TUI expects 10% earnings growth

As TUI reports its full year results, Helal Miah, investment research analyst at The Share Centre, explains what it means for investors.

TUI expects 10% earnings growth

The travel and leisure industry has faced a tough year having to deal with a host of global geopolitical concerns, investors should therefore appreciate that TUI seems to have done pretty well according to its full year results announced this morning.

The company, which is the largest tourism group in the world, delivered full year revenues of €17.2bn which was a little lower than last year. However, these are the first full year results post-merger and investors should acknowledge that it has utilised merger synergies and delivered an operating cash flow increase of 19%. The group was also keen to highlight that it raised the dividend by 12.5% to 63 cents.

TUI has had to face obstacles such as terrorism in Turkey and the Middle East over the past year for which travel in general has taken a knock. Investors should appreciate that the group increased capacity to alternative destinations for which travellers have taken up. Even so, the alternative destinations were not enough to offset the Turkey impact from the Nordics and Germany.

In the UK, volumes were strong and the load factor was higher despite the Brexit vote.

Looking forward the group remains very confident and suggests that underlying operating earnings growth in 2017 should be at least 10% as both the current winter season bookings and summer 2017 bookings so far look encouraging, and particularly strong from the UK.

Please remember, no news or research item is a recommendation or advice to buy. Every Investor is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment for your circumstances please contact an adviser. All investments can fall as well as rise in value so you could get back less than you invest. 

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