TUI AG has delivered a positive summary of the 2007 financial year. It achieved a significant increase in turnover, operating earnings, Group earnings and earnings per share. "2007 was a good year for us. We were set for growth, and we returned to the profit zone with a leap in earnings", said Dr Michael Frenzel. TUI’s CEO emphasized that both tourism and shipping had posted a positive performance. Frenzel continued: "And we are also optimistic for the 2008 financial year. We intend to further improve our Group’s profitability."

In the 2007 financial year, turnover by the tourism division grew by 11 per cent to 15.6 billion euro (previous year: 14.1 billion euro). Earnings by the tourism division (underlying EBITA) rose by almost 14 per cent year-on-year to 449 million euro (previous year: 395 million euro). The earnings growth was driven both by TUI Travel and TUI Hotels & Resorts.

Due to the first-time consolidation of the turnover by First Choice since September 2007, TUI Travel’s turnover grew by 11.6 per cent to 15.3 billion euro, including an amount of around 1.3 billion euro for the former First Choice activities. Earnings by TUI Travel PLC rose by 17.7 per cent year-on-year to underlying EBITA of 304.4 million euro (previous year: 285.6 million euro). Underlying earnings by TUI Travel PLC comprise earnings of around three million euro by the former First Choice sectors, included in consolidation.

TUI Hotels & Resorts also posted a significant increase in turnover and earnings in the 2007 financial year. Turnover grew by 9.5 per cent to around 379.8 million euro (previous year: 346.7 million euro). Operating earnings by the hotel sector rose even more strongly, up 18.6 per cent year-on-year. Underlying earnings by the hotel operations totalled 146.1 million euro (previous year: 123.2 million euro). The growth in operating earnings was partly driven by RIU hotels, the largest hotel group in the sector. Overall, TUI Hotels & Resorts achieved a 3.1 per cent increase in hotel bed occupancy to 81.2 per cent year-on-year on capacity which was up three per cent. Average revenues per bed grew by 4.2 per cent to 46.25 euro (previous year: 44.37 euro).

Detailed development in central operations/net debt

Turnover by central operations dropped by 85.5 per cent year-on-year to 25.5 million euro (previous year: 175.5 million euro). This was primarily due to the divestment of the majority interest in Wolf GmbH in October 2006 and the associated turnover effect. Underlying earnings by central operations (underlying EBITA) climbed by 54.9 per cent year-on-year to minus 29.5 million euro (previous year: -65.4 million euro). Besides an initial reduction in personnel costs in the corporate centre area, this improvement was attributable to a positive profit contribution from the measurement of derivative financial hedging instruments. In the 2007 financial year, the TUI Group no longer held any discontinuing operations. In 2006, it had generated earnings of 29.6 million euro from the trading sector in this segment.

At the balance sheet date, the Group’s net debt totalled 3.9 billion euro (previous year: 3.2 billion euro). The increase is due to the first-time consolidation of the First Choice Group.

Outlook for the current financial year

For 2008, TUI expects an increase in Group turnover of around four billion euro to 26 billion euro due to higher turnover expectations in the tourism and shipping divisions.

The tourism division expects to increase its turnover to around 19 billion euro. Due to the capacity adjustments already initiated, this turnover growth is expected to primarily result from the consolidation of the First Choice activities for a full year. The increase in earnings by TUI Travel will result from consolidation of First Choice for a full financial year, expected initial synergy effects, margin improvements in the Mainstream business and growth of the Specialist Holidays, Activity Holidays and Online Destinations Services sectors.

Booking volumes remain strong, both for the current winter season and the 2008 summer season. Turnover by the Northern Europe sector is up 7 per cent for the winter and up 9 per cent for the summer. Central Europe is currently recording an increase in turnover of 4 per cent for the winter and 6 per cent for the summer season. Western Europe is reporting turnover growth of 4 per cent, both for the current winter season and the 2008 summer season.

TUI Hotels & Resorts also expects turnover and earnings growth, resulting among others from a further increase in bed nights and an increase in average revenues per bed. Overall, the tourism division expects a substantial increase in earnings despite persistently intense competition as well as commodity price increases.
 
Overall, the Group’s profitability is expected to be boosted by the expected increase in earnings in tourism and the expected recovery of freight rates as well as other productivity increases in shipping.