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TUI benefits from growing demand for travel

Press Release: TUI AG
November 28, 2003
HANNOVER, Germany -- The TUI Group generated results by divisions (EBTA) of 504 million euro in the third quarter of the financial year 2003 and therefore achieved previous year’s level of earnings of 509 million euro again. Group turnover was 6.5 billion euro, down 4.3 percent compared with last year’s third quarter.

The tourism division developed positively in a difficult economic environment. At 501 million euro, earnings came close to the good result of last year of 519 million euro.

"TUI has achieved it’s own goal of generating earnings of half a billion euros in tourism in the third quarter. This was a big challenge against the background of the poor booking trend in the first half of the year. The results confirm the strength of our integrated business model", said Dr Michael Frenzel, chairman of the executive board of TUI AG.

At 4.7 billion euro, turnover in tourism was up 3.1 percent compared with last year. Whilst turnover in the Central Europe and Northern Europe sectors dropped, the increase resulted mainly from the integration of the French business in the Western Europe sector.

In Central Europe, the German market achieved a clearly positive result which was lower than last year due to the general weakness of the market. Northern Europe recorded good results overall in difficult markets. Earnings in Western Europe were significantly higher than last year. The first-time inclusion of the French activities had a positive effect. The destinations sector held its own well, mainly as a result of higher earnings in the hotel sector.

In the third quarter, tensions on bookings eased. Following the upturn at the beginning of the summer season, the booking situation improved steadily due to a significant number of guests booking late. Therefore the TUI Group finished the summer season with a decrease in booked turnover of only 5.8 percent, compared with the shortfall of about 15 percent reported in the first half of the year. The winter season commencing at the beginning of November had a good start. Currently booked turnover was up 6.2 percent compared with last year indicating growth again.

The logistics division continued on its successful development of the first half year. At 99 million euro, results by divisions in the third quarter of 2003 nearly doubled compared with 52 million euro achieved last year. As in previous quarters, container shipping was contributing the majority of earnings. Earnings contributions of VTG-Lehnkering and Algeco remained relatively stable. Turnover of the logistics division increased by 4.8 percent to 1.0 billion euro due to the good business in container shipping.

In the trading sector, the economic environment for the companies of the AMC Group and the PNA Group being active in the non-ferrous metals business and the steel service business remained difficult. Quarterly earnings were 7 million euro compared with 18 million euro last year. In an unfavourable environment, turnover of the trading sector dropped to 0.7 billion euro. In November, the shareholding in the AMC Group was sold as a further step in the divestment programme.

At – 103 million euro, the result of central operations in the third quarter of 2003 was slightly better than last year’s figure of – 107 million euro. This included – 93 million euro of expenses and provisions of central operations and in addition the start-up cost of Hapag-Lloyd Express (HLX). Both improvement of the load factor and optimisation of the flight schedule contributed to an improved earnings situation of HLX in the third quarter and, as a consequence, start-up cost were lower than in the previous quarters.

Net debt of the TUI Group declined in the first three quarters of 2003 by approximately one third to 3.5 billion euro. This resulted mainly from the cash inflow from the divestment of the energy sector and the related redemption of financial liabilities.

Outlook

In tourism, business in the third quarter of 2003 met expectations in a difficult economic environment. Consumer confidence returned in the major source markets and demand for travel increased. This is also reflected in the bookings for the winter season 2003/2004, which started well. Earnings for the fourth quarter 2003 are expected to improve year-on-year, among others, based on a stronger winter business than last year. However, earnings of the tourism division for the financial year 2003 will be clearly positive, but lower than last year.

In the logistics division, positive results are expected to continue in container shipping in the near future based on strong demand for transport volume and stable freight rates in the major shipping regions. Therefore earnings of the division for financial year 2003 should improve significantly year-on-year.

The divestment of the energy business generated high non recurring income in the second quarter 2003. Accordingly, results by divisions of the TUI Group for the financial year 2003 are expected to improve overall.
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Contact:

Dr. Kay Baden, Phone: +49(0)511 566-1417

Carolin von Below, Phone: +49(0)511 566-1487