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Tourism results in the first half year nearly balanced
The tourism division was successful in the second quarter 2002 and recorded a profit of Euro 152 million at a turnover of Euro 3.2 billion, which was a good result under the current difficult conditions. The turnover in the first half of 2002 was Euro 5.3 billion. The cumulative result for the first half year at minus Euro 16 million is thus almost balanced out after the significant negative first quarter 2002 attributable to seasonal as well as overall economic effects.
Our tourism units boosted their turnover as well as their performance in the second quarter 2002. In difficult markets – particularly in Germany and the Nordic countries – they did reasonably well, explained Dr. Michael Frenzel, TUI AG executive board chairman.
The booked turnover for the ongoing summer season improved increasingly and was particularly satisfactory in July and August. Group-wide it is currently still only 6.4 per cent down on the previous year, whereby the business developed differently in the various European source markets: for instance, the important UK market did better than average with a shortfall of 2.1 per cent. In the Netherlands, the shortfall was only 1.3 per cent, whilst Belgium posted strong growth with a plus of 8.7 per cent. The German tour operators posted a decline in booked turnover of 11.4 per cent, but did considerably better than the overall market which remains around 15 per cent down year-on-year.
We forecast that the shortfall in bookings for the World of TUI in summer 2002 will level out at below 6 per cent compared to 2001. Compared to the situation at the beginning of the season, this is a considerable improvement. This makes us optimistic that we have passed the lowest point, said Frenzel on the ongoing tourism business.
Recovery posted by logistics
The logistics division posted a recovery in the second quarter and improved on the results of the previous quarter. This applies to shipping as well as the other logistics activities. As a result, the turnover of the division in the second quarter 2002 at Euro 955 million was only around 4 per cent down on the previous year. In the first half of 2002, turnover was Euro 1.9 billion. The performance of the logistics division and the container shipping segment in particular was not able to match the extraordinarily good performance of the previous year. However, the second quarter 2002 with a profit of Euro 43 million posted an improvement in all segments compared to the previous quarter. The aggregate profit overall in the first half year was Euro 57 million.
Special effects in the energy division
The energy division posted a turnover of Euro 116 million in the second quarter 2002, and a cumulative turnover of Euro 230 million in the first half of 2002. The profit generated by the energy division in the second quarter 2002 at Euro 31 million was considerably lower than in the same period last year. The profit for the first half 2002 dropped to Euro 90 million. In addition to the volume and price-related decline in the oil business, this is mainly attributable to special effects such as the sale of the former Deminex projects.
Babcock risk fully absorbed
The segment Others was considerably lower year-on-year in the second quarter with minus Euro 80 million. The profit of the trading segment, with a turnover of Euro 0.9 billion, was Euro 13 million. In central operations, the result in the second quarter 2002 was again primarily influenced by earnings from divestments and expenses for holdings. The result of minus Euro 93 million was primarily attributable to the burden of Euro 183 million arising from the Babcock Borsig AG insolvency.
Net debt reduced to Euro 5.3 billion
The net debt of the Group was reduced over the reporting period to Euro 5.3 billion primarily due to the inflow of funds from divestments. Further inflows, including from the sale of Deminex, were received in July so that Group net debt is currently slightly below Euro five billion.
Outlook
In the tourism division, bookings for the summer season 2002 have marked continuous improvement during the course of the first half year. The forecast for the second half of the financial year remains uncertain because of the observed trend towards late bookings. However, the current good booking volumes in almost all source markets for the ongoing summer season indicate that a further reduction in the shortfall in bookings is possible if this trend is maintained. The structural adaptation measures and the cost-cutting programmes introduced in the aftermath of the events of 11 September will continue to have a positive influence on the development of results. They have a persistent effect and place the Group`s tourism business on a firmer cost footing, commented Frenzel.
Against the background of the general economic conditions, TUI`s three divisions will not be able to match the high profits of the 2001 financial year. However, improvements in central operations, and profits from the continuation of the divestment programme which are still expected in the second half 2002, will open up an opportunity of largely balancing out the shortfall in the results generated by the divisions.
The TUI Group sticks to its projections in a difficult economic environment: the divestment programme continues to proceed successfully, costs from previous businesses are absorbed. The expansion of the strong tourism growth activities will be purposefully pursued. We will rigorously monitor our cost targets in the coming months. On this basis, we will be able to start the next upturn as market leader in stronger shape, said Frenzel with an eye on the whole year.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
