German tourism group TUI AG is confident that it can float its stake in container carrier Hapag-Lloyd in 2011, a first step in plans to focus on its travel business.
Chief executive Michael Frenzel told journalists on Tuesday that his preferred option would be an initial public offering but added that he was in no hurry.
'We currently see a favourable time window for exiting our Hapag-Lloyd position. Container shipping is healthy and on an upward trend,' Mr Frenzel said in a conference call after the group reported a 25 per cent rise in underlying 2009/10 profit.
Shares in TUI, which owns Europe's largest tour operator TUI Travel, rose 4.8 per cent to a two-year high of 9.79 euros (S$17.14) at 0846 GMT, topping the German mid-cap gainers, and boosted by its forecast for a positive group result in 2010/11.
Analysts at WestLB welcomed the optimistic outlook so early in the new financial year. 'The attractive valuation, in combination with several share price drivers in the coming weeks (for example, the IPO of Hapag- Lloyd and good booking situation for the summer season), makes TUI AG one of the most attractive stocks in the sector,' they wrote in a note to clients.
TUI had previously planned to sell Hapag-Lloyd to a consortium, but falling freight rates and volumes as a result of the financial crisis meant that it ended up pumping more money into the company and keeping a larger stake than it expected.
Now that trading has improved, TUI said earlier this month that it planned to mandate Credit Suisse, Goldman Sachs and Greenhill to start preparations for a stock exchange listing of Hapag-Lloyd. TUI owns 43 per cent of Hapag-Lloyd and this will increase to almost 50 per cent at the end of 2010 through the exercise of a convertible bond. It has previously valued its stake in Hapag-Lloyd at 2.5 billion euros.
Mr Frenzel said on Tuesday that TUI was also considering selling its shares to individual investors.
Logistics businessman Klaus- Michael Kuehne, part of the Albert Ballin consortium that owns 57 per cent of Hapag-Lloyd and majority owner of Kuehne + Nagel, is expected to increase his stake in the shipping firm after the IPO, sources told Reuters last week.
TUI reported underlying earnings before interest, tax and amortisation (Ebita) of 589.2 million euros for the 12 months ended September 2010, compared with 470.5 million euros last year.
Turnover fell 1.5 per cent to 16.35 billion euros, hurt by the Icelandic ash cloud that grounded European flights for just over a week in April.
'Trading for the current winter season is up year-on-year in all European source markets, with some markets reporting substantial growth,' Mr Frenzel said.
After staying at home during the recession, consumers are starting to book holidays again, with customers in Nordic countries in particular driving growth.
Russia and Brazil will be key areas for expansion in the future, Mr Frenzel said, with smaller acquisitions likely in Russia.
Rival Thomas Cook is also keen to take advantage of the fast-growing Russian market and recently bought into local operator Intourist. Mr Frenzel said that TUI was ramping up marketing costs as it aims to gain market leadership there. He added that together with TUI Travel CEO Peter Long, he was looking at Brazil as a possible source market and was also planning to reorganise its joint venture in China.
For 2010/11, analysts estimate that underlying Ebita will rise to 668 million euros. Mr Frenzel declined to comment on whether TUI would pay a dividend in 2011, but said that the group was working to return to a payout as quickly as possible.
Chief executive Michael Frenzel told journalists on Tuesday that his preferred option would be an initial public offering but added that he was in no hurry.
'We currently see a favourable time window for exiting our Hapag-Lloyd position. Container shipping is healthy and on an upward trend,' Mr Frenzel said in a conference call after the group reported a 25 per cent rise in underlying 2009/10 profit.
Shares in TUI, which owns Europe's largest tour operator TUI Travel, rose 4.8 per cent to a two-year high of 9.79 euros (S$17.14) at 0846 GMT, topping the German mid-cap gainers, and boosted by its forecast for a positive group result in 2010/11.
Analysts at WestLB welcomed the optimistic outlook so early in the new financial year. 'The attractive valuation, in combination with several share price drivers in the coming weeks (for example, the IPO of Hapag- Lloyd and good booking situation for the summer season), makes TUI AG one of the most attractive stocks in the sector,' they wrote in a note to clients.
TUI had previously planned to sell Hapag-Lloyd to a consortium, but falling freight rates and volumes as a result of the financial crisis meant that it ended up pumping more money into the company and keeping a larger stake than it expected.
Now that trading has improved, TUI said earlier this month that it planned to mandate Credit Suisse, Goldman Sachs and Greenhill to start preparations for a stock exchange listing of Hapag-Lloyd. TUI owns 43 per cent of Hapag-Lloyd and this will increase to almost 50 per cent at the end of 2010 through the exercise of a convertible bond. It has previously valued its stake in Hapag-Lloyd at 2.5 billion euros.
Mr Frenzel said on Tuesday that TUI was also considering selling its shares to individual investors.
Logistics businessman Klaus- Michael Kuehne, part of the Albert Ballin consortium that owns 57 per cent of Hapag-Lloyd and majority owner of Kuehne + Nagel, is expected to increase his stake in the shipping firm after the IPO, sources told Reuters last week.
TUI reported underlying earnings before interest, tax and amortisation (Ebita) of 589.2 million euros for the 12 months ended September 2010, compared with 470.5 million euros last year.
Turnover fell 1.5 per cent to 16.35 billion euros, hurt by the Icelandic ash cloud that grounded European flights for just over a week in April.
'Trading for the current winter season is up year-on-year in all European source markets, with some markets reporting substantial growth,' Mr Frenzel said.
After staying at home during the recession, consumers are starting to book holidays again, with customers in Nordic countries in particular driving growth.
Russia and Brazil will be key areas for expansion in the future, Mr Frenzel said, with smaller acquisitions likely in Russia.
Rival Thomas Cook is also keen to take advantage of the fast-growing Russian market and recently bought into local operator Intourist. Mr Frenzel said that TUI was ramping up marketing costs as it aims to gain market leadership there. He added that together with TUI Travel CEO Peter Long, he was looking at Brazil as a possible source market and was also planning to reorganise its joint venture in China.
For 2010/11, analysts estimate that underlying Ebita will rise to 668 million euros. Mr Frenzel declined to comment on whether TUI would pay a dividend in 2011, but said that the group was working to return to a payout as quickly as possible.