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Kuoni Group reports an encouraging third quarter for 2002

The Kuoni Group achieved favourable results for the third quarter of the current business year…

The Kuoni Group achieved favourable results for the third quarter of the current business year. The Group generated earnings before interest, taxes and amortisation of goodwill (EBITA) of CHF 107.4 million, an 0.6% improvement on the same period last year. The EBITA margin was increased from 8.1% to 8.8%. Operating costs were further reduced, and an improvement was posted in the gross profit margin.



The Group generated total turnover of CHF 2.877 billion in the first nine months of 2002. The result is a 12.7% decline on prior-year levels. Year-to-date EBITA to the end of September amounted to CHF 95.6 million, while Group profit for the first three quarters totalled CHF 23.1 million. For the year as a whole, the Group expects to record turnover that is some 5% below prior-year levels and an EBITA margin of around 3%.



The Kuoni Group raised its earnings before interest, taxes and amortisation of goodwill (EBITA) to CHF 107.4 million for the third quarter of 2002, an 0.6% improvement on the prior-year period. The EBITA margin rose from 8.1% to 8.8%. The Group also further reduced its operating costs over the same period and increased its gross profit margin from 24.8% to 26.1%. Total turnover amounted to CHF 1.218 billion, an 8.1% decline on the third quarter of 2001. Some 2.5% of this was due to adverse currency movements.



Third-quarter EBITA for the Group`s Scandinavian operations was a substantial 27.4% improvement on the prior-year period. Turnover was 8.7% down on 2001 levels, largely as a result of capacity reductions. Year-on-year third-quarter turnover performance for the Europe division improved from the -31.3% recorded for the first six months to -11.1%. The Group`s Italian business sustained declines in both turnover and EBITA as a result of the revised product portfolio. The results were a prime contributor to the less-than-satisfactory performance of the division as a whole. The awaited recovery failed to materialise in the third quarter for the Incoming & Asia division. The economic situation in Japan, the USA`s continuing lack of appeal as a travel destination and intensified pressure on margins were all major factors in the unsatisfactory performance.



The Kuoni Group generated total turnover of CHF 2.877 billion for the first nine months of 2002, a 12.7% decline on the prior-year period. Year-to-date EBITA to the end of September 2002 amounted to CHF 95.6 million, 8.4% down on the CHF 104.4 million of the previous year. The Group increased its gross profit margin from 24.7% to 25.9% over the same nine-month period, while lowering its operating costs by a substantial 8.3%. Group profit for the first nine months amounted to CHF 23.1 million. This compares to the CHF 67.5 million generated over the same period in 2001, though the prior-year result included CHF 45 million in post-tax earnings on the sale of Neckermann Austria.



Outlook for the 2002 business year



Following its collapse in the fourth quarter of 2001, demand has slowly but steadily recovered in the first nine months of the current year. For the fourth quarter of 2002, however, the Kuoni Group expects to see a substantial increase in turnover and – thanks also to the continued rise in its gross profit margin and cost economies – an EBITA result that is a tangible improvement on the prior-year period. But with horizons limited by the short-term nature of current booking behaviour, precise forecasts are difficult to make.

In view of the results achieved in the first nine months, turnover for 2002 as a whole will fall short of its prior-year levels. The Group expects to report a turnover decline of some 5% for the year, and an EBITA margin of around 3%.



Balance sheet



The consolidated balance sheet showed shareholders` equity of CHF 590 million at September 30, 2002, giving a balance sheet equity ratio of 27%. This is expected to have risen to some 30% by the end of the year.



Cash flow



Year-to-date cash flow from operating activities amounted to CHF 215 million, while free cash flow totalled CHF 195 million. Liquid funds had risen to CHF 693 million by the end of the third quarter.

Theodore Koumelis
Co-Founder & Managing Director - Travel Media Applications | Website

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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