This morning the TUI AG ($TUI1 (-1,21%) ) FY or Q1 2025 earnings webcast was also held this morning, and I would like to summarize the key points for you.
The first quarter was strong, with revenue up 13% and underlying EBIT up significantly to 51 million euros, mainly driven by the strong performance of Holiday Experiences.
Hotels & Resorts recorded growth of 60 million euros, with a 3% increase in bed numbers, a 2% increase in occupancy and a strong 5% increase in daily rate. The cruise business also performed well, with an increase of 14 million euros despite some refinancing costs. Here, capacity rose by 10%, occupancy by 1% and rates by 4%. TUI Musement also grew by 9 million euros, with the 12% growth in experiences being particularly noteworthy.
Markets & Airlines recorded a decline of 30 million euros. However, there were also positive developments: Dynamic Packaging grew by 18% and app sales by 40%. The integration of Ryanair in December has already shown initial success and further airlines and dynamic connections are set to follow.
In the hotel sector, new locations were opened in Asia, including a Robinson Club in Vietnam and the first TUI Blue Hotel in Indonesia.
Financially, this was the second time that TUI recorded a positive first quarter. The company received a BB rating from Fitch, which represents a positive development in financial stability. The refinancing was completed and the KfW facility was formally removed from the balance sheet.
EBIT development was largely driven by the product sides, in particular hotels and cruises. The decline in Markets & Airlines is attributable to investments in the summer. Cash flow and working capital remained stable, despite the seasonally lower revenue and payments from the summer. Investments were higher this quarter as there were some disposal proceeds in the previous year and hotel projects were postponed.
Bookings for the winter are positive and summer bookings are up 4% year-on-year. The company confirms its forecast for the full year 2025, with revenue growth of 5 % to 10 % and EBIT growth of 7 % to 10 %.
In the following analyst Q&A session, an analyst from Morgan Stanley started after the current trading session. He wanted to know whether the slowdown in bookings in Germany compared to December's figures was a cause for concern. He also asked why hotel average daily rates (ADR) were increasing more in the second half of the year than in the first quarter. The answer was that TUI is benefiting from its global hotel portfolio and rising demand, particularly from America, the Middle East and Asia. In Germany, the focus is on margin protection and volumes are being managed accordingly.
Another point was the rating upgrade, which the analyst addressed. He wanted to know how this would affect the interest expenses of 400 million euros. TUI explained that the improved rating has a direct impact on the costs of the credit facility and will lead to savings in leasing and asset financing in the long term.
An analyst from Bank of America asked about the benefits from the FTI insolvency. The answer was that it is difficult to quantify what impact this will have, but it isbut it is expected that there will be a positive impact.
Richard Clarke from Bernstein asked about the inclusion of Ryanair. He wanted to know if this is in addition to existing capacity. The answer was that capacity will be kept flat while growth will be achieved through dynamic packages such as with Ryanair. It was emphasized that any additional business activity will increase profitability.
Another question related to cruise capacity utilization, which is slightly lower compared to 2019. The response here was that it is expected to return to 2019 levels.
The analyst also asked about a possible dividend payment, to which TUI replied that a dividend strategy will only be presented at the end of 2025, after the financial situation has been stabilized.
An analyst from Deutsche Bank asked about the operating trends in the West region. TUI explained that it does not see a need to sell more firm capacity to protect margins. Instead, growth should come from dynamic package products, as is being done in other countries.
I hope you enjoyed the summary.
Stay tuned!
