TUI profit down but upbeat for 2008

Source: Reuters

Date :14/11/2008 11:58:06

Germany's TUI AG posted a 2.9 percent drop in third-quarter group net profit but said on Friday it remained upbeat for the rest of the year despite the economic downturn.

The German group, which is selling container shipping arm Hapag-Lloyd to focus on tourism, said it was confident it would achieve a significant increase in operating earnings this year.

TUI agreed last month to sell Hapag-Lloyd to a group of Hamburg-based investors and now concentrates mainly on tourism activities which include TUI Hotels & Resorts and cruises as well as its 51 percent stake in TUI Travel .

Third-quarter earnings before interest, tax and amortisation (EBITA) at its tourism operations fell 3.4 percent to 616 million euros (529 million pounds) due to exchange rate effects.

Sales at the division jumped 17 percent to 6.84 billion euros and benefited from the first-time consolidation of First Choice, which TUI bought last year to create TUI Travel, Europe's biggest tourism company.

Customer volumes at TUI Travel fell 6 percent and capacity was reduced by 8 percent during this year's summer season. TUI said such capacity adjustments would continue in the winter season 2008/09 as well as the next year's summer season.

TUI AG shares were indicated around 2.7 percent higher at 7.44 a.m. British time, according to pre-market data from brokers, expecting the broader German market to open 3.9 percent higher.

TUI AG shares have fallen about 53 percent so far this year, while TUI Travel shares eased about 36 percent.

TUI trades at about 9 times projected 2009 earnings, while TUI Travel has a multiple of 7.3 compared with 4.5 for Thomas Cook , Europe's second-biggest travel company.

(Reporting by Eva Kuehnen)

FRANKFURT (Reuters)