TUI Travel's underlying operating profit up 53 percent
Published: 28 Nov 2008
TUI Travel has delivered a £137m improvement in underlying operating profits (to £398m) in 2008 in its first year as a fully merged business (2007: £261m).
Underlying profit before tax improved by 43 percent to £319.7m.
This has primarily been achieved as a result of a strong performance in the UK driven by improved trading and the delivery of synergies, a significant turnaround in France, further improvement in Nordics from strong winter trading and improved summer trading in Germany and Austria.
The Specialist sectors also contributed to the result through a combination of organic and acquisition led growth.
Group revenue for the year increased by nine percent to £13.9bn with currency movements accounting for four percent of the growth.
The group was created last year through the merger of German operator TUI AG and Britain's First Choice.
Peter Long, CEO, TUI Travel PLC, said, "Our customers continue to regard their main holiday as an essential, not a luxury, which they are reluctant to forgo. More than ever, they want to book their holidays with trustworthy brands that provide excellent value for money," said Long.
Long said the integration is progressing well and the group is now targeting £175m of synergies, which is £25m higher than the previous target.
The additional £25m synergy benefit will be achieved primarily through additional benefits of £15m arising from the UK integration, particularly in the airline as a result of further efficiencies in network planning. In addition, the Group and Global target has been upgraded by £10m to £35m, due to further opportunities identified in the integration of a number of specialist businesses in the UK that require turnaround and our offline incoming agencies in the ODS sector.
"Accordingly, we have exceeded our 2008 target by £10m, with £35m of benefits delivered in the year. We ended the financial year with an exit run-rate of £70m, meaning that the majority of our 2009 target of £100m is already achieved," stated the company.
"As a result of the additional synergy opportunities identified and the acceleration of synergy delivery, the one-off integration costs are now expected to total £230m, (from £180m). Expected capital expenditure to support the integration is expected to be at £28m (from £25m). Integration costs of £164m have been incurred in 2008, with the remainder to be incurred in 2009."
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