TUI share price down 18% after cutting earnings guidance due to hot summer

Shares in the Anglo-German tourism company fell on Thursday after it slashed its full year earnings guidance last night, blaming last year's hot summer and weaker pound for the downgrade.

TUI saw its share price fall by as much as 18% on Thursday morning after the company slashed its earnings guidance for it full year results, blaming the weaker than expected performance on the hot weather last summer and a weak pound.

On Wednesday, the tourism group downgraded its forecasted full year 2019 earnings, with EBITDA for the year ending in September to remain broadly unchanged from the €1.17 billion (£1.03 billion) it made last year.

TUI downgrades its full year guidance

In an announcement on Wednesday night, the tourism company sad that it could no longer stand by its previous guidance that promised a 10% increase in underlying EBITDA over the three years to the 2020 fiscal year.

TUI admitted that despite holiday bookings remaining broadly in line with last year, its margins are have not kept pace.

The company blamed sector headwinds including ‘extraordinary hot weather’ last summer, the continued weakness of the pound and a shift in demand from western to eastern Mediterranean destinations as the cause for its weaker margins.

TUI remains committed to growth strategy

Despite the myriad of sector headwinds that continue to impact the business, demand for leisure travel continues to grow in core markets.

‘We have positioned TUI to benefit from this through the successful transformation as an integrated provider of Holiday Experiences (hotels, cruises and activities & excursions), based on its strong strategic and financial position,’ the company said.

‘On top of that, we are planning to enter into new markets generating €1 billion of revenue from 1 million customers by 2022, driving more demand for our own hotels.’

TUI has confirmed a dividend of €0.72 per share for its full year 2018.

The company’s full year 2019 Q1 results will be released on February 12.

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