- Group turnover climbs by 2.71 per cent to 18.9 billion euros
- In line with TUI’s announcement, underlying EBITA -25.6 per cent down year-on-year to 893 million euros (previous year 1.183 billion2 euros) due to 737 MAX grounding
- Excluding the impact of the 737 MAX grounding, TUI’s underlying EBITA was in line with the record level delivered in 2018 at 1.186 billion euros
- Hotels & Resorts, Cruises and Destination Experiences segments deliver strong operating performance – investments in further growth
- Traditional tour operators (Markets & Airlines) face ongoing external headwinds – Focus: securing market share in an era of consolidation within the sector
- Proposed dividend of 0.54 euros
- Guidance: increase underlying EBIT to a range of between approx. 950 million euros and 1.05 billion euros3 in 2020
- Dividend policy to be adjusted from financial year 2020 – minimum dividend of 0.35 euros per share creates reliability for shareholders and leeway for the expansion of the digital business, investments in hotels and supported by a robust balance sheet policy
- Joussen: “TUI successfully completed financial year 2019 at a profit of nearly 900 million euros. Its ongoing transformation is continued. The second stage, i.e. transformation to a digital group, will change our company considerably stronger than the first stage, pursued over the past five years, to deliver the transformation from a traditional tour operator to a highly profitable hotel and cruise group. Our strategy, investments and an adjusted dividend policy have been designed to support that change and will strengthen TUI’s position going forward.“
“At an operating result of 893 million euros, TUI Group delivered a successful financial year 2019. Even in a challenging year for the tourism sector, TUI delivered a strong operating performance, a robust balance sheet and growth in its Hotels & Resorts and Cruises core businesses,” said CEO Fritz Joussen, speaking in Hanover on Wednesday. Excluding the impact of the 737 MAX grounding, TUI would have reported underlying EBITA of 1.186 billion euros, matching the prior year’s high level, the best result in the history of the company. However, due to the grounding of the 737 MAX aircraft ordered in March 2019, underlying EBITA totalled 893 million euros, down 25.6 per cent on the prior year (1.183 billion euros4), in line with expectations and the announcement made in the course of the financial year.
Holiday Experiences, the core business with hotels, cruises and destination activities, again delivered a strong performance and an increase in underlying EBITA, now accounting for 745 per cent of TUI’s underlying result. The Markets & Airlines business comprising the traditional tour operators, by contrast, continued to face a very challenging market and competitive environment. Apart from the grounding of the 737 MAX, the challenges included a continued Brexit uncertainty, airline overcapacities in Europe and changes in customers’ booking behaviour in the traditional tour operating business. Joussen: “Over the past five years, we have successfully transformed our Group. TUI is financially strong, economically robust and has made major investments in hotels, cruises and new digital businesses since 2014. The second stage of the transformation, launched to transform TUI to a digital group, will change our company considerably stronger than all steps taken over the past five years. Our strategy, investments and new dividend policy are aligned accordingly.”
Dividend: Proposed dividend of 0.54 euros per share; new dividend policy from financial year 2020
This far, TUI Group’s dividend has grown in line with underlying EBITA at constant currency. As underlying EBITA for the full year 2019 is 25.6 per cent down on the prior year, the calculated dividend proposed for financial year 2019 is 0.54 euros (previous year 0.72 euros). The Executive Board and the Supervisory Board are recommending this dividend to the Annual General Meeting on 11 February 2020.
From 2020, TUI Group will realign its dividend policy for the future:
- Payment of a core dividend of 30 to 40 per cent of underlying Group-EAT (Earnings After Tax)6
- with a dividend floor (minimum payment) of 0.35 euros per share.
In this context, Fritz Joussen explained: “We are planning to invest in our digital strategy, continue to report a robust balance sheet and pursue an attractive dividend policy – this will create growth for the company and reliability for its shareholders. With the planned minimum dividend payment of 0.35 euros per share from financial year 2020, TUI will remain an attractive investment, and we will create sufficient leeway for further investments in growth.” Based on the current share price, the minimum dividend paid out would amount to around three per cent per share.
Outlook: Target corridor for underlying EBIT
For financial year 2020, the Executive Board expects underlying EBIT to increase to a range of approximately 950 million euros to 1.05 billion euros7.
- The target corridor includes approximately 130 million euros cost impact from the 737 MAX grounding, assuming return to service by end of April 20208.
- Should the 737 MAX grounding continue until the end of financial year 2020, additional cost impact of approximately 220 million to 270 million euros is expected.
- The guidance range does not include any potential grounding compensation from Boeing in any form.
- The guidance range however includes a mid to high double-digit millions investment in digitalised platform growth.