Peter Fankhauser
Chief Executive Officer,
Central Europe
Thomas Döring
Chief Executive Officer,
East and West Europe
1 These are unaudited pro forma figures for the twelve months ended 30 September 2008. For a definition of how these figures have been compiled, please refer to Appendix 1 - Unaudited pro forma financial information. See the Statutory results for the eleven months to 30 September 2008. See Appendix 2 - Key performance indicators definitions.
Operational highlights
- Strong performance driven by excellent yield management, improved flight utilisation in Germany and the turnaround of our business in France, where we achieved significant margin growth
- The acquisition of Jet Tours, the premium tour operator, makes us France’s third largest tour operator and complements our existing offering
- The acquisition of 57 Neckermann Urlaubswelten retail outlets in Germany strengthens our German distribution, which is key to that market
- SENTIDO, the new hotel franchise, gives us access to and quality control of 17 hotels and two Nile river boats without increasing our risk profile
- Our controlling interest in Iberoservice, a ground handling agency in Spain, supports both mainstream and independent travel operations
- We developed innovative holiday concepts, such as Xperience in the Netherlands and Belgium, and Thomas Cook Villages in France, to target specialist interest groups
- This was our first full year in the Czech market. We are growing rapidly and achieving high margins throughout our Eastern European businesses
Key facts
7.5m
passengers
2,316
retail outlets
6
aircraft
The performance in the Continental European businesses during the period was very strong, resulting in a £38.8m improvement in pro forma profit from operations and a 31.8% increase in the operating profit margin.
The pro forma revenue for the twelve months to September 2008 increased by 18.7% to £3,620.4m. However, this increase was driven by changes in translation exchange rates and the impact of acquisitions (Iberoservice, Jet Tours, Neckermann Urlaubswelten, urlaub.de and the full year impact of the Czech business acquired in the previous year).
As a result, underlying revenue remained at the same level as in the prior year, with lower passenger numbers in the German and Dutch businesses being offset by increased passengers in the other Western markets (Belgium and France) and improved selling prices in Germany and all our Western markets. In the Eastern markets (Poland, Hungary, Czech Republic), where we are still establishing our business, we successfully increased volumes and selling prices.
The reduction in passenger numbers in Germany and the Netherlands was expected and reflects management’s focus on selling profitable holidays rather than protecting market share. This policy has proved successful as both selling prices achieved and margins have increased year on year. Improved flight utilisation in Germany also further helped to improve margins year on year.
The profit from operations was further improved by the realisation of synergy benefits in agency relationships, including the acquisition of a controlling stake in Iberoservice. Other acquisitions and changes in exchange rates also benefited the year on year performance.
As a result, the pro forma profit from operations was increased to £106.3m from £67.5m in the prior year, an increase of 57.5%.
The operating profit margin for the Continental segment was improved from 2.2% to 2.9%. The restructuring programmes we have undertaken in all our Western markets have paid dividends in the period. In France, we are especially pleased with the 5.6% margin we achieved. This is a strong improvement on the prior year margin of 2.9%. Margins also improved significantly in Belgium (4.8% compared to 2.9%) and the Netherlands (3.3% compared to 2.0%). Our relatively new Eastern division also achieved an operating margin of 4.6%, up from 4.1% in the prior year. The overall margin we achieved in Germany (including Airlines Germany) was very pleasing at 3.1% compared with 2.9% in the prior year.
The proportion of our departed passengers in the Continental European markets who booked on the internet was 8.5%, an increase of 18.1% on the prior year period. While this proportion seems low in comparison to the UK and Northern European markets, it continues to grow strongly and plays an important role in our multi-channel proposition. The proportion of passengers departing in the period who booked through our controlled distribution channels in Continental Europe (owned websites, shops and call centres) grew by 5.3% to 37.7%.