CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.

Thomas Cook shares falls after it issues second profit warning

The holiday group saw its shares plummet by as much as 30% on Tuesday morning after the company issued its second profit warning in what has proved to be a ‘disappointing year’ for the business.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.

Thomas Cook saw its share price nosedive on Monday morning after it announced a poor set of full year results which precipitated its stock fall more than 30% to 34p a share, down from 48p at open.

In its full year results, the company issued its second profit warning of 2018, with underlying earnings coming in at £250 million, down by £58 million compared with the previous year, after the business was hit by £52 million in write-downs and additional costs.

Thomas Cook has ‘disappointing’ 2018

According to Thomas Cook’s Group CEO Peter Frankhauser, ‘2018 was a disappointing year’ for the company, despite taking some important steps in transforming the business.

The company’s tour operating business saw profits decline by £88 million following the sustained summer heatwave restricted its ability to hit planned margins in its third quarter, Frankhauser said.

A less than perfect set of results has led the Thomas Cook to suspend its dividend for the fiscal year. In 2017, the company set a 0.6p per share dividend that resulted in a cash redemption of around £9 million paid during 2018.

CEO focused on growth

Despite the disappointing financial performance, 2018 was a year of good strategic progress for Thomas Cook, with the company establishing its hotel investment fund and opening 11 new hotels.

The business also launched a new alliance with Expedia in five key markets in a bid to give customers more choice at a lower cost to the company.

‘Looking ahead, we must learn the lessons from 2018 and go into the new year focused on where we can make a difference to customers in our core holiday offering,’ Frankhauser said.

‘Across the Group, we will continue to streamline our cost base and manage our capacity to give us greater operational flexibility and financial discipline, while focusing the team on delivering performance improvements and giving customers more reasons to holiday with Thomas Cook,’ he added.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.  Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. 

CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.