TUI likely to report Q2 loss of 73.9m euros
TUI AG, the German tourism company preparing to sell its Hapag-Lloyd shipping line, may report a second-quarter loss this week on costs to overhaul its travel unit and lease aircraft.
The net loss of 73.9 million euros (S$154.6 million) compares with a year-earlier profit of 56.4 million euros, according to the median estimate of five analysts surveyed by Bloomberg.
One-time costs will come to 234.2 million euros, Martina Noss, an analyst at Norddeutsche Landesbank, said on Tuesday. Sales gained 19 per cent to 6.2 billion euros, the survey shows.
TUI's travel unit is combining its main Thomson and First Choice brands after being formed last year by a merger.
The division also is adding acquired units to the rest of its business.
Hanover-based TUI is pressing ahead with the Hapag-Lloyd sale even though billionaire stockholder John Fredriksen argues that the market is unfavourable and would prefer a spinoff.
'Deteriorating market conditions and high bunker prices will result in a significantly more challenging operating environment for container-shipping lines in the second half of this year compared to the first half,' Tim Ramskill, an analyst at Dresdner Kleinwort in London, wrote in a research report. He advises selling TUI stock.
TUI began to classify Hapag-Lloyd as a discontinued unit in the first quarter as it neared a disposal. Singapore's Neptune Orient Lines Ltd, Southeast Asia's largest shipper, and a group including the city of Hamburg are still in contention to buy the division.
The travel business, Europe's market leader, may report slowing sales growth after reduced capacity left it with fewer vacations to sell on its main German market.
TUI has reduced its bookings of plane seats and hotel rooms to lessen to risk of having to sell holidays at discounts at the last minute.
TUI's travel unit said on June 23 it had raised US$526 million by agreeing to sell 19 Boeing Co planes to AerCap Holdings NV and Deucalion Aviation Funds and lease them back. Ms Noss estimated costs stemming from the transaction at US$150 million.
Mr Fredriksen's stake is about matched by a 15.03 per cent holding controlled by Alexei Mordashov, the billionaire Russian owner of steel maker Severstal Group, who has supported the plan to sell Hapag- Lloyd.
The shipping line helps smooth out seasonal volatility in tourism revenue, according to TUI CEO Michael Frenzel.
TUI, which holds a 51 per cent stake in TUI Travel, said last month German tourism revenue would be 2 per cent ahead of last year by the end of the summer season, down from 4 per cent as of May 13.
Stock in TUI has slid 22 per cent this year, more than the 18 per cent drop by Germany's benchmark DAX Index.
The retreat has cut the company's market value to 3.77 billion euros.
TUI is scheduled to release the figures today at 8am Frankfurt time (2pm Singapore time).
The net loss of 73.9 million euros (S$154.6 million) compares with a year-earlier profit of 56.4 million euros, according to the median estimate of five analysts surveyed by Bloomberg.
One-time costs will come to 234.2 million euros, Martina Noss, an analyst at Norddeutsche Landesbank, said on Tuesday. Sales gained 19 per cent to 6.2 billion euros, the survey shows.
TUI's travel unit is combining its main Thomson and First Choice brands after being formed last year by a merger.
The division also is adding acquired units to the rest of its business.
Hanover-based TUI is pressing ahead with the Hapag-Lloyd sale even though billionaire stockholder John Fredriksen argues that the market is unfavourable and would prefer a spinoff.
'Deteriorating market conditions and high bunker prices will result in a significantly more challenging operating environment for container-shipping lines in the second half of this year compared to the first half,' Tim Ramskill, an analyst at Dresdner Kleinwort in London, wrote in a research report. He advises selling TUI stock.
TUI began to classify Hapag-Lloyd as a discontinued unit in the first quarter as it neared a disposal. Singapore's Neptune Orient Lines Ltd, Southeast Asia's largest shipper, and a group including the city of Hamburg are still in contention to buy the division.
The travel business, Europe's market leader, may report slowing sales growth after reduced capacity left it with fewer vacations to sell on its main German market.
TUI has reduced its bookings of plane seats and hotel rooms to lessen to risk of having to sell holidays at discounts at the last minute.
TUI's travel unit said on June 23 it had raised US$526 million by agreeing to sell 19 Boeing Co planes to AerCap Holdings NV and Deucalion Aviation Funds and lease them back. Ms Noss estimated costs stemming from the transaction at US$150 million.
Mr Fredriksen's stake is about matched by a 15.03 per cent holding controlled by Alexei Mordashov, the billionaire Russian owner of steel maker Severstal Group, who has supported the plan to sell Hapag- Lloyd.
The shipping line helps smooth out seasonal volatility in tourism revenue, according to TUI CEO Michael Frenzel.
TUI, which holds a 51 per cent stake in TUI Travel, said last month German tourism revenue would be 2 per cent ahead of last year by the end of the summer season, down from 4 per cent as of May 13.
Stock in TUI has slid 22 per cent this year, more than the 18 per cent drop by Germany's benchmark DAX Index.
The retreat has cut the company's market value to 3.77 billion euros.
TUI is scheduled to release the figures today at 8am Frankfurt time (2pm Singapore time).