Europe's largest tour operator TUI Group reported a wider second-quarter loss on Monday, causing shares to slip in trade, however its chief executive told CNBC that the firm remained confident about its performance.
On Monday, the tourism group announced an underlying EBITA loss of 177.7 million euros ($195 million) for its second quarter on a constant currency basis, impacted by the late timing of Easter this year, compared to a loss of 126 million euros a year prior.
Here are some of the highlights:
- TUI Group saw an underlying EBITA loss of 177.7 million euros during its second quarter
- Turnover for 2016/17's first-half results was up 8.2 percent reaching 6.69 billion euros, at constant currency rates
- Hotels & Resorts division saw underlying EBITA climb to 122.8 million euros during the first half, up 27.9 percent from the year-earlier period
- "Guidance remains unchanged despite a challenging environment", the CEO said in a statement accompanying the release.
For the first half of the 2016/17 financial year, TUI Group reported solid growth in turnover, up 8.2 percent to 6.69 billion euros, adding that it saw current trading for 2017's Summer period to be "in line with expectations".
The group also reaffirmed its full year growth guidance, with TUI expecting underlying earnings before interest, taxes, and amortization (EBITA) to rise by at least 10 percent.
"When you look at the performance in H1 and when you look at the underlying trends, I think it's very strong. Also we've had last year a profit increase of 14.5 percent and we guided for this year another profit increase of 10 percent – and the basis for that is a transformation story," Friedrich Joussen, CEO of TUI Group, told CNBC Monday.
"We have been a [tour] operator only and now we are a hotel and cruise company, and when you see the profit contributions it is cruise and hotel profits which are driving the performance."
"We are very certain and very confident that we actually can achieve our guidance of at least 10 percent EBITA growth for the full year."
Demand shifted from Tunisia, Turkey, Egypt in H1, says CEO
Over the past year, countries such as Turkey, Egypt and Tunisia have seen a decline in visitor numbers due to security concerns, with customers opting to go to other destinations; however despite the TUI CEO telling CNBC that the group saw some demand shift away from these nations, he remained positive on consumer confidence.
"I think when you look at the overall customers for H1, you can see that we had a roundabout 8 percent more customers than the year before. So yes it's true that we shift some demand away from Tunisia or Egypt or Turkey into other countries," said Joussen.
"However also in all fairness, I think as always the countries will come back, particularly right now Turkey, we see a very much increasing trends – so therefore I think it is some volatility but as long as we are more relevant to more customers, I think we are in a very healthy industry."
In the earnings report, the tour operator saw customer numbers up 4 percent year-on-year and trading revenue up 8 percent for the summer; with greater demand for locations such as Greece, Spain and the Caribbean compensating for the weaker booking demand seen in Turkey and North Africa locations.
On Monday, shares of the tourism group underperformed the majority of its STOXX 600 counterparts, off more than 4 percent at 2.00 pm U.K. time.
— Reuters contributed to this report