TUI share price sinks as group trims earnings guidance

Shares in TUI Group (LON:TUI) have fallen deep into the red in London this morning as the company cut its earnings forecasts in an update ahead of its first-quarter results next week. The blue-chip group has attributed the move to last year’s heat wave as well as the continued sterling weakness.

As of 10:20 GMT, TUI’s share price had lost 15.08 percent to 1,005.50p, weighing on the benchmark FTSE 100 index which currently stands 0.1 percent lower at 7,166.16 points. The group’s shares have lost more than 37 percent of their value over the past year, as compared with about a 1.4-percent fall in the Footsie.

TUI warns on earnings

TUI announced in a statement this morning it now expects its FY19 underlying EBITA rebased at constant currency to be broadly stable compared with the previous financial year’s figure of €1.18 billion and as a result, the company was not reiterating its guidance of at least 10 percent underlying compound annual ground rate in underlying EBITA at constant currency for the three years to FY20.

The blue-chip group pointed to “negative impact from the extraordinary hot weather” last year, which resulted in later bookings and weaker Markets & Airlines margins, the shift in demand from the Western to Eastern Mediterranean, as well as continued weakness in the pound.

Group takes measures

TUI reassured investors that it was already taking specific measures to address headwinds in its Markets & Airlines business, including harmonisation under one leadership, reducing distribution costs with a shift to online and mobile and increasing upselling of activities and excursions.

“We also expect that the continued sector headwinds may trigger market consolidation, and that TUI could be a beneficiary of this,” the FTSE 100 company pointed out.

TUI said that it will release its first-quarter update on Tuesday, February 12.