, the world’s largest travel company, has insisted one-off charges from Turkey and airline disruption would not knock full-year profits off course.
The dual-listed outfit, which previously traded under the Thomson brand in Britain, said yesterday it expected a €35m (£31m) full-year hit from the devaluation of the Turkish lira after local loans were translated back into euros.
The Turkish currency has fallen by 27pc against the euro since the start of 2018 on concerns about President Recep Tayyip Erdoğan’s increased influence over monetary policy, and more recently after the US imposed sanctions on two Turkish ministers.
Meanwhile flight disruption caused by air traffic controller strikes cost the company €13m. Revenue rose 5pc to €5bn while net profit fell 31pc to €110.5m in the three months to June.
Tui reaffirmed its full-year guidance, saying revenue would grow by 10pc on a constant currency basis. For the first nine months of the year, revenues grew 7.6pc.
Fritz Joussen, the Tui chief executive, remained “cautious” about its critical final three months, when it traditionally swings into profit as people from the northern hemisphere embark on summer holidays. However full-year figures would “not be a massive outperformance”, he said. The summer heatwave made it less likely that Tui would pick up extra business with people more inclined to stay at home rather than jet off on a last-minute booking.
“Tourism companies don’t usually like it when it’s hot,” he said.
Last week rival Thomas Cook warned full-year profits would be at the lower end of guidance as the so-called “lates” market stuttered with Britain basking in unusually hot weather.
Tui investors were spooked by the results announcement, sending shares down as much as 10pc.
Shore Capital analyst Greg Johnson had pencilled in a €10m hit from the weakness of the Turkish lira.
Russ Mould, of AJ Bell, added: “The market appears to be sceptical of Tui’s pledge to achieve full-year guidance, perhaps mindful of its rival Thomas Cook guiding for results to be at the lower end of expectations last week.”
Analysts from Barclays agreed, saying recent “softness” in the UK and France, as well as the charges from the airline disruption, suggested there was a “small risk” the company may miss full-year expectations.