TUI AG (FRA:DE000TUA) TUI AG: Q3 INTERIM FINANCIAL REPORT 1 October 2022 – 30 June 2023
Transparency directive : regulatory news
09/08/2023 08:00
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TUI AG (TUI)
TUI Group
Quarterly Statement 1 October 2022 – 30 June 2023 Content Quarterly Statement Q3 2023 Summary Consolidated earnings Segmental performance Cash Flow / Net debt / Net capex and investments Consolidated income statement Cash flow statement Financial position Alternative performance measures Other segment indicators Cautionary statement regarding forward-looking statements Financial calendar Contacts This Quarterly Statement of TUI Group was prepared for the reporting period from 1 October 2022 to 30 June 2023. Quarterly Statement Q3 2023 Summary Q3 back to profitability with an underlying EBIT of €169.4m improving strongly by €196.5m year-on-year. Current booking levels confirm our expectations for a strong Summer and we are on track to deliver on FY 2023 expectations.
1Excluding businesses sold and discontinued since 2019 2 Bookings up to 6 August 2023 relate to all customers whether risk or non-risk and include amendments and voucher re-bookings
1 Based on constant currency. Sustainability as opportunity
Differences may occur due to rounding. 1 We define the EBIT in underlying EBIT as earnings before interest, income taxes and result of the measurement of the Group’s interest hedges. For further details please see page 20. 2 EBITDA is defined as earnings before interest, income taxes, goodwill impairment and amortisation and write-ups of other intangible assets, depreciation and write-ups of property, plant and equipment, investments and current assets. 3 Earnings per share for all periods presented were adjusted for the impact of the 10-for-1 reverse stock split in February 2023 as well as the impact of the subscription rights issued in the capital increase in March 2023. 4 Equity divided by balance sheet total in %, variance is given in percentage points. All change figures refer to the same period of the previous year, unless otherwise stated. The present Quarterly Statement Q3 2023 is based on TUI Group’s reporting structure set out in the Consolidated Financial Statements of TUI AG as at 30 September 2022. See TUI Group Annual Report 2022 from page 27. Due to the re-segmentation of Future Markets from All other segments to Hotels & Resorts, TUI Musement and Central Region in the current financial year, previous year’s figures have been adjusted. Trading update – Booking level remain strong for Summer 2023 supported by higher ASP, confirming customers continue to prioritise holidays. We are confident the capacity for the season will be close to normalised levels Markets & Airlines
Winter 2023/242
1 Depending on the source market, Summer season starts in April or May and ends in September, October or November. 2 Bookings up to 6 August 2023 relate to all customers whether risk or non-risk and include amendments and voucher re-bookings Holiday Experiences
Holiday Experiences Q41 trading remains well on track to deliver FY 2023 expectations.
1 Q4 covers July to September 2023 with trading data as of 30 July 2023 2 2023 trading data as of 30 July 2023 excluding Blue Diamond 3 Number of hotel days open multiplied by beds available in the hotel (Group owned and leased hotels) 4 Occupied beds divided by available beds (Group owned and lease hotels) 5 Number of operating days multiplied by berths available on the operated ships 6 Achieved passenger cruise days divided by available passenger cruise days Net debt The net debt position as of 30 June 2023 was €-2.2bn, an improvement of €1.1bn year-on-year (30 June 2022: €-3.3bn). This is driven by the net proceeds (following repayment of the final WSF obligations) from our capital increase in April 2023 and a positive free cash flow. Strategic priorities The TUI Group's strategy outlined in the Annual Report 20221 and at our FY2022 results presentation, will be continued in the current financial year. TUI’s strategy aims to deliver growth in both Holiday Experiences and Markets & Airlines, embedded in one central customer ecosystem, underpinned by our sustainability agenda and our people. Our Holiday Experiences business strategy focuses on asset-right growth in differentiated content and expanding the customer base with multi-channel distribution. Having accelerated our strategic transformation of Markets & Airlines during the pandemic, and fully implemented our Global Realignment Programme, our business strategy is now focused on profitable growth. This will be achieved by offering more product choice, growing our customer ecosystem into untapped segments, and increasing customer value and thus market share. This includes increasing the volume and proportion of dynamically sourced packages, as well as significantly increasing our component offer in accommodation only and flight only. We also aim to further improve our cash position focusing on optimising working capital and cash from operations and maintaining disciplined capital expenditure through asset right growth. In April 2023, we successfully completed a €1.8bn rights issue, facilitating the full repayment of the remaining state aid instruments granted by the German Economic Stabilization Fund (WSF) and enabling a significant reduction in the size of our KfW credits lines as well as a repayment of current drawings under our credit lines in the same magnitude. In May we successfully extended the maturity of our existing credit lines totaling €2.7bn from July 2024 to July 2026. The interest conditions of this revolving credit facility (RCF) are also linked to the achievement of the Group's emission reduction targets confirmed by the Science Based Targets Initiative (SBTi). With the review and confirmation of the ambitious emission reduction targets by the SBTi, TUI is setting new standards in the tourism sector. Both the rights issue and RCF extension are significant measures to improve our credit metrics and restore our balance sheet strength. As a result we have seen a first improvement in our credit rating during the quarter, with S&P upgrading in April to B and Moody’s upgrading in May to B2 both with a positive outlook. FY23 Assumptions2 – We reconfirm our expectations to increase underlying EBIT significantly for financial year 2023. Mid-term ambitions – We are focused on operational excellence and execution. We have a clear strategy to accelerate profitable market growth with new customer segments and more product sales. Our mid-term 2025/26 ambitions are for underlying EBIT to significantly build on €1.2bn3. We have a target to return to a gross leverage ratio4 of well below 3.0x and aim to return to a credit rating in line with the pre-pandemic rating of BB / Ba territory. 1 Details on our strategy see TUI Group Annual Report 2022 from page 23 2 Based on constant currency. 3 FY 2019 underlying EBIT of €893m including €293m Boeing Max cost impact 4 Defined as gross debt (Financial liabilities incl. lease liabilities and net pension obligation) divided by reported EBITDA Consolidated earnings
Segmental performance
9M 2023 total revenue in our Hotels & Resorts segment increased to €1,199.6m, up €289.8m year-on-year (9M 2022: €909.8m). 9M underlying EBIT for the segment of €262.2m improved by €72.5m year-on-year (9M 2022: €189.7m). Q3 2023 total revenue for the segment grew to €456.7m, an increase of 19% year-on-year (Q3 2022: €385.2m) supported by higher bed nights and rates across our portfolio of brands. Q3 underlying EBIT of €112.5m, was €7.7m ahead year-on-year (Q3 2022: €104.9m) and ahead of an already strong prior year quarter and achieving a fifth consecutive quarter above 2019 levels, underlining the continuing strong performance of this segment post pandemic. Results were driven by an improved operational performance for Riu as well as Robinson and were supported by higher occupancies and rates. In the Q3 period, we offered 10.9m available bed nights (capacity), an increase of 2% on 10.7m in Q3 2022. The overall occupancy rate for the segment increased across all our key brands by a total of 5%pts year-on-year to 79%, Again the Canaries, Balearics, Turkey, Greece and Cape Verde proved to be popular summer destinations for both Markets & Airlines and third-party customers. Our year-round hotel offering across the Caribbean delivered average occupancy rates of 90% at high capacity levels, with Mexico being our most popular destination, achieving 94% average occupancy in the quarter. Q3 2023 average daily rate in the segment rose by 9% year-on-year to €80 with rates higher in all our key destinations and in particular in the Caribbean. Riu’s average daily rate increased by 13% to €71 (Q3 2022: €63) and Blue Diamond’s average daily rate rose by 7% to €150 (Q3 2022: €140). Robinson achieved an average daily rate of €98, up 4% versus prior year (Q3 2022: €94). Future content growth in our Hotels & Resorts segment will be delivered both through our well-known hotel brands in existing and new destinations, as well as introducing new brands to complement our portfolio. This growth will be achieved in accordance with our asset-right strategy. Following the announcement in the previous quarter of our expansion plans for TUI Blue, we are now announcing the creation of a new off-balance sheet joint venture with Riu. This targets realising unique opportunities to invest into growth, whilst limiting the financial impact on TUI’s leverage and net investments. In addition, the TUI initiated global Hansainvest hotel fund is successfully executing its first two hotel investments on Zanzibar and on Cape Verde. Here, TUI is providing hotel management and investment advisory services to support our asset-light growth development.
The Cruises segment comprises the joint venture TUI Cruises in Germany, which operates cruise ships under the brands Mein Schiff and Hapag-Lloyd Cruises, and Marella Cruises in UK. The segment operated a full fleet of 16 ships in the third quarter in line with Q3 2022 when the segment was able to return to normal operations after COVID-19 restrictions were lifted. During the quarter Mein Schiff Herz transferred from TUI Cruises to Marella and after refurbishment the newly named Marella Voyager returned to service at the beginning of June for the summer season. 9M 2023 Cruises revenue only includes Marella Cruises, as TUI Cruises is accounted for using the equity method. Revenue grew to €421.7m, a significant improvement of €242.9m year-on-year (9M 2022: €178.8m). 9M 2023 underlying EBIT for the segment (including the equity result of TUI Cruises) was €79.0m, up €181.3m year-on-year (9M 2022: €-102.3m loss). Q3 2023 revenue reflecting Marella Cruises solely, increased to €164.6m, up €61.3m year-on-year (Q3 2022: €103.3m). Q3 2023 underlying EBIT for the segment (including the equity result of TUI Cruises), was €64.0m, an improvement of €61.1m (Q3 2022: €3.0m) with all of our three Cruise brands contributing to the positive EBIT development boosted by increased volumes as well as higher occupancies. The Cruises business continues to recover post pandemic with this now being the fifth consecutive positive quarter for the segment with TUI Cruises achieving Q3 2023 EAT (earnings after tax) of €47m, a significant increase of €34m year-on-year (Q3 2022: €13m). Mein Schiff – Mein Schiff operated their full fleet of six ships at the end of the quarter against seven ships in the previous year following the transfer of Mein Schiff Herz to Marella Cruises during the quarter. The brand offered itineraries to the Mediterranean, Northern Europe and Asia. At €191, the average daily rate was 1% above prior year (Q3 2022: €188) and virtually in line with pre-pandemic levels (Q3 2019: 190€). Occupancy of the operated fleet in Q3 2023 of 98% was significantly ahead of prior year (Q3 2022: 70%) and moving close to the peaks seen in FY2019, underlining the strong demand for our German language, premium all-inclusive product. Hapag-Lloyd Cruises – Our luxury and expeditions cruise brand, offering itineraries to Europe, Asia, the America’s as well as voyages to the Artic during the quarter. As in the previous year, the brand operated all five ships in Q3 2023. Q3 average daily rate was €706, an increase of 14% on prior year (Q3 2022: €619) and well above pre-pandemic levels (Q3 2019: €577). Q3 occupancy of the fleet was 73% (Q3 2022: 57%), highlighting the popularity of these cruises post pandemic. Marella Cruises – Our UK cruise brand offered itineraries to the Mediterranean, the Caribbean and North America in Q3. With Marella Voyager supplementing the fleet, the brand operated a full fleet of five ships towards the end of the quarter against four ships in the previous year. The business achieved an average daily rate of £178 up 11% year-on-year (Q3 2022: £160) and well above the pre-pandemic level of £144, driven in particular by the expansion of the fleet and itineraries to the Eastern Mediterranean. Occupancy also improved significantly to 95%, versus a prior year Q3 of 70%.
In TUI Musement, our Tours and Activities business, 9M 2023 revenue of €506.1m, was up €189.2m year-on-year (9M 2022: €316.9m). 9M underlying EBIT loss of €-13.1m improved against prior year (9M 2022: €-18.1m loss). Q3 2023 revenue of €216.1m, was €44.8m and therefore 26% higher year-on-year (Q3 2022: €171.3m) highlighting the significant growth in this segment and the advantage of our integrated model as well as growth of third-party sales through the TUI Musement platform. Underlying EBIT of €13.1m was in line with prior year (Q3 2022: €13.3m). The business continues to focus on its B2C offering driving growth of Experiences sales directly to the consumer and through B2B, as well as focusing on profitability by growing the differentiated own product portfolio globally. During the quarter, TUI Musement benefited from increased guest transfers due to a higher number of tour operator guests, providing 8.2m transfers in the destinations, 1.0m more than in the same quarter last year (Q3 2022: 7.2m). In addition, 2.7m Experiences were sold across our global destinations, up 0.7m and 33% (year-on-year (Q3 2022: 2.0m) as the significant expansion of our business in this segment continued.
Q3 2023 revenue of €4,645.9m, increased €748.0m or 19.2% year-on-year (Q3 2022: €3,897.9m). The Q3 underlying EBIT profit of €6.3m was up significantly by €149.3m year-on-year (Q3 2022: €-143.0m loss) whereby the prior year included €75m of costs from flight disruptions. The improvement was driven in particular by higher prices and good demand for our wide and varied product offering. Traditional short- and medium-haul destinations such as the Canaries and Egypt were again popular amongst customers, with long-haul destinations such as Mexico and the Dominican Republic also in good demand. A total of 5,514k customers departed in Q3 2023, an increase of 445k customers versus Q3 2022.
9M 2023 revenue of €4,527.3m, which was up €1,264.4m year-on-year (9M 2022: €3,262.9m). 9M underlying EBIT loss for the region of €-270.6m improved by €175.2m year-on-year (9M 2022: €-445.7m loss). Northern Region reported Q3 2023 revenue of €1,992.7m, which was up €229.9m year-on-year (Q3 2022: €1,762.8m). Q3 2023 underlying EBIT loss for the region of €-1.1m improved by €92.0m year-on-year (Q3 2022: €-93.1m loss) driven by improved margins and the absence of flight disruptions as in the prior year. Q3 2023 customer volumes increased by 5.9% to 2,219k versus 2,095k guests in Q3 2022 underlining the popularity of the summer season offering. Online distribution remained strong at 69% and well up on pre-pandemic levels (Q3 2019: 66%), but were down 2%pts against prior year (Q3 2022: 71%), as retail shop sales continued their recovery post pandemic. Direct distribution was at 94% in line with prior year (Q3 2022: 94%) and pre-pandemic levels (Q3 2019: 94%).
Q3 2023 revenue of €1,861.2m, improved €409.3m 28.2 %year-on-year (Q3 2022: €1,451.9m) whilst the underlying EBIT result for the region of €8.8m, was €11.5m lower year-on-year (Q3 2022: €20.3m). The improvement in operational performance especially in Germany was generated by higher volumes and prices. This was offset year-on-year by negative valuation effects from ineffective hedge positions. Customer volumes increased by 17.1% to 2,009k versus prior year (previous year 1,716k) reflecting in particular the significant recovery in customer bookings in the region. Online distribution for Central Region reached 30%, and thus virtually in line with the 31%pts in the prior year. Against pre-pandemic levels, online distribution was up by 6%pts (Q3 2019: 24%), emphasising the strong development of our online offering in this region in line with consumer demand. Direct distribution reduced 2%pts to 56% against Q3 2022 of 58% but ahead versus pre-pandemic levels (Q3 2019: 53%).
In Western Region 9M 2023 revenue of €1,804.8m, rose €339.3m year-on-year (9M 2022: €1,465.5m). 9M underlying EBIT loss of €-103.9m, decreased by €55.7m year-on-year (9M 2022: €-159.5m loss). Q3 2023 revenue of €792.2m, was up €108.9m year-on-year (Q2 2022: €683.2m). Q3 underlying EBIT loss of €-1.0m, improved by €69.2m year-on-year (Q3 2022: €-70.2m loss). This was driven in particular by an improved operational performance in both Belgium and the Netherlands supported by the absence of the flight delays and cancellations due to disruptions in particular at Schiphol Airport encountered in the prior year. Customer volumes increased by 2.1% to 1,285k guests year-on-year (Q3 2022: 1,259k). Online distribution for region stood at 55%, 5%pts below prior year but virtually in line with pre-pandemic levels (Q3 2019: 56 %). Direct distribution was down 4%pts to 76% versus last year (Q3 2022: 80%) but in line with pre-pandemic levels (Q3 2019: 76%).
9M 2023 underlying EBIT loss of €-57.2m, increased €25.1m year-on-year (9M 2022: €-32.0m loss) and Q3 2023 underlying EBIT loss of €-26.6m, increased by €21.4m year-on-year (Q3 2022: €-5.2m loss). Cash Flow / Net debt / Net capex and investments In the first nine months of financial year 2023, TUI Group’s business volume was significantly higher than in 9M 2022 which was still impacted by measures to contain the spread of COVID-19. TUI Group’s results generally also reflect the significant seasonal swing in tourism between the winter and summer travel months. TUI Group's operating cash inflow in 9M 2023 of €1,079.6m decreased by €891.0m compared to previous year, which was characterised by normalising business volumes and thus the one-time rebound of customer prepayments to a normal level following the gradual lifting of the COVID-19 travel restrictions in 2022. Net debt position as at 30 June 2023 of €-2.2bn was down €1.1bn compared to previous year level (30 June 2022: €-3.3bn). This improvement is driven by net proceeds (following repayment of the final WSF obligations) from our capital increase in April 2023 and a positive free cash flow.
* Including €6.7m for Q3 2023 (Q3 2022: €59.4m) and €27.2m for 9M 2023 (9M 2022: €62.1m ) cash gross capex of the aircraft leasing companies, which are allocated to Markets & Airlines as a whole, but not to the individual segments Northern Region, Central Region and Western Region. Cash gross capex in 9M 2023 was €91.8m higher year-on-year. This increase was due, amongst others, to higher investments in Hotels & Resorts, the IT and the airline sector and at Marella for the refurbishment of Mein Schiff Herz prior to its commissioning for the UK market. Net capex and investments of €310.1m increased by €21.4m year-on-year. The divestments include an inflow of €71m from the sale of the stakes in RIU Hotels S.A. in financial year 2021 as well as an inflow from the sale of the non-consolidated share in Peakwork AG. Consolidated income statement
Cash flow statement
Financial position
Alternative performance measures The Group’s main financial KPI is underlying EBIT. We define the EBIT in underlying EBIT as earnings before interest, income taxes and expenses for the measurement of the Group’s interest hedges. EBIT by definition includes goodwill impairments. One-off items carried here include adjustments for income and expense items that reflect amounts and frequencies of occurrence rendering an evaluation of the operating profitability of the segments and the Group more difficult or causing distortions. These items include gains on disposal of financial investments, significant gains and losses from the sale of assets as well as significant restructuring and integration expenses. Any effects from purchase price allocations, ancillary acquisition costs and conditional purchase price payments are adjusted. Also, any goodwill impairments are adjusted in the reconciliation to underlying EBIT.
The TUI Group’s operating loss adjusted for special items decreased by €404.6m to €-225.9m in the first nine months 2023. The adjusted net income totaling €13.4m in the first nine months 2023 includes in particular a positive gain on disposal from the sale of the tour operator business by Sunwing Travel Group Inc., Ontario, which is accounted for using the equity method, in Northern Region as well as subsequent expenses from a company disposal in previous years in Hotels & Resorts. These were offset by adjusted restructuring expenses in various segments, including in particular an impairment loss on self-generated software in All other segments. The adjusted net expenses totaling €5.0m in the first nine months 2022 include restructuring expenses in the Northern Region, Central Region and TUI Musement as well as income from the sale of the shares in Nordotel S.A., fully consolidated in Hotels & Resorts, to Grupotel S.A., a joint venture of TUI Group. In addition, an adjustment was made for expenses from the revaluation of a purchase price receivable. Expenses for purchase price allocations of €18.4m (previous year: €21.5m) relate in particular to the amortisation of intangible assets from acquisitions made in previous years.
Other segment indicators
Cautionary statement regarding forward-looking statements The present Quarterly Statement contains various statements relating to TUI Group’s and TUI AG’s future development. These statements are based on assumptions and estimates. Although we are convinced that these forward-looking statements are realistic, they are not guarantees of future performance since our assumptions involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors include market fluctuations, the development of world market prices for commodities and exchange rates or fundamental changes in the economic environment. TUI does not intend to and does not undertake any obligation to update any forward-looking statements in order to reflect events or developments after the date of this Statement. Financial calendar
Contacts Nicola Gehrt Group Director Investor Relations Tel: + 49 (0)511 566 1435 Adrian Bell Senior Manager Investor Relations Tel: + 49 (0)511 2332 James Trimble Investor Relations Manager Tel: +44 (0)1582 315 293 Stefan Keese Investor Relations Manager Tel: + 49 (0)511 566 1387 Anika Heske Junior Investor Relations Manager Tel: + 49 (0)511 566 1425 TUI AG Karl-Wiechert-Allee 4 30625 Hannover Tel: + 49 (0)511 566 00 www.tuigroup.com This Quarterly Statement, the presentation slides and the video webcast for Q3 2023 (published on 9 August 2023) are available at the following link: www.tuigroup.com/en-en/investors Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. |
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| ISIN: | DE000TUAG505 |
| Category Code: | QRT |
| TIDM: | TUI |
| LEI Code: | 529900SL2WSPV293B552 |
| OAM Categories: | 3.1. Additional regulated information required to be disclosed under the laws of a Member State |
| Sequence No.: | 263250 |
| EQS News ID: | 1698881 |
| End of Announcement | EQS News Service |
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