Thomas Cook reduces losses as Egypt dents revenue
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Thomas Cook improved its underlying EBIT by 39% as trouble in Egypt continues to impact its sales revenue.
The group’s underlying EBIT still registered at a loss of GBP274 million in the 12 months up to 31 March 2014 but was GBP77m better than the same period last year.
The six months up to the same date saw its underlying EBIT at a GBP187m loss, improved GBP30m.
Its underlying UK EBIT margin improved 2.1% in the 12-month period and with measures in place the group hopes to achieve a target of more than 3.5% in full-year 2014 and more than 5% by full-year 2015.
Thomas Cook Group’s chief executive Harriet Green said it will continue to work through its waves of cost out and profit improvement initiatives, which are currently ahead of the initial target.
“2014 Wave 1 cost out and profit improvements are GBP20 million ahead of plan, resulting in yet another increase in our 2015 Wave 1 target, from GBP440 million to more than GBP460 million,” she explained. “In respect of our 2018 Wave 2 target of more than GBP400 million, we have so far identified an initial proportion of benefits, which we have fully risk weighted, of GBP150 million, with substantially more to come. We believe that these, in addition to over GBP1.2 billion in targeted incremental new product revenue in 2017, will transform our profitability and generate superior returns for our shareholders.”
‘Tipping point’ for online bookings
During the half year the group’s online bookings increased almost 39% with web revenues making up GBP3 billion and mobile/tablet bookings amounting to GBP0.5bn.
The group said it expects a ‘tipping point’ in the next six months for web bookings to ‘accelerate’ after recently updating its customer website.
Its Digital Advisory Board recently also expanded to include Home Retail Group’s Jo Hickson; Kathryn Parsons, co-founder and co-CEO of De-coded and Nicola Millard from BT Global Services.
“Looking further forward, we can deliver even more. In particular, we see significant opportunities as we increasingly professionalise the group around our customers’ needs, developing products, digitising the business and consolidating diffuse operations, all through relentless performance management,” said Green.
Egypt dents sales revenue
Continued trouble in Egypt was attributed to the group’s GBP60m drop in revenues to GBP9.1bn for the 12-month period and a GBP213m drop to GBP3.01bn in the six months ending this March.
Excluding Egypt the tour operator saw sales increase 0.8%, and is confident of reaching 3.5% full year sales growth in full-year 2015 even with the country included.
Sales for holidays in its concept hotels are up 44% for the summer with the seasons ‘developing well’, while forward winter bookings are up 11% with the average selling price 2% higher.
Thomas Cook’s concept and partnership hotel portfolio includes an extra 166 exclusive hotels totalling 475 and has more than 300 potential options in the coming years with an aim to reach 800 by 2017.
Around a third of revenue is from its ‘flexible’ offering rather than package holidays and amounts to GBP3bn of business.
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