Revenue rise buoys Thomas Cook
Thomas Cook Group (TCG) shares enjoyed a much-needed boost as it reported a 3% rise in first-quarter revenue and announced the sale of its Indian subsidiary.
Revenues rose to £1.86 billion in the first three months of the firm's financial year, boosted by increased activity in Northern Europe and Airlines Germany and a maiden contribution of £68 million from the Co-operative and the Russian joint ventures.
"I have been encouraged by how our bookings have developed, particularly in the UK where our market share for both the winter and summer seasons remains broadly stable. As expected, the first quarter has been adversely impacted by the uncertain economic environment across Europe, input cost inflation and the ongoing disruption in the Middle East and North Africa," commented chief executive Sam Weihagen.
However, the seasonal underlying loss from operations expanded from £37 million last year to £91 million, due to tougher trading conditions amid the troubles in the Middle East and North Africa and rising fuel costs.
Thomas Cook said it is on track to deliver the planned £35 million benefit in the current financial year as a result of its UK turnaround strategy, but pointed to a difficult winter and challenging year ahead.
It noted that a number of unsolicited informal expressions of interest have been received for its 77.1% stake in Thomas Cook India Limited, which is the largest integrated foreign exchange and travel services company in the country.
"Whilst the shares may bounce today, given the structural and consumer issues, we reiterate our 'sell' recommendation and 10p target price," said analysts Simon French and Lindsey Kerrigan at Panmure Gordon. Peel Hunt also reiterated its 'sell' stance.
Does Thomas Cook's stock hold value despite the tour operator's troubles? For more, read: Should I buy shares in Thomas Cook?
