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TUI expects to post double-digit earnings growth after it enjoyed strong summer trading

Last updated: 15:00 28 Sep 2017 BST, First published: 07:58 28 Sep 2017 BST

TUI plane
TUI reiterated its guidance of at least 10% growth in underlying EBITA for the financial year 2016/17

TUI AG (LON:TUI) has said it expects to grow its underlying full-year earnings by at least 10% after Europe's largest tour operator enjoyed strong summer trading at its hotels and resorts.

In a pre-close season trading update, the FTSE 100-listed also said trading for future seasons, albeit at an early stage, was in line with expectations.

READ: TUI lifts annual turnover forecast as tourism remains strong despite weak pound, terrorist attacks

TUI Group’s chief executive, Friedrich Joussen, said: “Whilst there are at times external factors which can create uncertainty in specific markets and destinations, we are confident that our balanced portfolio, content led growth strategy and integrated model leave us well positioned to continue to deliver against our plans.”

He added: “We are therefore pleased to reiterate our guidance of at least 10% growth in underlying EBITA for the financial year 2016/17 and look forward to providing an update on our strategy this December."

Referring to the recent hurricanes which have battered the Caribbean and Florida, the group simply said its “focus has been on supporting customers staying in these areas and assisting with rebooking to alternative destinations where necessary.”

UK bookings lower but against tough comparatives

In a note to clients, analysts at Shore Capital, said; “The recent hurricane damage is not expected to have material impact on trading, booking trends in Germany are encouraging, especially with demand for NA and Turkey recovering, and although UK bookings are down, it is against tough comparatives with pricing ahead by 6%; we would also expect continued strong growth in its Cruise division along with Hotels & Resorts.”

They added: “Following today’s update we reiterate our 2017F PBT estimate of €961m (EPS: €1.10) and €1,070m (EPS: €1.24) next year. On a 2018F PER of 11x and with an increasingly higher quality business emerging we reiterate our buy stance.”

In late afternoon trading, TUI shares were 0.2%, or 3p lower at 1,262p.

 -- Adds analyst comment, share price --

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