LONDON -- TUI Travel (LSE: TT) -- the largest tour operator in the world, which includes Thomson and First Choice among its more than 240 brands -- published its interim results for the six months to March 31 this morning, and reported that business for its winter program, across its mainstream markets, had been ahead of expectations.
Although overall revenue was down 1%, at 5,397 million pounds, TUI managed to reduce its operating loss by nearly 14%, bringing it down to 274 million pounds. Underlying operating loss improved by 9% to 289 million pounds. Its U.K. and Nordic source markets actually saw revenue growth of 5% and 10%, respectively, resulting in an almost 18% reduction in U.K. operating loss and a 63% improvement in Nordic operating profit, up 14 million pounds to 36 million pounds.
TUI also reported that the strong trading momentum seen over the winter was continuing and that there had been an increase in summer bookings in both the U.K. and Nordic markets, up 13% and 14%, respectively, with "significant growth" in its profitable market share in the U.K. Overall, it says that 58% of its mainstream summer 2013 program is already sold. The company says it expects underlying profit growth for the full year to be at least 10% (on a constant currency basis).
The board has proposed a 10% increase in the first-half dividend, raising it to 3.75 pence. TUI currently offers a yield of around 3.5%, which is above both the sector and FTSE 100 averages, and its dividend is forecast to rise to just over 3.7% in 2014.
Commenting on the results, Peter Long, TUI's chief executive, said:
Our strategy of focusing on unique holidays and putting our customers at the heart of our business continues to deliver strong growth. With our market leading brands and scale we have the ability to give our customers great holiday experiences, at terrific value, in a segment of the market that is increasing in popularity. Our drive to Modern Mainstream is contributing significantly to our outperformance in a number of markets where we are achieving strong booking volumes and improved margins. Given current trading and the visibility we have within our businesses we anticipate full year underlying operating profit growth of at least 10% on a constant currency basis.
TUI Travel's share price has taken off over the past couple of years, and stands 85% higher than in May 2011. It's currently up 2% from its opening price this morning.
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