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TUI share price surges despite hit to profits

TUI Group’s (LON:TUI) share price has surged in London this morning even as the blue-chip tour operator posted a fall in profits for the third quarter of its financial year, having suffered from the grounding of Boeing’s 737 MAX aircraft. The company, however, reaffirmed its full-year expectations.

As of 09:01 BST, TUI’s share price had added 3.06 percent to 835.38p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.29 percent lower at 7,206.11 points. The group’s shares have given up more than 45 percent of their value over the past year, as compared with about a 5.6-percent fall in the Footsie.

TUI posts third-quarter results

TUI announced in a statement this morning that turnover had climbed 2.8 percent higher to €4.75 billion in the third quarter of its financial year. The group’s underlying EBIDTA, however, tumbled 54.6 percent to €219.3 million.

The company explained that its Markets & Airlines business continued to see a weak demand environment, reflecting the ongoing knock-on impact of the last summer’s heatwave and Brexit uncertainty. The third quarter was further impacted by the 737 MAX aircraft grounding, and TUI said that it anticipates related costs of about up to €300 million for the current financial year.

The blue-chip group, however, reaffirmed its full-year EBIDTA guidance of about up to -26 percent compared with underlying EBITA rebased in FY18 of €1.18 billion. The company further said that it had inked a deal related to the disposal of two non-core German specialist businesses, for an agreed enterprise value of between €96 million and €106 million.

Analysts on blue-chip company

Shore Capital reaffirmed the FTSE 100 tour operator as a ‘buy’ today, without specifying a target on the TUI share price. According to MarketBeat, the blue-chip company currently has a consensus ‘hold’ rating and an average valuation of 989p.

About the author

Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.

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