- WKN: TUAG00
- ISIN: DE000TUAG000
- Land: Germany
Nachricht vom 11.05.2022 | 08:00
TUI Group Half-Year Financial Report 1 October 2021 - 31 March 2022
TUI AG (TUI)
1 October 2021 - 31 March 2022
Interim Management Report
Q2 2022 delivering further operational and financial progress
1 Available seat (risk) capacities
2 Available liquidity defined as available cash plus committed lines including financing packages
3 For details see Report on changes in expected development on page 6
Differences may occur due to rounding.
This Quarterly Report of the TUI Group was prepared for the reporting period Q1 2022 from 1 October 2021 to 31 March 2022.
1 We define the EBIT in underlying EBIT as earnings before interest, income taxes and result of the measurement of the Group’s interest hedges. For further details please see page 15.
2 EBITDA is defined as earnings before interest, income taxes, goodwill impairment and amortisation and write-ups of other intangible assets, depreciation and write-ups of property, plant and equipment, investments and current assets.
3 Equity divided by balance sheet total in %, variance is given in percentage points.
All change figures refer to the same period of the previous year, unless otherwise stated.
Strong recovery building through Q2, confident Summer 2022 will be close to Summer 2019 levels
1 Bookings up to 30 April 2022 compared to Winter 2018/19 programme (undistorted by COVID-19 effects and thus provide an appropriate benchmark) and relate to all customers whether risk or non-risk
2 Bookings up to 8 May 2022 compared to Summer 2019 programme (undistorted by COVID-19 effects and thus provide an appropriate benchmark) and relate to all customers whether risk or non-risk
3 The Netherlands Bureau of Tourism and Congress, Holiday Sentiment Monitor, April 2022
Global Realignment Programme – Targeted savings ~€400m p.a. by financial year 2023
In May 2020, we announced our Global Realignment Programme to address group-wide costs, with a target of permanently saving more than €400m per annum by financial year 2023.
In the financial year ending September 2021, ~60% (€240m) of our announced targeted savings were delivered. Savings have been most significantly delivered across the Markets & Airlines division (~85% of savings to date).
We expect to deliver a further 20% (€80m) of our targeted savings in financial year 2022 and we remain on track to deliver the full programme benefits by end of financial year 2023.
H1 2022 net debt position of €3,936m is an improvement of €1,134m versus Q1 2022 net position of €5,070m and an improvement of €2,877m year-on-year (H1 2021: €6,813m). The quarterly improvement is predominantly driven by positive cash flow, as the business returns to a more normalised pre-pandemic environment for travel and bookings and operations recover. The year-on-year improvement is driven by positive cash flow as operations recover, and proceeds from our capital increase completed in the first quarter of 2022.
Ongoing priorities – we will continue with our disciplined cash management, drive operating effectiveness, whilst maximising opportunities to de-lever, continue the reduction of debt and German government exposure in order to return to a solid balance sheet. Mid-term ambitions – we expect underlying EBIT to significantly build on financial year 2019, driven by both top-line growth and benefits from our Global Realignment Programme, with a target to return to gross leverage ratio of less than 3.0x.
Our growth opportunities will be driven by the expansion of our TUI Musement tours & activities segment, which will benefit from both our integration as well as growth through third party sales, accelerated digitalisation, our increased offer of dynamic packaging, growth through asset-right financing structures and execution of our Global Realignment Programme. The combination of these drivers will enable us to emerge stronger, leaner, more digitalised and more agile, and ready to exploit market recovery and growth opportunities.
TUI is strategically well positioned and will continue to benefit from the strong rebound in the leisure industry.
Report on changes in expected development
The impact of the pandemic and the war in Ukraine on customer behaviour remains difficult to predict. The greatest area of uncertainty will be the impact on consumer confidence, should travel restrictions be reintroduced, should there be further cost inflation volatility and/or an escalation of the war in Ukraine. In view of these considerable uncertainties, the Executive Board continues to believe that it is not in a position to issue a specific, quantified forecast for the financial year 2022.
Against the backdrop of current bookings and the business performance to date, we confirm our expectation in the 2021 Annual Report of a significant improvement in TUI Group's underlying EBIT compared with 2021 and now expect to return to a significantly positive underlying EBIT in the current financial year.
We continue to consider the remaining assumptions for the financial year 2022 made in the Annual Report 2021 to be valid.
Structure and strategy of TUI Group
The present Half-Year Financial Report for H1 2022 is based on TUI Group’s reporting structure set out in the Consolidated Financial Statements of TUI AG as at 30 September 2021.
The TUI Group's strategy outlined in the Annual Report 2021 will be continued in the current financial year.
H1 2022 revenue grew to €379.3m, an improvement of €295.4m year-on-year (H1 2021: €83.9m) reflecting the more normalised pre-pandemic travel environment across our multiple destinations, , versus the prior year. The segment reported a H1 underlying EBIT profit of €84.8m as a result, improving by up €283.1m year-on-year (H1 2021: €198m loss), with Riu delivering strong results in their core Caribbean and Spanish markets.
Q2 2022 revenue respectively grew to €181.0m, improving €153.5m year-on-year (Q2 2021: €27.5m), delivering an underlying EBIT profit of €23.7m, an improvement of €126.3m year-on-year (Q2 2021: €-102.6m loss), the third sequential quarterly positive underlying EBIT result since the start of the pandemic.
For the Q2 period, we operated 6.9m available bednights (capacity) which is an increase of 2.7m available bednights versus the prior year (Q2 2021: 4.2m), and nearing pre pandemic levels (Q2 2019: 7.6m). The benefit of our brands, with a high level of capacity in popular year-round destinations such as the Caribbean and Canaries, both of which achieved average occupancies of 77% in the quarter, is evident in our operational results. Q2 occupancy rate increased 29%pts year-on-year to 65% for the segment, with Riu achieving 73% in the quarter, up 37%pts year-on-year (Q2 2021: 36%) and Blue Diamond achieving 78%, up 41%pts year-on-year (Q2 2021: 37%), reflecting the benefit of third-party sales in the Caribbean from North America and our ability to steer our base of European customers to our own hotels e.g. in the Canaries first. Robinson average occupancy increased 2%pts to 51% year-on-year (Q2 2021: 49%), reflective of the usual winter seasonality for its more European portfolio.
Q2 2022 average daily rate increased by 24% to €86, with Riu’s average daily rate increasing 21% to €71 (Q2 2021: €59) and Blue Diamond average daily rate increasing 50% to €143 (Q2 2021: €96), driven by higher average spend in the Caribbean. Robinson also delivered a strong average rate of €115, an increase of 20% year-on-year (Q2 2021: €96).
The Cruises segment comprises the joint venture TUI Cruises, which operates cruise ships under the brands Mein Schiff and Hapag-Lloyd Cruises, and Marella Cruises.
H1 2022 Cruises revenue, reflecting Marella Cruises solely (TUI Cruises consisting of Mein Schiff and Hapag-Lloyd Cruises is equity accounted) grew to €75.5m, an improvement of €74.0m year-on-year (H1 2021: €1.5m), reflecting the more normalised pre-pandemic travel environment, versus the prior year when Marella’s operations were suspended in line with UK government travel advice. Resultingly, H1 underlying EBIT loss for the segment (including the equity result of TUI Cruises) reduced to €-105.3m loss, an improvement of €48.0m (H1 2021: €-153.3m loss), with a partial fleet operated by all three brands in the first six months due to Omicron restrictions, which held back the performance for the segment.
Q2 2022 revenue for Marella grew to €41.3m respectively, improving €40.3m year-on-year (Q2 2021: €1.0m). Q2 underlying EBIT loss (including equity result for TUI Cruises) increased by €18.5m to €-73.5m loss due to Omicron restrictions introduced at the end of Q1 2022, which resulted in operational disruption costs for all three brands throughout January and February.
Mein Schiff – January in particular, was impacted by short-term Omicron-related amendments, resulting in the cancellation of itineraries and a temporary operational pause for part of the fleet. Four ships (out of seven) operated in January, five ships operated in February, returning to six ships from March as Omicron-related travel restrictions eased during the quarter. (Mein Schiff 5 already in use as a vaccination hub until February and Mein Schiff Herz in pre-planned lay-up until April). Occupancy of the operated fleet in the second quarter was 51% as a result (Q2 2021: 34%). Q2 average daily rate of operated fleet was €138, up 55% versus prior year (Q2 2021: €89), with cruises operated in the Canaries, the Mediterranean, Caribbean, and United Arab Emirates during the second quarter, versus shorter average duration “Blue Cruises” operated in the prior year.
Hapag-Lloyd Cruises – Hapag-Lloyd Cruises saw the same short-term Omicron-related amendments, resulting in the cancellation of itineraries and temporary operational pause of two ships, with three (out of five) operated in January and February, returning to full fleet of five from March as Omicron-related restrictions eased during the quarter. Q2 average daily rate of operated fleet was €606, an increase of 61% on prior year (Q2 2021: €376), reflecting the resumption of worldwide itineraries versus European cruises in the prior year. Q2 occupancy of the operated fleet was 29% (Q2 2021 Q2: 29%), reflecting the previously discussed factors.
Marella Cruises – Similarly to Mein Schiff and Hapag-Lloyd Cruises, Marella operated a partial fleet throughout the second quarter, with just one ship (out of four) in operation in January, two in February and three in March as Omicron-related restrictions eased. Q2 average daily rate of was £156 and occupancy was 53%, versus a previous Q2 which saw operations suspended in line with UK government travel advice.
H1 2022 revenue of €128.8m, up €110.2m year-on-year (H1 2021: €18.6m). H1 underlying EBIT loss of €-29.5m, improving €32.5m year-on-year (H1 2021: €-62.0m), reflecting the same previously discussed factors.
Q2 revenue of €62.5m, up €54.4m year-on-year (Q2 2021: €8.1m). Q2 underlying EBIT loss of €-16.8m, improving €12.5m year-on-year (Q2 2021: €-29.3m loss).
0.7m excursions, activities and tours sold in the second quarter, an increase of 0.6m excursions versus the prior year (Q2 2021: 0.1m) reflecting the more normalised pre-pandemic travel environment across our global destinations. The increase reflects the breadth of our coverage in both popular cities and traditional sun & beach locations, benefitting from the advantage of our integrated model and growth of third-party sales through the Musement platform.
Q2 online distribution was 45% (Q2 2021: 56%) reflecting the return of destination staff in resort versus the prior year, in line with our hybrid in-person and online self-service model.
H1 2022 revenue of €3.9bn, up €3.3bn year-on-year (H1 2021: €0.6bn). H1 underlying EBIT loss for the segment of €-517.7m improved by loss €332.4m year-on-year (H1 2021: €-850.1m) reflecting the more normalised pre-pandemic travel environment versus the prior year against our typical winter seasonality.
Q2 2022 revenue of €1.8bn, up €1.6bn year-on-year (Q2 2021: €0.2bn). Q2 underlying EBIT loss of €258.7m, improved by €168.3m year-on-year (Q2 2021: €427.0m). The result includes a €43m net benefit from the revaluation and unwinding of ineffective hedge positions, €50m state compensation within Central Region for loss of business in the course of the pandemic as well as savings delivered by our Global Realignment Programme across all markets.
A total of 1.9m customers departed in the second quarter, an increase of 1.7m customers versus Q2 2021. Average load factor of 84% was achieved for the second quarter (Q2 2019: 85%)
H1 2022 revenue of €1.5bn, up €1.3bn year-on-year (H1 2021: €0.2bn). H1 underlying EBIT loss for the region of €-352.6m improved by €65.7m year-on-year (H1 2021: €-418.3m) per the factors already mentioned.
Q2 2022 revenue of €847.9m, up €795.8m year-on-year (Q2 2021: €52.1m). Q2 underlying EBIT loss for the region of €180.9m, improved by €40.1m year-on-year (Q2 2021: €-221.0m), driven by improving departure volumes in a more normalised pre-pandemic travel environment, €16m benefit from the revaluation and unwinding of ineffective hedge position and savings delivered through our Global Realignment Programme. The loss position, comparatively to other markets, predominantly reflects the higher operational leverage for the UK, as well as a more subdued Nordics market.
Northern Region reported an increase in Q2 customer volumes, with 752k guests departing overall in the quarter representing 75% of pre-pandemic Q2 2019 volumes and versus 6k customers in Q2 2021. Online distribution for region continues to be strong at 69%, up 2%pts versus pre-pandemic levels (Q2 2019: 67%). Direct distribution is up 1%pts to 93% versus pre-pandemic levels (Q2 2019: 92%)
H1 revenue of €1.6bn, up €1.3bn year-on-year (H1 2021: €0.3bn). H1 underlying EBIT loss for the region of €-75.7m, improved by €196.3m year-on-year (H1 2021: €-272.0m) per the factors already mentioned.
Q2 2022 revenue of €619.6m, up €495.4m year-on-year (Q2 2021: €124.2m). Q2 underlying EBIT loss for the region of €-20.7m, improved by €102.0m year-on-year (Q2 2021: €-122.7m), driven by better departure volumes, the benefit of a €50m state compensation for loss of business in the course of the pandemic receipted in the second quarter, €30m benefit from the revaluation and unwinding of ineffective hedge position, in addition to savings delivered by our Global Realignment Programme.
Central Region similarly saw a step-up in operations, with 524k customers departed in the second quarter, representing 54% of pre-pandemic Q2 2019 volumes and versus 87k customers in Q2 2021. Online distribution for region stood at 33%, up 9%pts versus pre-pandemic levels (Q2 2019: 24%). Direct distribution is up 5%pts to 58% versus pre-pandemic levels (Q2 2019: 53%).
H1 2022 revenue of €0.8bn, up €0.7bn year-on-year (H1 2021: €0.1bn). H1 underlying EBIT loss for the region of €-89.4m, improved by €70.4m year-on-year (H1 2021: €-160m) per the factors already mentioned.
Q2 2022 revenue of €366.2m, up €338.2m year-on-year (Q2 2021: €28.0m). Q2 underlying EBIT loss for the region of €-57.0m, improved by €26.3m year-on-year (Q2 2021: €-83.3m), driven by better departure volumes in the more normalised pre-pandemic travel environment and savings delivered through our Global Realignment Programme.
Western Region also saw operations ramp-up, with 582k customers departing in the second quarter, representing 65% of pre-pandemic Q2 2019 volumes and versus 66k customers in Q2 2021. Online distribution for region stood at 64%, up 4%pts versus pre-pandemic levels (Q2 2019: 60%). Direct distribution is up 5%pts to 82% versus pre-pandemic levels (Q2 2019: 77%).
H1 2022 underlying EBIT loss of €-35.8m, improved €9.3m year-on-year (H1 2021: €-45.1m) and Q2 underlying EBIT loss of €-4.6m, improved €14.5m year-on-year (Q2 2021: €-19.1m, driven by strong cost discipline.
Financial position and net assets
Cash Flow / Net capex and investments / Net debt
As a result of the continued easing or lifting of global travel restrictions in the course of H1 2022, TUI Group was able to increase its business volume year-on-year. Nevertheless, TUI Group's operating cash inflow continued to be impacted by the COVID-19 pandemic in the period under review. At €439.8m, it increased by €1,915.8m compared to previous year.
In October 2021, TUI AG carried out a capital increase. This resulted in an inflow of €1,106.4m after deduction of borrowing costs.
H1 2022 net debt position of €3,936.0m is an improvement of €1,133.6m versus Q1 2022 net position of €5,069.6m and an improvement of €2,877.1m year-on-year (H1 2021: €6,813.1m). The quarterly improvement is predominantly driven by positive cash flow, as the business returns to a more normalised pre-pandemic environment for travel and bookings and operations recover. The year-on-year improvement is driven by positive cash flow as operations recover, and proceeds from our capital increase completed in the first quarter of 2022.
* Including €1.4m for Q2 2022 (Q2 2021: €2.3m) and €2.7m for H1 2022 (H1 2021: €5.4m) cash gross capex of the aircraft leasing companies, which are allocated to Markets & Airlines as a whole, but not to the individual segments Northern Region, Central Region and Western Region.
Cash gross capex in H1 2022 was 22.1% higher year-on-year. This increase was mainly due to dock periods at Marella Cruises and Group IT investments. Net capex and investments of €136.7m increased by €245.1m year-on-year. The divestments related mainly to the sale and lease back of spares. In addition, a subsequent reconciliation of the disposal of RIU Hotels S.A. was included, in total resulting in positive divestments. Previous year’s divestments included sale and lease back of spares and aircraft as well as a part of the sales proceeds of Hapag-Lloyd Kreuz-fahrten to our joint venture TUI Cruises.
Comments on the consolidated income statement
As a result of the continued easing or lifting of global travel restrictions, TUI Group was able to increase its business volume compared with the prior-year period under review. Nevertheless, the development of revenue and earnings in H1 2022 continued to be significantly impacted by the measures to contain the spread of COVID-19. TUI Group’s results generally also reflect the significant seasonal swing in tourism between the winter and summer travel months, however this period the impact is less evident due to the COVID-19 pandemic.
In H1 2022, consolidated revenue increased by €3.8bn year-on-year to €4.5bn.
Alternative performance measures
The Group’s main financial KPI is underlying EBIT. We define the EBIT in underlying EBIT as earnings before interest, income taxes and expenses for the measurement of the Group’s interest hedges. EBIT by definition includes goodwill impairments.
One-off items carried here include adjustments for income and expense items that reflect amounts and frequencies of occurrence rendering an evaluation of the operating profitability of the segments and the Group more difficult or causing distortions. These items include gains on disposal of financial investments, significant gains and losses from the sale of assets as well as significant restructuring and integration expenses. Any effects from purchase price allocations, ancillary acquisition costs and conditional purchase price payments are adjusted. Also, any goodwill impairments are adjusted in the reconciliation to underlying EBIT.
The TUI Group’s operating loss adjusted for special items increased by €705.3m to €603.5m in H1 2022.
Other segment indicators
Composition of the Boards
In H1 2022 the composition of the Boards of TUI AG changed as follows:
Ms Carola Schwirn left the Supervisory Board at the end of 28 February 2022. Ms Schwirn, department coordinator in the Berlin transport division of the ver.di trade union, had been a member of the Supervisory Board since 2014 and was also a member of the Mediation Committee. In the quarter under review, the Executive Board of TUI AG subsequently filed an application for judicial appointment with the local court. The local court appointed Ms Sonja Austermühle, trade union secretary and lawyer at ver.di, as an employee representative on the Supervisory Board with effect from 1 April 2022.
As a result of the war in Ukraine triggered by Russia, the European Union issued sanctions against Mr Alexey Mordashov on 28 February 2022. Mr Mordashov notified us on 2 March 2022 that he was resigning from the Supervisory Board of TUI AG with immediate effect. He had been elected to TUI's Supervisory Board in 2016 and was also a member of the Presiding Committee, the Nomination Committee and the Strategy Committee.
On 3 March 2022, Mr Vladimir Lukin also informed us that he was resigning from his mandate as shareholder representative on the Supervisory Board of TUI AG with immediate effect. Mr Lukin had been a member of our Supervisory Board since 2019 and was also a member of the Audit Committee and the Strategy Committee. We will also seek to fill these two vacancies by means of a court appointment.
There were no changes in the TUI AG Executive Board in the period under review.
The current, complete composition of the Executive Board and Supervisory Board is published on our website, where it is permanently accessible to the public.
Risk and Opportunity Report
Successful management of existing and emerging risks is critical to the long-term success of our business and to the achievement of our strategic objectives. Full details of our risk governance framework and principal risks can be found in the Annual Report 2021.
Details see Risk Report in our Annual Report 2021, from page 35
Principal risks above risk appetite: Lack of integration & flexibility within operations and IT systems; Reduction in customer demand; Inability to attract & retain talent; Insufficient cash flow; Volatility of input costs; Impact of Brexit; Disruption to IT Systems (Cyber attack); Lack of sustainability improvements;
Principal risks within appetite: Disruption within our destinations; Security Health & Safety breach; Reliance on key suppliers; Breach of regulatory requirements; Management of joint venture partnerships
Several principal risks materialised simultaneously as a result of the COVID-19 pandemic, which has led to travel restrictions across the world, both within the markets as well as in destination countries.
Currently, TUI Group continues to be affected by the negative financial impact of the COVID 19 pandemic.
Although the number of COVID 19 cases remained high, in particular due to the rapid spread of the Omicron variant, contact restriction measures and travel restrictions were gradually eased in most countries in the first months of the calendar year. TUI Group's operating business recorded good demand during Q2 2022. The booking momentum in our key markets so far remained largely unaffected by Russia's war of aggression on Ukraine. However, an enhanced general price increase as a possible impact of the war could affect our customers' purchasing power and desire to travel in the medium term, thus impacting our principle risk of a reduction in customer demand. In addition, the war affects our principle risk of input cost volatility and led to an increase in fuel costs, which particularly might affect the results of the Northern Region, Central Region, Western Region and Cruises segments. There is a risk that fuel price levels will remain elevated.
From the Executive Board's perspective, despite the existing risks, the TUI Group currently has and will continue to have sufficient funds, resulting from both borrowings and operating cash flows, to meet its payment obligations and to ensure the going concern of the company accordingly in the foreseeable future. In this context, the Executive Board assumes that the credit lines expiring in summer 2024 will be refinanced. Therefore, as at 31 March 2022, the Executive Board does not identify any material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern risk. The Executive Board does not consider the remaining risk with regard to a further pandemic/war-related change in booking behaviour as a going concern. In its assessment, the Executive Board assumes that booking figures will gradually recover in the remainder of the 2022 financial year and that volumes in the summer of 2022 will settle approximately close to the level of the summer of 2019.
For the 2023 financial year, it is expected that booking behaviour in the 2023 financial year will largely correspond to the pre-pandemic level. In this regard, the Board assumes that travel behaviour will not be affected by further long-term closures and lockdowns or by the impact of Russia's war of aggression on Ukraine. Nevertheless, customer bookings may deteriorate due to new new pandemic or war-related travel restrictions, insufficient vaccination coverage against the COVID-19 virus in the individual countries and virus variants for which there is insufficient vaccination protection, thus affecting TUI Group's performance.
During this period of reduced travel compared to pre-pandemic levels, the Executive Board continues to monitor the key risks, particularly heightened risks such as customer demand and those that impact the financial profile (i.e. cost volatility and cash flow) of the Group.
Unaudited condensed consolidated Interim Financial Statements