TUI Posts Surprise Profit as Joussen’s Turnaround Shows Effects

TUI AG (TUI1), Europe’s largest tour operator, reported a surprise full-year profit and said earnings will continue to rise as a turnaround plan gains speed.

Net income was 4.3 million euros ($5.92 million) in the fiscal year ended Sept. 30, compared with a of 15.1 million euros a year earlier, TUI said today. Analysts surveyed by Bloomberg had predicted a loss. Sales were little changed at 18.5 billion euros.

Chief Executive Officer Friedrich Joussen, who took over 10 months ago, initiated an efficiency plan that includes cutting more than half of the jobs at the headquarter, ending sponsoring agreements, selling the corporate jet and generating 1 billion euros in operating profit by fiscal 2015. He pledged to fix ailing hotel brands and turn around the loss-making cruise business to make the company a stable payer of dividends.

“We deliver on our promises,” Joussen said in a release today. “Our good operating results enable us to pay a dividend to our shareholders earlier than promised.”

Underlying earnings before interest, taxes and amortization, which the Hanover, Germany-based company calls operating profit, rose 2.2 percent to 761.9 million euros ($1 billion). That compares with the average estimate for 754.5 million euros by 11 analysts collected by Bloomberg.

TUI yesterday said the supervisory board approved a management proposal to pay a dividend of 15 euro cent per share for the year, ahead of plan and the first time since 2007 the company offers investors a cash payout.

Operating profit will rise 6 percent to 12 percent this fiscal year as the efficiency measures come into effect, while sales will rise 2 percent to 4 percent on rising guest numbers at its main travel unit, TUI said.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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