Tui sticks to full-year guidance even as Q3 earnings drop

Travel group Tui said on Thursday that it was sticking to its guidance for full-year underlying earnings growth even as it posted a drop in third-quarter underlying earnings.

Third-quarter underlying earnings before interest, taxes and amortisation fell 12.7% to €193.4m, in part due to the timing of Easter and currency movements, but revenue was up 5% to €5.02bn.

Still, Tui said it continues to expect to deliver at least 10% growth in underlying EBITA for the year and that high levels of early bookings have helped to limit the impact of the heatwave in its key markets.

The third-quarter results reflected further strong growth in cruise and hotel group profitability, which was partly offset by softness in the tour operating segment and some net one-off items.

Tui said airline disruption cost the company around €3m in the third quarter, mostly as a result of air traffic control strikes in France, with action being taken to address its operational resilience in light of this.

Tui said the cruise division saw a "significant" increase in yield in all three brands, reflecting the strength of demand, the benefit of new ship launches and an improvement in itinerary mix. Meanwhile, hotels and resorts saw high levels of occupancy and overall average rate broadly in line with the previous year, despite the earlier Easter, the shift in demand to Turkey and North Africa and the currency impact.

At 0808 BST, the shares were down 4.6% to 1,509p.