Record results for TUI

THOMSON AND First Choice owner TUI Travel reported a year of record results as its new line of luxury all-inclusive deals kept up demand for package holidays.

Europe’s biggest travel company shrugged off the impact of this summer’s heatwave to post its highest ever earnings across the business and in its UK arm, with overall underlying pre-tax profits surging 21% to a higher-than-expected £473 million in the year to September 30.

Package holiday sales rose 5% in the UK, helped by its focus on more profitable unique holidays, which now account for 83% of all departures.

UK underlying earnings rose 27% to £251m.

It paid just £14m of UK corporation tax as it continues to offset losses incurred following a restructuring launched six years ago.

It courted controversy last year when it admitted paying zero UK corporation tax.

But the group said it paid another £96m of corporation tax in other countries and expects to pay tax of around 20% of underlying pre-tax profits as its tax bill begins to normalise.

On a bottom-line basis, pre-tax profits fell 10% to £181m as it was hit by write-downs in its specialist and activity division and embattled French tour operator, which saw annual losses widen to £60m.

TUI said current trading was “robust”, with 60% of its 2013/14 winter holidays already sold.

It added that it was pleased with demand for next summer despite strong comparatives.

Underlying pre-tax profits at TUI Travel surged 21%.