Record year for Tui

According to the ttgdigital.com Tui Travel has reported record underlying profits across its business as it benefited from strong margins across the busy summer period.

Operating profit grew 20% to £589 million and revenues rose 4% to £15.1 billion.

Much of Tui’s success over the past couple of years has come from its determination to provide customers with “differentiated product”. This year that part of the business rose by four percentage points and now accounts for 69% of all mainstream holidays.

Similarly, the travel giant has also decreased its reliance on third parties when it comes to selling holidays. Tui said this direct distribution mix had improved by one percentage point over the year to 66% of mainstream sales, with improvements in all key source markets.

Tui’s UK business saw underlying operating profit rise 27% to £251 million during the year. This translates to an operating margin of 6.5%, a 110 basis point improvement over the prior year. This record result was driven by strong load factors, focus on higher margin unique holidays increasingly distributed online and a 5% increase in package volumes during the year.

Tui focuses on its underlying figures, which exclude various separately disclosed items. It’s statutory results show a fall in pre-tax profits of 10% to £181 million, primarily due to the impairment of goodwill across some of its businesses.

“We have once again reported record underlying profits across the business, significantly exceeding the top end of our growth roadmap target of 10%,” said chief executive Peter Long.

“This follows strong margins across the peak summer period, particularly in the UK, and accelerated business improvement delivery.”

He added:  “The business continues to deliver sustainable growth through our unique holiday experiences, increasingly distributed online, while leveraging its scale as one organisation. This, in turn, will drive further value for both our customers and shareholders.

“Building on this year’s outperformance where we have achieved a 13% underlying operating profit growth, I remain confident that we will deliver consistently on our five-year annualised growth target of between 7% to 10% at constant currency.”

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