Passengers board on the TUI bus at Palma de Mallorca airport on June 18, 2020 in Palma de Mallorca, Spain.
Clara Margais | Getty Images
German travel giant TUI on Tuesday posted a quarterly profit of 6 million euros ($6.46 million), defying expectations on the back of upbeat travel demand.
The swing to profit vastly outstripped an analyst consensus forecast for a 102 million euro loss in underlying earnings before interest and taxation (EBIT), in response to LSEG data. For a similar quarter last yr, Europe’s largest travel operator posted a 153 million euro net loss.
The group’s fiscal first-quarter revenue got here in at a record 4.3 billion euros, up by 15% from the previous yr, driven by higher demand at increased prices and rates.
Shares rose as much as 6% after the market open, but have since pared gains to simply above 3% during early trade in Europe.
“We’re on target, we’re gaining customers and we’re growing. We’re accelerating our transformation quarter by quarter. We have now goals that we’re consistently implementing,” TUI CEO Sebastian Ebel said in an announcement.
“In a persistently difficult environment, people’s high willingness to travel ensures strong economic development in all areas of the Group.”
Tui expects to record growth in operating profit of a minimum of 25% across the 2024 financial yr and is targeting a compound annual growth rate of 7-10% over the medium term.
A complete of three.5 million guests travelled with TUI throughout the three-month reporting period, up from 3.3 million the previous yr.
Deutsche Bank analysts noted on Tuesday that TUI’s share price “remains to be affected by a really significant discount,” trading at just 0.2 times enterprise value to sales and at a 5.3 times estimated price to earnings ratio for 2024, versus a historical average of 0.5x EV/Sales and 14x P/E.
“Out of those especially low level of valuation multiples, the year-to-date performance of the stock has been particularly poor (-3.9% YTD for the German listing and -5.5% for the London listing) in comparison with each the Stoxx 600 (c. +1.8%) and the Stoxx T&L (c. +9.2%),” Deutsche Bank analysts said, reiterating a “buy” rating on the stock.
Ditching London listing
The bumper earnings report if Tuesday got here as Tui shareholders gather for an annual general meeting at which they may vote on whether the corporate should strike its shares off London markets in favor of a full listing in Germany.
The group currently holds a dual listing between Frankfurt and U.K., however the board has beneficial ditching the London Stock Exchange, where only 10% of its shares are held, citing a “significant” decline in liquidity on U.K. equity markets lately.
The AGM will begin at 10:30 a.m. London time.
