Tui sees strong summer as holidays boost FY earnings

Travel giant TUI said annual operating profit jumped by more than a third and said it expected more growth next year driven by expanded capacity in its holiday business to meet demand.

Underlying earnings before interest and tax (EBIT) for the 12 months to September 30 rose 33 percent to €1.3bn, while the holiday division saw earnings rise to €1.1bn from €822m on the same basis. Revenue rose 12% to €23bn.

TUI expects 2025 EBIT to increase by 7 - 10% driven by high summer demand and revenue by 5 – 10%.

"Our focus on operational excellence, rapid implementation of the defined measures to improve earnings and transformation will continue to deliver significant growth. The TUI of tomorrow is well positioned," said TUI chief executive Sebastian Ebel.

“This is against the background of a higher inflationary environment and our expectation that the first half of the year will be impacted by a higher seasonality for investment ahead of the summer and the shift of Easter holidays into the third quarter."

More than 20 million people travelled with the group last year, up from 19 million a year earlier. Hotels and resorts also lifted underlying profit to €668m, up from €549 million a year earlier on the back of as improved operational performance across key brands.

Hargreaves Lansdown analyst Aaring Chiekrie said consumers continued to prioritise travel, "meaning more customers have been willing to pay higher prices to enjoy a break away from everyday life".

"TUI owns an airline, cruise ships, hotels and resorts, giving more than 20 million customers the choice of over 180 destinations. In some ways, having a wide package holiday business makes it more defensible – there’s more to offer and a lot of cross-selling opportunities," he said.

"But the drains on cash when you have planes, huge hotels and cruise ships to maintain and fill are enormous, so it was good to see occupancy rates across the business creep higher. Fewer empty rooms mean more efficiencies and higher profits."

"Debt levels have been brought down to a comfortable level, and continued progress on this front could see dividends reinstated in the near to medium term. With its valuation sitting well below its long-run average, this looks like an attractive opportunity for potential investors if expected improvements in revenue and profitability are to be taken at face value.”

Reporting by Frank Prenesti for Sharecast.com