Thomson Holidays owner TUI Group PLC (LON:TUI) has reported a narrower first-quarter loss after unveiling plans to sell its specialist travel arm, Travelopia to private equity firm KKR for around £325mln.
The FTSE 100-listed firm reported a ‘seasonal’ underlying loss of €66.mln for the three months to December 31, a 17% improvement on the £80.4mln loss seen at the same stage a year earlier.
The group – which was formed after Germany’s TUI AG took full control of UK-listed TUI Travel, home of the First Choice and Thomson brands - maintained its forecast for core earnings to rise by at least 10% this year at constant currency levels.
In its results statement, TUI said: “Current trading remains in line with our expectations, with continued growth in revenues and bookings in most Source Markets, further openings planned in our hotel and concept brands and the launch of two cruise ships this Summer.”
The improved first-quarter numbers came despite the firm’s German TUI Fly unit being hit by costs of around €22mln due to staff calling in sick after a new strategy of industrial action was announced in October.
The results came a day after the London-listed group announced the Travelopia sale. TUI had put Travelopia – which is comprised of over 50 brands offering specialist luxury, adventure and education holidays – up for sale in September as part of a push to dispose of non-core assets.
Kepler Cheuvreux analyst Jurgen Kolb said the enterprise value of the disposal of Travelopia is slightly below its expectations but the deal is "good news" for TUI's transformation.
On its first quarter results, the broker said numbers were in line with its forecasts and reiterated a 'buy' rating on the stock.
Strong gains ...
By lunchtime, TUI Group shares on the FTSE 100 index jumped almost 5% higher, up 56p to 1,213p.
In a note to clients, Shore Capital analyst Greg Johnson, said: “Booking patterns look solid and ‘in line with management expectations’ with the winter programme 87% sold (in line with last year) with revenues up 8% and bookings up 4% reflecting strong growth in UK long haul.
“For summer 2015 the programme is 35% sold to date with revenues up 9% and bookings up 4%, with a particular strong performance from the UK, which is 43% sold with revenues up 12% and bookings up 3%, driven by strong growth Canaries, Greece, Cyprus and good growth in long haul.”
Reiterating a ‘buy’ rating on the stock, the analyst added: “The completion of the sale of the Travelopia assets was on a 2016A EV/EBIT multiple of over 14x. In line with strategy, we would expect these proceeds to reinvested over time in cruise and hotel assets. We see the price as attractive for TUI”.
-- Adds share price, broker comment --