Tui turnover reveals only small aftershock from violence in Europe

Geopolitics and a spate of violent attacks in parts of Europe hit Tui Group's revenues in the third quarter but the travel group was still confident of hitting its full year targets and said it was pleased with the start to early trading for the winter season and Summer 2017.

Shares in Tui were up to pre-referendum levels on the release of the results, rising 4.6% to 1,059p just after 0900 BST on Thursday.

Turnover of €4.6bn in the three months to 30 June was down 5.7% on the same period, and while missing some analyst forecasts not as bad as some feared, while earnings before interest, tax and amortisation (EBITA) rose 1.1% to €180m.

With the source market programme 87% sold to date, sales were down only 2.1% if excluding the currency impacts, while also excluding Easter timing actually improved by €25m.

UK trading was said to have remained strong, with no apparent slowdown in bookings as a result of the EU referendum, with the reduction in group turnover driven by lower demand in holidays to Germany, Nordics and Belgium due to geopolitical events as well as the earlier timing of Easter.

Chief executive Friedrich Joussen said Summer 2016 trading was continuing in line with expectations, with 87% of the Source Markets' programme sold to date and sustained strong demand for holidays in the Western Mediterranean, long haul destinations and cruise.

"Given the resilience of demand for our holidays, hotels and cruises, the flexibility inherent in our business model, our balanced portfolio of businesses and destinations, and the strength of our balance sheet, we are well positioned to deal with the changing geopolitical and macroeconomic environment," he said.

Therefore he was confident of delivering the full year guidance of at least 10% growth in underlying EBITA, and reiterated previous guidance of at least 10% underlying EBITA compound annual growth over the three years to 2017/18.

Broker Shore Capital said it was a "solid" quarterly performance. Adjusting for disposals and currency it estimated circa €0.95 of earnings for the full year, which would value TUI at a p/e ratio of 12 times.