Thomas Cook nose dive this morning - but that's not the end of the story

Thursday, 16th May 2019 08:39 - by Rajan Dhall

This morning Thomas Cook released their results for the six months ended 31 March 2019, here are some of the key highlights:

•    The Co. has suffered a near GBP 1.45bln loss due to a GBP 1.1bn goodwill impairment relating to a merger from over a decade ago.

•     Revenue of GBP 3,019 million, in line with last year a fall of more than GBP 200mln

•     Underlying EBIT loss increased by GBP 65 million to GBP 245 million reflecting margin pressure in Tour Operator

•     Goodwill impairment of GBP 1,104 million in UK business, relating to 2007 merger with MyTravel

•     Loss before tax of GBP 1,456 million after goodwill impairment

•     Net debt of GBP 1,247 million; increase due to a lower working capital position and higher non-cash items

•     The company has secured a short term loan to ease worries. Authorities are now worried about the sustainability of the business. 

It's clear that the company are struggling and they are desperately looking to flog the airline business, which they say they have had multiple bids for. In regards to a trading outcome, the resent poor performance is obviously not good news but before you go taking a short position there could be some upside if they announce the sale of the aforementioned airline unit. If the sale collapses then the 2011 historical low could be the next support target but on the upside, any good news could be resisted at the 39.24p area which has held strong in the past.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.