Thomas Cook trading for winter 07/08 and summer 08 continues to be encouraging and "we are in a strong position for the rest of the year", as the tour operator stated. The Board continues to look to the future with confidence. In the short term, the company is encouraged by the business’s performance since the year end and ongoing current trading.
"In the longer term, merger synergies of at least €200m provide a sound platform for the achievement of our target of at least €620m operating profit in 2009/10," said Thomas Cook.
The unaudited Group operating loss before exceptional items and amortisation of business combination intangibles in the two months to December 2007 was reduced by €39.6m, or 27%, to €106.8m (2006 pro forma loss: €146.4m). The result for this period is in line with the company’s expectations and reflects the seasonality of its business.
The improved Group operating result reflects costs savings and improvements in underlying margins, partially offset by increased costs of fuel. Significant year on year improvements were seen in the UK and Continental Europe with smaller improvements reported in Airlines Germany and North America. Northern Europe continued to perform strongly, in line with the prior year. Corporate costs were broadly flat year on year.
The improvement in the UK reflects cost savings achieved through the integration process. In Continental Europe, the company has seen a strong start to the year in Germany, with improvements in margins achieved and lower overhead costs than in the prior year.
In Airlines Germany, increased volumes in third party and seat only business have resulted in improved margins year on year. In North America, Thomas Cook has also achieved improved margins despite the continuing difficult trading conditions in Canada.
Operating exceptional items in the period were €9.9m, and largely reflect the continued integration of the UK businesses. Amortisation of business combination intangibles amounted to €14.9m.
Acquisition of hotels4U.com
The Group also announced that it has agreed to acquire the entire issued share capital of hotels4U.com Limited from Centurion Holiday Group Limited. The initial consideration, net of amounts to be reinvested by Haim Perry, MD of hotels4U and Jacky Bedlow, Finance Director, is £21.8 million payable in cash from internal resources. The management’s reinvestment is subject to earn out arrangements based on the profitability of hotels4U up to 2013.