After two years of epidemic losses, Tui Group returned to profitability in its most recent fiscal year, demonstrating a turnaround.
The FTSE 250-listed firm that operates vacations, hotels, cruise ships, and an airline generated underlying earnings of € 409 million (£ 352 million) for the year ending September 30, compared to a loss of € 2 billion the previous year.
During the period, Tui reported revenues of €16.55 billion, or £14.24 billion, up from €4.73 billion, or £4.07 billion, in the prior year.
It was stated that this winter’s typical holiday prices were 28% higher than pre-pandemic levels, which would assist mitigate inflation.
The company’s fourth-quarter revenue more than doubled to €7.6 billion compared to the same period last year, when pandemic restrictions hindered performance.
The group’s fourth-quarter operational profit was €1 billion, compared to a loss of €97 million at the same time last year.
As of Wednesday morning, Tui shares were down 8.47 percent, or 12.51 pence, to 135.14 pence, and have dropped nearly 37 percent in the past year.
Tui said that bookings for the summer of 2022 were almost 90 percent of those recorded in 2019, before the outbreak.
It stated that its average profits this summer were “considerably greater” than during the same period in 2019. The organization reported that bookings for winter 2022 were similarly robust.
The world’s largest vacation operator said it will repay Covid-19 through a capital increase the following year after a great summer saw it return to profitability and it forecasted a solid 2023.
We anticipate 2023 to be a healthy and profitable year, but we are keenly aware of external market concerns, as stated by CEO Sebastian Ebel.
Germany-based Tui stated that it will reduce its dependence on the German government, which had assisted the group in surviving the epidemic when travel was suspended.
The repayments will be funded by a capital increase expected by the chief financial officer to be between €1.6 billion and €1.8 billion the following year.
Peel Hunt analysts stated, “We believe it will be difficult for the share price to advance before this (rights issuance).
Richard Hunter, head of markets at Interactive Investor, commented, “The share price performance is undeniable evidence of the mountain that must be scaled to return TUI to its former glory before its demotion from the FTSE 100 index in March 2020.”
‘Over the past year, the shares have lost 30%, compared to a 15% fall for the FTSE 250 as a whole.
Therefore, the shares have decreased by 70% over the past three years and 80% over the past five.
The current difficulty is to strengthen the balance sheet while sustaining trade momentum, and it may take multiple quarters of outperformance for the market consensus of the shares to be revised upwards.
