TUI AG (LON: TUI) have reported a resilient performance in their recently completed financial year, amid “challenging” market conditions.
TUI have seen a good year of trading, and in October the firm revealed its new routes for 2020. New flights from Glasgow Airport have gone on sale with Bodrum Flights operating on Mondays and Fuerteventura on Sundays.
TUI expanded the length for inclusive holidays, by now offering 10 or 11 day packages to eight destinations including Orlando, Antalya and Zakynthos.
TUI have been quick to respond after the demise of Thomas Cook, only a few weeks ago. This move looks to fill the void made by Thomas Cook in oder to establish market dominance.
The travel company said its pretax earnings for the year to the end of September fell 28% to €691 million from €966 million a year earlier, despite revenue growing by 2.5% to €18.93 billion from €18.47 billion. On a constant currency basis, revenue rose by 2.7%.
TUI explained that its earnings were bruised by €293 million cost from the grounding of the Boeing (NYSE: BA) 737 MAX aircraft.
The firm said it has delivered results in line with expectations and results a year ago, which was driven by strong growth in its Holiday Experiences businesses.
The FTSE100 listed firm declared its annual payout of €0.54 per share, which slipped from €0.72 a year ago, which may concern shareholders.
TUI also updated shareholders on changes to its payout policy for dividends, in effect from 2021.
The firm said the new policy is expelled to result in lower payouts, but shareholders will be guaranteed a minimum distribution irrespective of the market environment of the tourism industry.
TUI intends to pay a core dividend payout of between 30% and 40% of the its underlying EAT, with a guaranteed minimum payout of €0.35 per share a year.
Forecasting for the future the firm expects underlying earnings before interest and taxes for current financial 2020 in the range of between €950 million to €1.05 billion.
“This coming year will see us focus on driving competitiveness in Markets & Airlines, asset-right expansion of our Holiday Experiences business, and building reach and scale through our digital platforms in new markets and Destination Experiences, to enlarge TUI’s ecosystem,” the company said in its statement Wednesday.
Certainly, shareholders of TUI should not be worried for the future.
The travel and airline industry has been very volatile over the last few months. It seems that some firms such as Fastjet are struggling to stay afloat in an ever increasingly tough operating market.
Shares in TUI currently trade at 940p (-0.21%). 11/12/19 12:19BST.
