Published On: Wed, Nov 25th, 2015

Thomas Cook Group (LON:TCG) Returns To Profitability

Thomas Cook

Thomas Cook shares jumped by 7% in early morning trade.

Today Thomas Cook Group PLC released its full year 2015 trading results with the announcement that the company has returned to profitability for the first time since 2010.

The group saw its profitability bounce back from a loss of £115 million in 2014 to a £19 million profit after tax. The company’s overall revenue declined by £754 million from £8.58 billion in 2014 to £7.83 billion in 2015 with the company highlighting external headwinds such as the attack in Tunisia costing the company roughly 25 million.

Thomas Cook noted in its outlook for the next year that the business is “inevitably impacted by geopolitical events” with situations such as the repatriation of 1,700 customers from Sharm-El-Sheikh and the terrorist attack in Tunisia placing pressure on the company. Overall the company said that business has continued to grow with demand for their differentiated holidays increasing and it is confident on delivering its expectations for the current year.

Peter Fankhauser, Chief Executive of Thomas Cook said:

“2015 has been a year of real progress as good trading combined with rigorous cost control to deliver our first positive profit after tax in five years. Despite turbulence in some of our destinations, the underlying business performed in line with our plans at the start of the year, demonstrating its greater resilience.

“Customers have responded well to our increased focus on higher-quality hotels with our own-brand properties proving particularly popular, growing bookings by more than 40% over the year. We have continued to build on this success with the launch of a new boutique concept, Casa Cook, with the first hotel set to open next spring in Rhodes.

“Looking across the Group, the UK continued to strengthen as a better quality holiday offering and other business improvements delivered a 42% increase in underlying operating profit. Northern Europe and our German airlines business also performed well with underlying operating profits up 23% and 19% respectively. As previously highlighted, Continental Europe, particularly Germany and France, were weaker due to more competitive trading conditions.

“Of course, the past year has also presented considerable challenges for Thomas Cook as we confronted the mistakes that were made following the deaths of Bobby and Christi Shepherd in Corfu nine years ago. I am clear that we need to learn from the tragedy and do things differently in the future. Last week, we launched the Safer Tourism Foundation together with the children’s mother, Sharon Wood.

“But we also recognise that change needs to come from within Thomas Cook, putting our customers first in everything that we do. That is why we have introduced customer satisfaction as a new internal measure of success and why we are rolling out a 24-hour hotel satisfaction promise for key hotels across the group. It is also why we are putting a renewed focus on the quality of our holiday offering and pushing hard to further develop our online and retail channels.

“During the year our staff have shown great dedication in times of crisis, working tirelessly to support our customers. Their response to recent events in both Egypt and, earlier in the year, Tunisia, shows what we can achieve when we pull together. In a time of geopolitical uncertainty, that level of customer care is a key advantage of our packaged holiday offering.

“The new financial year has got off to a good start with encouraging trading overall for Winter 2015/16 and Summer 2016. With our business on a firmer financial footing, we have a clear strategy in place to deliver greater value for customers and sustainable growth for our shareholders.”

The company once again assured investors that it expects to pay a dividend from FY16 profits in early FY17 returning around 20% – 30% of reported net profit each year to shareholders.

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