Tui cruising confidently despite Caribbean hurricane hangover

Tour operator Tui cruised towards its full year targets and said, with two new ships launching and five year-round resorts opening in the coming year, that trading for future seasons was "overall" in line with expectations despite a dip in demand for Caribbean and Florida holiday post hurricane season.

The Anglo-German group, owner of the Thomson holidays business, reiterated guidance of at least 10% growth in underlying earnings before interest, tax and depreciation, with €10-15m of currency impact.

"As we near the end of the third financial year post merger, our results and trading performance show that we are consistently delivering our growth strategy," said chief executive Friedrich Joussen, who said he would provide an update on strategy in December.

He said the hotel and cruise brands continued to perform very well, while growth in source market customers "demonstrates the strong appeal of our holidays and distribution capability".

Summer 2017 revenue in Northern Europe, made up of the UK and Nordics, grew 8%, with customer numbers up 1% and average selling prices up 7%.

Central and Western Europe grew sales 9% and 6%, with customers up 6% and 4% and prices up 3% and 2%.

For the coming winter total source markets revenues are 36% sold, with revenue up 7%, customer numbers up 3% and prices 5%.

"At this early stage, overall trading for future seasons remains in line with our expectations," said Joussen. "Whilst there are at times external factors which can create uncertainty in specific markets and destinations, we are confident that our balanced portfolio, content led growth strategy and integrated model leave us well positioned to continue to deliver against our plans."

Cruises this winter are one-third sold far, with capacity boosted by the new ships launched in the just finished summer, with demand said to be strong for all three cruise brands and management pleased with yield performance.

There has been some impact on demand for some parts of the Caribbean and Florida as a result of the recent hurricanes, though Germany and the Nordics had a strong start.

UK booking and selling price performance are in line with management expectations, given the very strong start in prior year trading and impact of currency inflation on selling price. Both load factor and percentage of the UK programme sold are in line with prior year, with capacity being balanced in line with demand.

A Tui rebrand from Thompson has already begun in the UK, ahead of the key summer 2018 selling period.

Tui shares fell more than 1% in early trading on Thursday to 1,248p.

Analyst Greg Johnson at Shore Capital left his forecasts for full year profit before tax of €961m and EPS of €1.10, highlighting "recent hurricane damage not expected to have material impact on trading, booking trends in Germany are encouraging, especially with demand for North Africa and Turkey recovering, and although UK bookings are down, it is against tough comparatives with pricing ahead by 6%; we would also expect continued strong growth in its cruise division along with hotels & resorts".