Travel giant TUI misses earnings expectations as investors decide to leave London

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Passengers board a TUI bus at Palma de Mallorca airport on June 18, 2020 in Palma de Mallorca, Spain.

Clara Margais | Getty Images

German travel giant TUI on Tuesday posted a quarterly profit of 6 million euros ($6.46 million), defying expectations on the back of positive travel demand.

The shift to profit was well above analyst consensus forecasts for a 102 million euro loss in underlying earnings before interest and taxes (EBIT), according to LSEG data. For the same quarter last year, the largest travel operator in Europe posted a net loss of 153 million euros.

The group’s fiscal revenue in the first quarter came in at a record 4.3 billion euros, up 15% from the previous year, driven by higher demand at higher prices and rates.

Shares rose as much as 6% after the market opened, but have since pared gains to just over 3% in early European trading.

“We are on the way, we are getting customers and we are growing. We are accelerating our seasonal transformation every quarter. We have goals that we are implementing regularly ,” TUI CEO Sebastian Ebel said in a statement.

“In an environment that is always challenging, the high willingness of people to travel ensures strong economic development in all areas of the Group.”

Tui expects to grow operating profit by at least 25% over the 2024 financial year and is targeting a compound annual growth rate of 7-10% over the medium term.

A total of 3.5 million guests traveled with TUI during the three-month reporting period, up from 3.3 million the previous year.

Deutsche Bank analysts noted on Tuesday that TUI’s share price “still suffers from a significant discount,” trading at just 0.2 times enterprise value to sales and at a price-to-earnings ratio of 5.3 times for 2024, the compared to historical averages of 0.5x EV/Sales and 14x P/E.

“Out of these particularly low valuation multiples, stock performance year to date has been particularly poor (-3.9% YTD for the German listing and -5.5% for the London listing) compared to the both the Stoxx 600 ( c. +1.8%) and the Stoxx T&L (c. +9.2%),” said Deutsche Bank analysts, reiterating a “buy” rating on the stock.

Provides a list of London

The positive earnings report comes on Tuesday as Tui shareholders gather for an annual general meeting where they will vote on whether the company should delist its shares on the London markets for a full listing in the Germany.

The group currently has a dual listing between Frankfurt and the UK, but the board has proposed delisting from the London Stock Exchange, where only 10% of its shares are held, citing a decline “huge” in liquidity on the British equity markets in recent years.

The Annual Meeting will start at 10:30am London time.

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