The tour operator has decided to suspend the dividend against the annual accounts
The shares of British tour operator Thomas Cook closed the session on Tuesday on the London Stock Exchange with a fall of 22.6%, after the company has lowered its forecast of results and announced the suspension of the dividend.
Thus, the titles of the British company closed the trading day with a price of 37.56 pounds, representing a drop of 22.6% compared to the 48.5 pounds with which ended the negotiation last Monday.
This fall in the stock market occurs after the company has cut its forecasts for its fiscal year, which ends on September 30, in which it expects to obtain a net adjusted profit of 250 million pounds sterling (281.8 million euros) , which is 58 million pounds (65.3 million euros) less than the highest range of its previous estimates. Its annual results will be presented next Thursday, November 29.
It is the third time that the British tour operator cuts its forecasts in just a few months. At the end of July, Thomas Cook estimated that the adjusted profit for the year would be at a range between 323 and 355 million pounds sterling (364 and 400 million euros).
In addition, the corporation has decided to suspend the dividend charged to the annual accounts. The company allocated nine million pounds sterling (about ten million euros) in 2017 to the distribution of a dividend among its shareholders, which was 20% more than in the previous year.
The tour operator figures in a cut of 88 million pounds sterling (99.2 million euros) the impact on its margins for poor performance of the business in the UK “particularly disappointing”, which contrasts with the sharp increase in profits from the airlines of the group, which reported 35 million pounds sterling (39.4 million euros), despite the higher costs of flight interruption in Europe.
As of September 30, the group’s net debt amounted to 389 million pounds sterling (438.5 million euros), almost nine times more, including adjustments for currency exchange impact. The company, however, is confident of making progress in reducing your debt in the coming years.
A “DISAPPOINTING” EXERCISE
“The year 2018 was disappointing for Thomas Cook, despite having achieved some important milestones in our strategy to transform the business.After a good start to the year, we experienced higher growth than anticipated but the decrease in gross margin has been prolonged after a key summer “, has recognized the CEO of the company, Peter Fankhauser.
The tour operator has attributed these bad forecasts to the excess supply and strong competition that reduced its margins, to the excessively hot summer in northern Europe that caused many travelers to postpone their vacations, and to the affectation of the business especially in the sale of packages from the United Kingdom. United towards Spain, where the levels of promotional activity exceed a market that is “already competitive”. To this is added, the slowdown of reserves for the winter.
“We remain committed to our strategy for profitable growth and we have made good progress during the year,” said the executive who emphasized the new strategy of own-brand hotels, after the opening of up to eleven new establishments last summer, what will already provide its fruits in the year 2019, after an increase in sales of 15% in this segment. He also highlighted the launch of his alliance with Expedia in five markets.
Going forward, the director urged to learn from the lessons of this exercise and start the new year with special attention to the future performance of the operator in the United Kingdom where the challenges are growing in a competitive environment, as well as in the rationalization of costs and in the management of its capacity “with greater operational flexibility and financial discipline”.
In this line, the group has set as priorities for 2019 a better management of its capacity, address the performance of its tour operators in the United Kingdom, promote with innovative initiatives the sale of ancillary services, improve the margins of its hotel strategy. own brand and implement a greater focus and discipline of costs in the whole group.