Thomas Cook takes £10m profit hit after rocky year of trading due to terror attacks and political instability
Thomas Cook's revenue and profit in the 12 months to 30 September was dented by a difficult year's trading which included a number of terror attacks in popular tourist destinations, and post-Brexit vote currency volatility.
The figures
The travel group's revenue dropped to £7.81bn from £7.83bn.
Profit from operations was down to £205m from £211m, and profit after tax dropped to £9m from £19m.
Basic earnings per share fell to 0.8p from 1.6p.
The company's net debt widened slightly to £129m compared with £128m this time last year.
Thomas Cook's share price was down 1.44 per cent at the open – but by mid-morning had recovered to jump over nine per cent on yesterday's close price.
Why it's interesting
Thomas Cook's balance sheet was hit by a reduction in bookings in the wake of a series of terror attacks over the past 18 months. Underlying operating profit for the group was £308m, which the company said reflects the decline in customer demand for Turkey, and the effect on our Belgian business of the Brussels attacks.
Meanwhile, extreme volatility in the currency markets proved to be a positive factor for the company – although in the immediate aftermath of June's Brexit vote, Thomas Cook was forced to suspend its online currency sales due to unprecedented demand as the pound nosedived. However, today the group said underlying earnings before income tax was higher by £39m as a result of currency movements during the year.
What Thomas Cook said
"In what's been a difficult year for tourism, I'm pleased with the progress that we've made at Thomas Cook," said chief executive Peter Fankhauser.
"The early actions we took to shift our holiday programme into the Western Mediterranean and long haul, together with the benefits of a stronger euro, helped us to maintain revenue at group level. Additionally, a focus on holidays to our own-brand and partner hotels delivered record profit margins in our UK and Northern European businesses.
"Meanwhile, we've made big strides towards our target to put the customer back at the heart of the business. Our strategy is clear: to deliver sustainable growth by giving our customers great holidays which inspire them to come back to Thomas Cook and recommend us to their family and friends. This renewed focus on quality and service delivered a six-point increase in customer satisfaction in summer 2016 telling us that the changes we're making are having an impact where it matters most."
In short
As expected, Thomas Cook had a difficult year, but the group is taking action to deal with a changing tourism market.