TUI AG (LSE:TUI), the world's largest holiday company, said it expects its current year to be "solid" as the recovery from the coronavirus pandemic helped it swing back into profit for the last financial year.
The FTSE 250-listed firm, which operates holidays, hotels, cruise ships and an airline, posted group underlying earnings (EBIT) of €408.7mln for the 12 months to 30 September 2022, compared to a €2.08bn loss the previous year. Revenue in the period rose to €16.55bn, up from €4.73bn in 2022, a 250% increase.
For 2023, TUI guided to a significant increase in underlying earnings (EBIT), although it was cautious given the economic outlook. It said average holiday prices for this winter were 28% higher than pre-pandemic levels which would help cushion against high inflation levels.
"We also expect 2023 to be a solid and good year, but we are very aware of external market factors," said TUI's new chief executive Sebastian Ebel in the results statement. Ebel is just two months into the TUI top job, having formerly been its CFO.
Winter bookings were stable, TUI said, although it noted that customers were booking close to departure dates.
Given its return to profit and a forecast for higher earnings in 2023, TUI said it planned to repay the €730mln of COVID-19 aid it had taken from the German state in full and reduce related credit lines.
One swallow does not a summer make
In reaction to the TUI numbers, Richard Hunter, head of Markets at interactive investor, commented: “TUI has seen improvements across the board as it continues its recovery following the ravages of the pandemic, but this recovery is something of a marathon and not a sprint.
"If the direction of fourth quarter trading is to become a trend, the company is well placed to repair some of the damage done to its balance sheet. Indeed, for the year as a whole, net debt has reduced from €5bn to €3.4bn, with background liquidity of €3.7bn, which should provide a buffer in the event of trading difficulties."
"Even so, one swallow does not a summer make and investors will need to see evidence of an established trend before warming to the prospects of the company. In the meantime, inflation, disruptions, labour shortages and competition from lower-cost operators which could well capture the imagination of cash-starved consumers could all provide headwinds," he concluded.