TUI AG, Europe’s largest tourism company, abandoned its forecast for higher 2011 profits today as uprisings in North Africa put tourists off and in the face of a tough shipping environment.
TUI reported an 11 per cent fall in third-quarter underlying earnings and said profits for the year to September will now only be in line with the prior year. The company said in May it expected profits to rise
"Earnings benefited from higher customer volumes and better average prices. On the other hand, they were impacted more strongly than expected by the impact of the unrest in North Africa," TUI said in a statement.
The tourism division accounts for the vast majority of turnover and includes TUI Travel as well as TUI's own hotel and cruise operations.
The uprisings particularly affected bookings from customers in France and TUI's hotels in Egypt, the group said.
TUI said the weak US dollar had led to a 9 per cent decline in turnover at shipper Hapag-Lloyd in the quarter, although it had managed to keep freight rates almost stable.
In a separate statement, Hapag-Lloyd said freight rates had gone from an average of $1,563 per twenty-foot equivalent (TEU) in the first quarter of the 2011 calendar year to $1,546 in the second.
TUI is looking to divest its 38.4 per cent stake in Hapag-Lloyd, and sources told Reuters last month that turbulent markets and low freight rates had delayed the process.
For the fiscal third quarter to end-June, TUI reported turnover up 9 per cent to €4.39 billion and underlying earnings before interest, tax and amortisation of €96.2 million.
TUI AG is a majority shareholder in TUI Travel which owns Falcon Holidays.
Reuters