TUI Travel reports soaring full-year profits

TUI has beat market expectations with a 13% rise in its full-year profits, boosted by premium holiday sales.

Underlying operating profits for the year have increased to £550 million, and these better-than-expected figures have given the company the confidence to maintain its growth target for 2014 at 7-10%, despite the cloudy economic picture. TUI Travel is the world’s biggest tour operator, and through its Thomson and First Choice brands the UK-quoted company has seen a surge in sales in its higher-margin UK and German markets.

The company now stands with a £4.23 billion market capitalisation, and prior to today’s announcement already offered investors a 3.26% dividend yield. The 17% increase in the final dividend has raised this to a gross yield of 3.89%. The fact that the firm’s major competitor, Thomas Cook, has had such a poor couple of years has ultimately been helpful to TUI. Thomas Cook’s woes were triggered by market fears over funding, and this initially hurt all operators in the sector as concerns over holiday deposits spread. However, subsequently the improved reputation afforded to TUI Travel has boosted sales.

Earlier in the year shares failed to break 400p, dropping 60p before remounting an assault on this level. A break above here may see renewed buying as traders look for a return to the two-year bullish trend the firm has experienced.

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TUI Travel plc chart

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