RE: Half year report10 May 2023 14:37
TUI falls after results but analysts see 'window of opportunity' for shares
Proactive Investors - Shares in TUI (LON:TUIT) fell 4% to 539p after the tour operator shrank its loss not quite as much as expected, but said booking trends were strong and average selling prices for summer improving.
Operating losses of €242mln for the second quarter to 31 March were down 26.5% on the same period a year earlier but slightly bigger than the €236mln loss the City expected.
Net debt was €4.2bn, up from €3.9bn a year ago, but thanks to a recent rights issue is down to €3.1bn now.
The Germany-headquartered group, which also owns what was Thomson in the UK, reported a total of 12.9mln bookings taken across the Winter and Summer seasons, with roughly 4.2m bookings added since the first-quarter update.
Anslysts at UBS (NYSE:UBS) noted that cruises continues to underperform compared to pre-pandemic 2019 with pricing still down 7%.
But tour operator losses have recovered closer to 2019 levels, while hotel profits are higher.
"We believe the recent decline in kerosene prices and strengthening pound could be tailwinds for 2H - although the magnitude of the support is unclear due to limited disclosure on hedging," the analysts said.
The shares have "significantly underperformed" the EU travel sector so far in 2023 in the context of its April rights issue, but today's results are seen as "suggesting things are on track" with improving prices and stronger cash inflow.
"We see a potential window of opportunity over the next weeks for the shares to outperform travel names, narrowing some of the gap," they said.
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