TUI Group Half-Year Financial Report 1 October 2023 – 31 March 2024

Half-Year
Financial Report
 
1 October 2023 – 31 March 2024
 

Content

Interim Management Report

Summary

Report on changes in expected development

Consolidated earnings

Segmental performance

Financial position and net assets

Comments on the consolidated income statement

Alternative performance measures

Other segment indicators

Corporate Governance

Risk and Opportunity Report

Related parties

Unaudited condensed consolidated Interim Financial Statements

Notes

General

Accounting principles

Group of consolidated companies

Acquisitions – Divestments

Notes to the unaudited condensed consolidated Income Statement

Notes to the unaudited condensed consolidated Statement of Financial Position

Responsibility Statement

Review Report

Cautionary statement regarding forward-looking statements

Financial calendar

Contacts

This Half Year Financial Report of TUI Group was prepared for the reporting period from 1 October 2023 to 31 March 2024.

TUI AG

Karl-Wiechert-Allee 23

30625 Hannover

Germany

Interim Management Report

Summary

Record Q2 2024 performance, delivering highest ever revenues of €3.6bn and strong improvement in Q2 underlying EBIT by €53.6m to €-188.7m[1]. Following our strong performance in H1 and as we see the positive trends in our business continuing in H2, we reconfirm our FY24 guidance to increase our underlying EBIT by at least 25%.

• Q2 Group revenue of €3.6bn was a record for the period1 with strong growth of +16% versus prior year (Q2 2023: €3.2bn). It underlined the strength of demand for our product portfolio at improved prices across our businesses.
• As a result, the Group’s underlying EBIT for Q2 improved strongly by +€53.6m to €-188.7m. This emphasises the progress we have made as a business in executing and advancing our strategy for the Group.
  • Hotels & Resorts achieved a record performance in the quarter1, reflecting significant operational growth driven by higher bed nights at improved rates.
  • Similarly, our Cruises segment also delivered a record result for Q21, buoyed by significant growth. This achievement was marked by higher occupancies and improved rates within a strong trading environment.
  • TUI Musement continues to drive forward digitalisation and differentiated product innovation, reporting higher customer volumes.
  • In Markets & Airlines demand remained resilient with customer volumes ahead for all Regions and prices continuing to track higher. Results were however influenced by the absence of the prior year’s positive contribution from Canada, following the sale of the tour operator business.   
• A total of 2.8m customers travelled with TUI during the quarter, +14% more than in the prior year. Average load factor of 93% for Q2 2024 again achieved the high levels of the prior year.
• Our net debt position further improved year-on-year by +€1.1bn to €3.1bn at 31 March 2024 (31 March 2023: €4.2bn). This improvement reflects foremost net proceeds (following repayment of the final WSF obligations) from our capital increase in April 2023 and a positive operational cash flow in the last twelve months since 31 March 2023.
• We remain committed to improving our cash flow position and maintaining strict cost and investment discipline, with the target to restore our balance sheet strength and improve our credit metrics.
• During the quarter, we successfully issued €500 million sustainability-linked senior notes, as part of our target to fully return and debt-finance the remaining KfW Revolving Credit Facility (RCF).
• In February 2024, we saw a further improvement in our credit rating, which was upgraded to B+ by S&P and B1 by Moody’s, with both noting a positive outlook. These upgrades reflect the operational and financial progress made by the business to date.
• Bookings in Markets & Airlines[2] continue to be well ahead year-on-year, highlighting the resilience of demand for our product offering. The Winter 2023/24 season closed with a strong lates market. Bookings were at +9% with average selling price (ASP) holding up well at +3%. Bookings for the Summer 2024 season continue to be promising, with 60% of the season sold. Bookings taken to date are +5% higher, supported by increased prices, up +4%.
• Holiday Experiences trading[3] remains well on track to deliver in line with expectations. Both our Hotels & Resorts and Cruises segments in particular, continue to benefit from strong demand.
• Our hedging levels for the coming Summer and Winter seasons remain in line with our normal hedging policy.

FY 2024 guidance[4]

Our focus is on operational excellence and execution as well as the continued transformation. Our strategic roadmap, the strong operational recovery and the measures taken to strengthen our balance sheet, lay the foundations for future profitable growth. Our guidance for FY 2024 is based on the strong performance in H1 with underlying EBIT up +€232m[5] supported by a significant improvement in Hotels and Cruises and by the return to our normal hedging policy in our Markets & Airlines. We see the positive trends in our business continuing in H2, but also recognise the current macroeconomic as well as geopolitical uncertainties especially in the Middle East, with 40% of the Summer 2024 left to sell. We therefore reconfirm our guidance for FY 2024 as published in our Annual Report 2023:

• We expect revenue to increase by at least +10% year-on-year
• We expect underlying EBIT to increase by at least +25% year-on-year

Mid-Term Ambitions

We have a clear strategy to accelerate profitable growth by increasing the customer lifetime value, creating a business which is more agile, more cost-efficient and achieving a higher speed to market with the aim to create additional shareholder value. Our mid-term ambitions are as follows:

• Generate underlying EBIT growth of c. +7-10% CAGR
• Target net leverage[6] strongly below 1.0x
• Return to a credit rating territory in line with our pre-pandemic rating BB/Ba (S&P/Moody’s)

Sustainability (ESG) as an opportunity[7]

• As an industry leader, we want to set the standard for sustainability in the market. We believe that sustainable transformation should not be viewed solely as a cost factor, but that sustainability pays off – for society, for the environment, and for economic development. We continue to make progress to reduce relative emissions and to achieve our targets. These include:

• The launch of a new Group Policy on Diverse, Sustainable and Ethical Sourcing. This policy sets targets and gives guidance for all procurement regarding emission reduction, energy usage, circular economy, plastic use, water conservation and design for re-use. It encompasses a broader ESG agenda, where diversity, equality, inclusion and ethical conduct are paramount. The policy will support our goal to be a catalyst for positive change.
• TUI Blue is working with tech company KITRO to reduce food waste through technology. Leftover food is weighed and analysed with the help of artificial intelligence. This year, the new process will be rolled out to 12 hotels in Germany, Austria, Turkey, Tunisia, Morocco and Croatia. The aim is to reduce food waste in hotels by 25 percent by 2030.
• TUI fosters socially responsible tourism, addressing concerns about scarce living space and environmental impact. We operate organised packaged tourism that impacts local living space less, whilst we feel the current critism is directed at the unregulated individual tourism on the Canaries. TUI is also committed to minimising hotel emissions, reduce water consumption significantly, and investing in solar systems, within the next decade. Despite protests highlighting issues such as rising housing prices and resource consumption, the general sentiment towards tourists remains positive. We continue our efforts to balance tourism benefits with community well-being.