03:00 Tue 31 Jul 2018
Thomas Cook Group - Thomas Cook Group Q3 2018 Trading Update
Thomas Cook Q3 Trading Statement for the three months ended
HIGHLIGHTS
Our financial commentary is based on like-for-like comparisons unless otherwise stated, as Management believes this provides a clearer view of the Group's underlying year-on-year progression
· Q3 revenue growth of 10% to
· Gross profit down 3% to
· Underlying EBIT up 8% to
· Summer 2018 bookings up 11% on last year with 79% of programme sold
Peter Fankhauser, Chief Executive of Thomas Cook, commented:
"We have grown revenue strongly in the third quarter as more customers chose Thomas Cook for their holidays. I'm pleased to see that the improvements we've made to our holidays are paying off through strong growth in both new and retained customers, at 12% and 5% respectively so far this year.
"Bookings for the summer are up 11% overall, fuelled by strong growth in our
"It's clear that we remain in a competitive environment, particularly in the UK where the growth in popularity of higher-margin destinations like Turkey and Egypt has not fully offset the continued pressure on margins to Spanish holidays. Based on our current view, we now expect growth in full year underlying operating profit to be at the lower end of market expectations.
"I am pleased by the strong strategic progress we have continued to make in the past few months, including the successful opening of our new Cook's Club brand in Greece and the launch of our Expedia alliance for customers in the UK and Scandinavia. We are confident this will lead to further profitable growth over the medium term."
THIRD QUARTER PERFORMANCE
Group revenue increased by 10% to
Gross profit of
Group operating profit (pre-exceptionals) improved by
EBIT Separately Disclosed Items increased by
Financial position
Net debt at
CURRENT TRADING
Summer 2018
Our Summer 2018 programme is 79% sold, a similar level to last year. Total bookings are up 11%, supported by strong customer demand for Turkey, Egypt and Greece. Pricing across all segments is higher than last year, but average selling prices are 3% lower overall, reflecting a higher mix of short/medium-haul destinations.
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Summer 2018 |
Year-on-Year Variation % |
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Bookings(i) |
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ASP(i) |
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% Sold(ii) |
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UK |
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+1% |
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+7% |
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86% |
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Continental Europe(iii) |
-1% |
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+3% |
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80% |
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Northern Europe |
+2% |
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+4% |
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90% |
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Group Tour Operator |
Flat |
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+4% |
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84% |
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Short & Medium Haul |
+18% |
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+8% |
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79% |
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Long Haul |
-1% |
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+2% |
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82% |
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+15% |
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+1% |
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79% |
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+11% |
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-3% |
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79% |
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Based on cumulative bookings to |
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Notes |
(i) |
Risk and non-risk customers |
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(ii) |
Risk customers only |
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(iii) |
Continental Europe excluding legacy city and domestic hotel-only business bookings up 1% and ASP up 3% |
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(iv) |
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Since our last update in May, Group Tour Operator bookings have been impacted by the sustained period of hot weather across Europe during June and July. Group Tour Operator bookings are now in line with last year, while pricing up 4%, remains firm.
In the UK, bookings are up 1% with pricing up 7%, largely reflecting higher bed cost inflation to Spain. We continue to experience margin pressure due to a highly competitive market for Spanish holidays. While we have seen good growth to higher-margin destinations such as Turkey and Egypt, this has not been enough to fully offset the margin pressure which has largely impacted holidays to Spain to date.
Northern Europe bookings have also softened since the last update due to the hot weather with bookings now up 2% and pricing up 4%. In Continental Europe, bookings are 1% lower than last year, with growth in our German, French, Belgium and Russian package businesses offset by a decline in our Netherlands and hotel-only business.
For the
Winter 2018/19
Our Group Tour Operator has made a good start to trading for Winter 2018/19, with 31% of the programme currently sold, 2% higher than this time last year. Group Tour Operator bookings are up 4%, driven by strong demand for package holidays in the UK market, with pricing up 3%. Our Airline typically has a later booking profile compared to the Tour Operator, and it is therefore too early to comment on the Airline's performance for Winter 2018/19.
OUTLOOK
There is no change to our outlook beyond 2018. While it is early in the booking cycle, we are encouraged by booking and pricing trends for the Winter 2018/19 and Summer 2019 seasons. We are also confident that the strategic actions we are taking to better position the business - including improving the quality of our holiday offering, investing in our online proposition, and targeting efficiencies - will lead to further profitable growth over the medium term.
ANALYST AND INVESTOR CALL
A conference call and webcast for investors and analysts will be held today at 08.30 (BST):
- Standard International Access: +44 (0)20 3003 2666
- UK Toll Free: 0808 109 0700
- Password: Thomas Cook
Forthcoming announcement dates
The Group intends to issue a pre-close trading update on
Enquiries
Analysts & Investors: |
Tej Randhawa, |
+44 (0) 20 7557 6487 |
Media: |
Matthew Magee, Chris Alfred, |
+44 (0) 20 7294 7059 +44 (0) 20 7294 7203 |
APPENDIX
Like-for-like analysis
Certain items, such as the impact of foreign exchange translation, acquisitions, disposals and business transfers, affect the comparability of the Group's financial performance over time. To give a clearer view of underlying performance, we provide 'like-for-like' comparisons which adjust for the impact of these factors, as set out in the table below. The financial commentary in this announcement is based on 'like-for-like' comparisons unless otherwise stated.
Group (£m) |
Revenue |
Gross profit |
Gross margin |
Underlying EBIT |
3 months ended |
2,272 |
468 |
20.6% |
19 |
Impact of currency movements |
13 |
1 |
(0.1)% |
(1) |
Impact of Easter adjustments |
(29) |
(5) |
- |
(5) |
Impact of business transfer(i) |
- |
(6) |
(0.2)% |
- |
3 months ended |
2,256 |
458 |
20.3% |
13 |
3 months ended |
2,479 |
443 |
17.9% |
14 |
Like-for-like change (£m) |
+223 |
-15 |
-240bps |
+1 |
Like-for-like change (%) |
+10% |
-3% |
n/a |
+8% |
Note: (i) Thomas Cook Airlines Belgium transferred to
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Group Tour Operator |
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(£m) |
Revenue |
Underlying EBIT |
Revenue |
Underlying EBIT |
3 months ended |
1,828 |
34 |
801 |
4 |
Impact of currency movements |
4 |
- |
8 |
(1) |
Impact of Easter adjustments |
(13) |
(2) |
(14) |
(3) |
Impact of business transfer(i) |
11 |
- |
(32) |
(3) |
3 months ended |
1,830 |
32 |
763 |
(3) |
3 months ended |
1,930 |
26 |
924 |
2 |
Like-for-like change (£m) |
+100 |
-6 |
+161 |
+5 |
Like-for-like change (%) |
+5% |
-19% |
+21% |
+167% |
Note: (i) Thomas Cook Airlines Belgium transferred to
(ii) Intercompany revenue eliminations in the quarter were
The proportions of our forthcoming requirements for Euros, US Dollars and Jet Fuel that have been hedged are shown in the table below.
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Summer 2018 |
Winter 2018/19 |
Summer 2019 |
Euro |
98% |
82% |
58% |
US Dollar |
94% |
82% |
51% |
Jet Fuel |
93% |
90% |
63% |
Hedged rate |
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As at
As Jet Fuel is priced in US Dollars, we buy forward the requisite amount of US Dollars from a mix of base currencies. For FY18, we estimate that fuel costs will increase by around
The Group's policy is not to hedge the translation impact of profits generated outside the UK. If Q3 period end rates for the Euro and Swedish Krona were maintained throughout the remainder of FY18, there would be a negative year-on-year translation impact of
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