13
December 2017
�
TUI GROUP
�
Full year
results to 3
0
Septe
mber
201
7
�
HIGHLIGHTS
�
-
Third consecutive
year of strong earnings growth, with
12
% increase in underlying EBITA
1
and
34
% increase in underlying EPS
1
�
-
Continuing to transform our business -
5
6
%
of our
earnings
are now delivered
from own hotel and
cruise brands
,
with a strong ROIC performance
and less seasonal profile
�
-
Post
-
merger phase is complete -
double digit
annual
earnings gro
wth
with strong cash conversion and strong ROIC performance
continues
,
d
riven
increasingly
by
market demand
and
digitalisation
benefits
, as well as
disciplined
expansion of own hotel and cru
ise content
�
-
Strong cash conversion plus EUR2 billion disposal proceeds enable us to finance growth, pay an attractive dividend and strength
en the balance sheet
�
-
Trading for future seasons is progressing well overall
-
our
balanced portfolio of markets and destinatio
ns and strong competitive position
leave us well placed to
deliver further growth
�
-
E
xpect to deliver at least 10% gr
owth in underlying EBITA in
FY
1
8
1
and extend our previous guidance of at least 1
0% underlying EBITA CAGR to
FY
20
1
�
-
Our ambition - strong strategic positioning, strong earnings growth and strong cash generation
,
with
underlying EBITA
doubling between FY14 and FY20
�
KEY
FINANCIALS
�
Year ended 30 September
|
�
|
�
|
EURm
|
201
7
|
201
6
|
Change
|
Constant currency change
1
|
Turnover
|
18,5
3
5
|
17,154
|
+8.1
%
|
+11.7
%
|
Underlying
EBITA
2
|
1,
102
|
1,001
|
+
10.
2
%
|
+1
2.0
%
|
Reported EBITA
3
|
1,0
2
7
|
898
|
+1
4.3
%
|
+
1
6
.
2
%
|
Underlying e
arnings per share
4
|
1.14
|
0.86
|
+
32.
6
%
|
+
33.7
%
|
Earnings before tax
5
|
1,080
|
618
|
+
74.6
%
|
+
76.8
%
|
Leverage ratio
6
|
2.5
times
|
3.3 times
|
-
0.8
times
|
n/a
|
R
eturn on invested capital (ROIC)
7
|
23.6
%
|
21.9%
|
+
1.7
ppts
|
n/a
|
Dividend per share
|
EUR0.
65
|
EUR0.63
|
12.0
%
8
|
n/a
|
�
|
�
|
�
|
�
|
�
|
� |
� |
� |
� |
� |
� |
�
1
Assuming constant foreign exchange
rates are applied to the result in the current and prior period
2
Underlying EBITA has been adjusted for gains/losses on disposal of investments, restructuring costs according to IAS 37, ancillary acquisition costs and conditional purchase price payments under purchase price allocations and other expenses
and income from one-off items
3
Reported
EBITA comprises earnings before net interest result, income tax and impairment of goodwill and excluding the result from the
measurement of interest hedges
4
For calculation of underlying earnings per share please refer to page
58
of the Annual Report
5
For reconciliation of earnings before tax to underlying EBITA, please refer to page
57
of the Annual Report
6
Leverage rati
o is calculated as the ratio of gross debt (including net pension liabilities and
discounted value
of operating leases) to reported EBITDAR
7
ROIC (return on invested capital) is calculated as the ratio of underlying EBITA to the average for invested interest bearing capital fo
r the Group or relev
ant segment
8
Percentage growth in dividend per share
is calculated
off
the base dividend
in respect of
FY16
of EUR0.58 per share (excluding the additional 10% announced at the time of the merger)
�
Annual Report
and Investor & Analyst Presentation and Webcas
t
�
A ful
l copy of our Annual Report
can be found on our corporate website:
http://www.tuigroup.com/en-en/investors
.
A
presentation and webcast for investors and analysts will take place today at 09:30 GMT / 10:30 CET. The presentation will be made available via our website shortly beforehand. Details of the webcast, which will be available for replay, will also be available there.
FY
17 RESULTS
�
-
We have delivered a third consecutive year of strong ear
nings growth, with underlying EBITA increasing
to
EUR
1,
10
2
m
or
12
% growth at constant currency rates
.
This w
as d
riven by
growth across the business, including our own hotel and cruise content, Source Markets
and the delivery of the final tranche of merger sy
nergies
.
Significant growth in underlying EBITA was delivered despite
the impact of higher than normal levels of
sickness in TUI
fly at the start of the financial year
(as previously flagged)
as well as
the impact of
the
Air Berlin
insolvency
(see below for further detail)
.
�
In EURm
|
�
|
Underlying EBITA
FY
1
6
|
1,001
|
Hotel & cruise content
|
+131
|
Source Markets & other
segments
|
+8
|
Merger synergies
|
+20
|
TUI
fly sickness
(Q1
)
|
-24
|
Air Berlin insolvency
|
-15
|
Underlying EBITA
FY
17
excluding FX
|
1,
121
|
Foreign exchange translation
|
-
19
|
Un
derlying EBITA
FY
1
7
|
1,
10
2
|
�
-
Growth in underlying EBITA
was driven across our business
segments
,
demonstrating the strength of our integrated business mo
del
and well
balanced portfolio of markets and destinations.
�
Underlying EBITA in EURm
|
FY
17 at constant c
urrency
|
FY
16
|
Variance at constant currency
|
FY
17 at actual rates
|
Variance at actual rates
|
Hotels & Resorts
|
362
|
304
|
+58
|
357
|
+53
|
Cruise
s
|
263
|
191
|
+72
|
256
|
+65
|
Source Markets
|
532
|
554
|
-22
*
|
526
|
-28
*
|
Northern Region
|
351
|
383
|
-32
|
346
|
-37
|
Central Region
|
72
|
85
|
-13
*
|
71
|
-14
*
|
Western Region
|
109
|
86
|
+23
|
109
|
+23
|
Other Tourism
|
18
|
8
|
+10
|
13
|
+5
|
Total Tourism
|
1,175
|
1,057
|
+118
|
1,152
|
+95
|
All Other Segments
|
-54
|
-56
|
+2
|
-50
|
+
6
|
Total TUI Group
|
1,121
|
1,001
|
+120
|
1,10
2
|
+
101
|
�
* includes the adverse impact of higher than normal le
vels of
sickness in
TUI
fly
at the start of the financial year (EUR24m) and the impact of the Air Berlin insolvency (EUR15m); excluding these items
, and at constant currency,
Source Markets variance was +EUR17m and
Central Region variance was +EUR26m
�
-
Hotels & Res
orts
delivered a
strong performance
, with segmental ROIC increasing to
13.2
%
(versus
segmental
WACC
of
8.5
%)
.
-
We opened
ten
new
hotels this year
in our core brands
, bringing the total since merger to 28
. M
ore than
60%
of
these
are
operated
with no or low capital intensity
.
-
Hotels & Resorts continues to deliver
high levels of
occupancy
, now 79%
, thanks to
our strong portfolio of brands and destinations, and our
integrated model.
Average revenue per bed increased by
6
%.
The earnings result reflects
a continued strong performance in the Western Mediterranean and Caribbean, and encouraging
improvement in T
urkey and North Africa, as well as earnings from new hotel openings.
-
FY
17 marks the fourth consecutive year of increasing ROIC
for Hotels & Resorts
.
This demonstrates the attractiveness of our
portfolio of
hotel and club brands, the strength of our distribution capabilities, and our disciplined approach to investment
.
-
For further commentary on Hotels & Resorts, please see page
6
0
of the Annual Report.
�
-
Cruise
delivered another year of strong earnings growth
, with
strong
segmental ROIC
of
19.9
%
(versus
segmental
WACC
of
5.25
%)
.
-
Growth in earnings
was
driven primarily by the launch of new ships in Germany and UK.
-
A
verage daily rates increased across all three fleets, despite the increase in capacity.
-
S
egmental ROIC
re
mains
high,
reflecting
our equity participation in TUI Cruises
as well as
excellent
performances by our UK and Hapag-Lloyd Cruises subsidiaries.
-
For further commentary on Cruise, please see page
s
60
to 6
1
of the Annual Report.
�
�
-
Our
S
ales
&
M
arketing in
Source Markets
del
ivered a
strong
portfolio
performance
, thanks to their
geographic diversity,
market leading positions,
popular range of holiday products
and focus on efficiency.
-
Customer volumes
(excluding joint ventures)
grew
by
6
% to
20.2
million
, with growth in all three regions.
-
Source Markets delivered a h
igh net promoter score of
50
overall
,
with
year on year
increases
in most of our markets
.
-
The TUI rebrand was completed successfully in Nordics
and Belgium.
This has helped to drive a further increase in direct and online distribution
, to
73
% and
46
% respectively
.
The UK rebrand commenced in October and is progressing very well.
-
Overall,
Source Markets delivered a
strong portfolio performance
this year, with particularly good operational performances in Nordics, Germany and Benelux this Summer. As previously flagged, this has helped to offset
the
normalisation of UK margins dri
ven by currency cost inflation
and
a
disappointing Q4 in France.
-
As previ
ously communicated the result was impacted by the sickness incident in TUI
fly at the start of the
financial
year, costing EUR24m.
-
The Central Region result also includes an adverse variance to prior year of c. EUR15m following the Air Berlin insolvency, relat
ing to receivables for aircraft and crew leased to Air Berlin in FY17 on which the latter defaulted.
-
For further commentary on Source Markets please refer to page
s
6
1
to 6
3
of the Annual Report.
�
-
The result for
Other Tourism
and
All Other Segments
reflects the delivery of the final tranche of merger synergies, as well as a good performance by Destination Services
,
which
deliver
s
a key part of the customer holiday experience.
�
-
Adjustments between underlying and reported EBITA continued to decrease this year
,
driven by continued
disciplined
management of
separately disclosed items.
For further detail on Ad
justments, please refer to pages
57
to
58
of
the
Annual Report.
�
-
Underlying EPS increased to EUR
1.14
, or
34
% gr
owth at constant currency rates,
driven by the s
trong operational performance
outlined above
, lower cost
of
finance
driven
by
our improved rating, and low underlying effective tax rate of 20%.
For the calculation of underlying EPS, please refer to page
58
of
the
Annual Report.
�
-
Earnings before tax therefore also increased significantly, to
EUR
1,080
m. This included
EUR
172
m
gain on
the
disposal of
our remaining shares in Hapag
-
Lloyd AG during the financial
year.
�
-
We continue to deliver strong c
ash conversion
,
driven by our
disciplined management of
working capital,
separately disclosed items
and
investments
, as well our low cost of finance and effective tax rate.
In addition, we have generated EUR2 billion from the disposals of Hotelbeds, Travelopia and Hapag
-
Lloyd AG since September 2016
. Our strong cash flow and disposal proceeds enable us to fina
nce growth, pay an attractive dividend and strengthen the balance sheet, with our leverage ratio reducing further this year.
�
-
We remain committed to delivering attractive returns to our shareholders, w
ith a proposed dividend of EUR0.65
per share. This is in
line with our guidance to
increase
the base dividend in line with
annual
underlying EBITA growth at constant currency.
�
TRADING FOR FUTURE SEASONS IS PROGRESSING WELL OVERALL
�
-
Demand for our holidays, hotels and cruise brands remains strong
:
-
Further
growth
in own hotel brands, with
seven
openings scheduled
so far
for
FY
18
,
continued strong demand for West
ern Mediterranean and Caribbean
and
improving demand for Turkey and North Africa.
-
Strong cruise yields and load factors
across all three brands, with ship launches scheduled for 2018 and 2019
.
-
Source Market volumes
and average selling price both
up
3
%
for
Winter 2017/18
, with
percentage sold
slightly ahead of
prior
year
; Summer 2018 performing in line with our expectations, albeit at a very early stage.
�
�
�
�
�
�
�
�
�
�
CURRENT TRADING
�
Demand for our holidays, hotels and cruises remains strong. In Hotels & Resorts we have
seven
openings scheduled
to date
for
our core brands in
FY
18
. These include Robinson cl
ubs in the Maldives and Thailand
,
Riu hotel
s
in
Mexico
and Bulgaria
,
two
Blue Diamond p
roperties in Dominican Republic and
a
Sensatori in Rhodes
.
We are also continuing to streamline our portfolio, with further repositionings
under the TUI Blue brand currently planned for
four
existing hotels.
We continue to see strong demand for the Western Mediterranean and Caribbean, which are already operating at a high level of occupancy and rate, and expect to see some
improvement
in demand for Turkey and North Africa
, including
from our own Source Markets.
�
In May 2018 we will launch two ships - the new Mein Schiff 1 for TUI Cruises in Hamburg, and the Marella Explorer (previously Mein Schiff 1) in Palma de Mallorca. Further launches will follow in Summer 2019 for TUI Cruises and Marella Cruises, as well as two new expedition ships for Hapag-Lloyd Cruises in 2019. Bookings for our new ships and the existing fleet are progressing very well, with a year on year increase in fleet yield for each of the three brands.
�
Source Markets trading is progressing
well,
in line with our expectations. Winter
volumes are ahead of prior year,
with
strong
growth in bookings for
Thailand,
Cape Verde,
North Africa
and Cyprus. Demand
is
more subdued for the Caribbean following the hurricanes in September
, however
this is offset by demand for other destinations with
overall long haul bookings up
4
%
. Both Nordics and Germany have continued their strong performance
s
.
In Germany, we continue to build market share
with a good trading margin performance
, with
particularly strong demand for Canaries, North Africa and Thailand.
In Nordics
,
strong volume growth continues
and reflects the strategy to grow early volumes. The rollout of our yield management system is also helping to drive
a strong
margin
performance
.
In Benelux,
both
volumes
and
average selling price
are ahead of prior year
.
�
Despite the Brexit backdrop, the
UK
continues to
deliver a resilient performance
in line with our
expectatio
ns. Year on year
bookings and selling price for Winter 2017/18
reflect
the very strong start in prior year trading (when bookings were up
19
%
including Marella Cruises
) a
nd impact of currency inflation
.
L
oad factor and percentage of the UK programme sold
remain
in line with prior year
.
We are
also
very pleased with the progress of the UK rebrand, with una
ided awareness of the TUI brand performing ahead of our original expectations for this stage
.
As expected, although UK demand for holidays abroad remains strong, margins across the
package holiday market are normalising
,
primarily
as a result of the weaker Pound Sterling. Nonetheless, our margins remain healthy and we are
well
positioned
competitively
.
TUI
is
the clear market leader
in package holidays
in the UK
,
with a
strong net promote
r score
of 55
in FY17
,
high levels of direct and online distribution
, and a highly integrated and
efficient business model.
�
Source Markets - Current Trading
2
|
Winter
2017
/18
|
YoY variation%
|
Total
Revenue
|
Total
Customers
|
Total
ASP
|
Programme sold (%)
|
�
|
�
|
�
|
�
|
�
|
Northern Region
|
+6
|
+0
|
+6
|
63
|
UK
|
+3
|
-
4
|
+8
|
57
|
Memo: UK incl. Cruise
|
+
7
|
-3
|
+10
|
59
|
Nordics
|
+10
|
+7
|
+
3
|
74
|
�
|
�
|
�
|
�
|
�
|
Central Region
|
+7
|
+
8
|
-1
|
64
|
Germany
|
+
9
|
+
9
|
+
1
|
63
|
�
|
�
|
�
|
�
|
�
|
Western Region
|
+
3
|
+0
|
+2
|
65
|
Benelux
|
+4
|
+2
|
+2
|
65
|
�
|
�
|
�
|
�
|
�
|
Total Source Markets
|
+
6
|
+3
|
+3
|
63
|
Memo: Total Source Markets incl.
UK
Cruise
|
+7
|
+
3
|
+3
|
64
|
� |
� |
� |
� |
� |
� |
� |
� |
2
These statistics are up to
3 December
2017, shown on a constant currency basis and relate to all customers whether risk or non-risk
�
For
Summer 2018
, Source Markets trading
is performing in line with our expectations, albeit at a very early stage.
As usual for this point in the booking cycle, o
nly the UK is more than 20% booked
. UK booked revenue (excluding Marella Cruises) is up 2%, with bookings slightly below the strong start to prior year
(when bookings were up 9% including Marella Cruises)
and average selling price up
4
%.
�
�
�
�
�
FUEL/FOREIGN EXCHANGE
�
Our strategy of hedging the
majority of our
jet
fuel and currency requirements for
future seasons, as detailed below, remains unchanged. This gives us
certainty of costs when planning capacity and pricing
.
The following table shows the percentage of our forecast requirement that is currently hedged for Euros, US Dollars and jet fuel
for our
Source Markets
, which account for over 90% of our Group currency and fuel exposure.
�
�
|
Winter
2017
/1
8
|
Summer 201
8
|
Winter 2018
/1
9
|
Euro
|
9
5
%
|
71
%
|
3
6
%
|
US Dollars
|
9
3
%
|
8
6
%
|
50
%
|
Jet Fuel
|
93
%
|
85
%
|
6
3
%
|
As at
8
December
2017
|
�
|
�
|
�
|
�
DIVIDEND
�
The Executive Board and the Superv
isory
Board are recommending a dividend of 65 cents per share in respect of the financial year 2017. Subject to approval at the Annual General Meeting on 13 February 2018, shareholders who held relevant shares at close of business on 13 February 2018 will receive the dividend on 16 February 2018.
�
OUTLOOK
�
Three years
after the merger, we are a stronger, more integrated and better strategically positioned business. Having delivered the
merger synergies in full and disposed
non-core businesses, the post
-
merger phase is now complete.
�
Looking ahead we continue to expect to deliver double digit annual earnings growth with less seasonality, strong cash conversion and st
rong ROIC performance. This will be driven
increasingly
by
market demand
and
digitalisation
benefits
, as well as
disciplined
expansion of own hotel and cru
ise content.
�
We have a clear
ambition - strong strategic positioning, strong earnings growth and strong cash generation, with underlying EBITA doubling between FY14 and FY20.
�
With regard to the ongoing Brexit negotiations between the UK and the EU, w
e expect and strongly encourage those involved in the negotiations to have a workable solution in place for the airlines, including that current arrangements are extended until such a solution is reached. Whilst we are not able to control the outcome of these negotiations, we are putting contingency plans in
place in
order to manage potentia
l disruption to our operations.
�
Trading for future seasons is progressing well overall, and our balanced portfolio of markets and destinations and strong competitive position leave us well placed to deliver further growth, despite external factors which sometimes influence certain parts of the business.
W
e therefore expect to deliver at least 10% growth in underlying EBITA in
FY
18
1
and extend our previous guidance of at least 10% underlying EBITA CAGR to
FY
20
1
.
�
The following detailed guidance is given in respect of
FY
18
1
:
-
Turnover - around
3
% growth
(excluding cost inflation relating to currency movements)
-
Underlying EB
ITA -
at least 10% growth
-
Adjustments - around EUR
80
m
-
Net interest - around EUR
120
m
-
Net capex and investments - around EUR
1.2
bn
, including
net
pre-delivery payments and assumed acquisition of Mein Schiff 1 for Marella Cruises
, and phasing of expenditure from FY1
7
-
Year end net debt -
slightly negative
, reflecting investment in transformational growth and aircraft order book finance
-
Financial targets - leverage ratio
3.0
to
2.25
times, interest coverage
5.75
to
6.75
times
.
�
1
Assuming constant foreign exchange rates are applied to the result in the current and prior period and base
d on the current Group structure
�
ANNUAL GENERAL MEETING AND Q1
FY18
�
TUI Group will hold its Annual Gener
al Meeting and issue its Q1
FY
18
Report on
13
February 201
8
.
�
�
�
�
�
ANALYST & INVESTOR ENQUIRIES
�
Peter Kr�ger
, Director Investor Relations
and M&A
|
�
Tel: +49 (0)511 566 1440
|
�
Contacts for Analysts and Investors in UK, Ireland and Americas
|
Sarah Coomes, Head of Investor Relations
|
Tel: +44 (0)1293 645 827
|
Hazel
Chung
, Investor Relations Manager
|
Tel: +44 (0)1293 645 823
|
�
Contacts for Analysts and Investors in Continental Europe, Middle East and Asia
|
Nicola Gehrt, Head of Investor Relations
|
Tel: +49 (0)511 566 1435
|
Ina Klose, Investor Relations Manager
|
Tel: +49 (0)511 566 1318
|
Jessica Blinne,
Junior Investor Relations Manager
|
Tel:
+49 (0)511 566 1425
|
�