Travel operator, TUI AG (LON:TUI), delivered growth in underlying earnings in 2017, driven by a strong performance in its hotel and cruise division.
In the year to 30 September 2017, underlying earnings (EBITA) came to €1.1bn, up 10.2% on last year at actual exchange rates or 12.0% at constant currency. Turnover edged up 8.1% on a reported basis or 11.7% at constant currency to €18.5bn.
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The hotels and cruise unit was the star performer with underlying EBITA up 131%, helping to offset the impact of higher than average levels of pilots and crew calling in sick at TUI’s carrier TUIfly at the start of the year and Air Berlin’s collapse.
TUI took a €15mln hit related to receivables for aircraft and crew leased to Air Berlin, which filed for insolvency in August.
Return on invested capital (ROIC) rose 1.7 percentage points to 23.6%.
The dividend was raised by 12.0% to €0.65 each.
Optimism over the future
Looking ahead, the group said it continues to expect to achieve double digit annual earnings growth with less seasonality, strong cash conversion and robust return on invested capital (ROIC) performance.
In fiscal year 2018, TUI estimates a 10% increase in underlying EBITA and reiterated its guidance for at least a 10% underlying EBITA compound annual growth rate through to fiscal year 2020.
“We have a clear ambition - strong strategic positioning, strong earnings growth and strong cash generation, with underlying EBITA doubling between FY14 and FY20,” TUI said.
TUI said winter trading was in line with expectations and has seen an improvement in Turkey.
On Brexit, the company said it has put contingency plans in place to manage a potential disruption to its operations. UK airlines have raised concerns that leaving the EU without a Brexit deal would mean losing all flying rights to the bloc.
TUI called for a transition agreement after Brexit to ensure a smooth transition.
“Despite the Brexit backdrop, the UK continues to deliver a resilient performance in line with our expectations,” the company said.