Thomas Cook posts eighth quarter of improvements
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Thomas Cook announced a GBP32 million rise in underlying EBIT for its third quarter results this morning, with bookings up for its concept hotels.
Group underlying EBIT came in at GBP33m, although the group statutory EBIT came at a GBP43m loss and 1.9% lower than the previous year. Its revenue also dropped 5.7% in the quarter.
The group said its performance for the full year is in expectations, having already offloaded Gold Medal, Elegant Resorts, Neilson, Co-operative Travel Management, Essential Travel and a stake in Airline Group, while it has also started to integrate its airlines into one operation.
Group CEO Harriet Green said: “Our transformation is progressing very well. Today’s announcement of a GBP32 million rise in underlying EBIT, represents our eighth consecutive quarter of increased profits. Every business improved and the UK delivered the most significant contribution, accounting for over three quarters of the total rise, as we start to realise its full potential.”
UK business improves
The group is also on Wave 2 of its cost cutting measures having already improved its UK EBIT by 3.1%, or GBP27m, in the first wave. For the full year the UK business has a 3.5% target EBIT margin which it hopes to improve more than 5% in full-year 2015.
Green added: “Twenty four months into our transformation, we are confident that our deliberate actions to improve operating efficiency and yield management, digitise our business and develop new exclusive products that build on the strength and trust that our brand represents, will significantly improve Thomas Cook’s profitability and growth trajectory. As a stronger and more resilient business, our operational performance remains in line with our expectations for FY14 and we look forward to delivering more value in FY15 and onwards.”
Forward demand ‘encouraging’
Demand for the group’s new products is said to be ‘encouraging’, with summer 2014 bookings for its concept hotels up 43% and for partner hotels up 10%.
Its summer 2014 is currently 83% sold, slight improved on last year, with bookings and prices in the UK similar to the previous year.
Forward bookings have also seen an 11% increase in concept hotel sales for winter 2014/15 with UK bookings and the average price ‘significantly up’ for summer 2015. In FY15 the group expects to have 640 exclusive hotels and 800 in 800 in FY17, compared to the current 475.
Its digital strategy has also resulted in a 73% increase in bookings through mobile and tablets, while a new dynamic packaging function has been successful “without any cannibalisation of our existing risk business”.
In total the group has now delivered GBP328m in Wave 1 cost out and profit improvement, on track and expected to surpass the GBP360m target set for the full year. A target of GBP460m has been set for FY15.
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