TUI – Cruise control

TUI – Cruise control

Mike van Dulken, Head of Research at Accendo Markets, commented this morning:

 

TUI tops the UK’s blue-chips this morning as investors welcome a Q1 report card (Oct-Dec) showing revenues +8.1% YoY, a narrower seasonal net loss and significantly improved underlying profitability.

 

Shareholders are comforted by strong demand for Holidays in the Northern and Central regions, summer already 35% sold (in-line) and continued improvement in destinations such as Turkey and North Africa which had been shunned following acts of terrorism. Very reassuring too is the growing Cruises segment faring so well with revenues and profits jumping in spite of much implement weather in H2 last year.

 

What’s really driving the shares to fresh record highs (10% bounce from last week’s sell-off lows), however, is likely lower debt and improved underlying profitability (excluding one-offs, disposals/acquisitions, restructuring charges etc; awkwardly plentiful in the latest period) leaving management comfortable enough – even at this early stage – reiterating FY growth guidance of underlying EBITA +10%, keeping it on track for a targeted doubling between FY14 and FY20.

 

Full steam ahead!

 

TUI shares +4.6%. Accendo Markets does not have a rating or target price on any of the TUI

 

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