The owner of Europe's largest holiday company TUI Travel forecast considerably better group profit this year despite a widening first quarter loss but traders fretted about its future and marked down its shares sharply. TUI shares, which have risen more than 70 percent in the past four weeks, were 6.5 percent lower at 7.53 euros in Frankfurt by 12:14 p.m.. TUI Travel shares were down 2.0 percent in London.
"The share price was being driven by ongoing speculation about the future of the group and the plans of major shareholder Frederiksen." said Commerzbank analyst Johannes Braun, who kept his "reduce" rating on the stock, .
"Not only the outcome of Fredriksen's campaign to oust two supervisory boards member is hard to predict, but visibility on the company's future strategy and set-up is extremely low," Braun said.
TUI's underlying loss before interest, tax and amortisation was 324.2 million euros (291.1 million pounds), compared with a loss of 213.7 million in the same period last year, missing the average estimate for a loss of 304 million in a Reuters analyst poll.
This was mainly due to a further widening of TUI Travel's underlying operating loss as political unrest in Madagascar and the French West Indies as well as in Thailand hurt business.
Sales of TUI Travel, in which TUI holds 51 percent, fell 16 percent, hit by capacity reductions, a weakening exchange rate of the British pound against the euro and a shift of the Easter holidays into the second quarter this year.
TUI will hold its annual shareholder meeting on Wednesday.
TUI Travel, which generated about 96 percent of TUI's turnover last year, said it remained well positioned to meet its expectations for the year to Sept 30, with trading over the last eight weeks robust.
The group, formed in 2007 from the merger of TUI's travel division and First Choice, said in recent weeks demand for long haul holidays were up 2 percent in the last two weeks over the same period a year ago, despite the outbreak of swine flu in Mexico.
Along with rival Thomas Cook, TUI Travel has responded to the recession by reducing the amount of holidays it has on sale, enabling it to increase average selling prices and avoid discounting heavily in the late bookings market.
As a result, it has continued to grow profits, while smaller operators have struggled to stay afloat. Britain's third-biggest travel firm, XL Leisure, fell into administration last year.
Tour operators traditionally make a loss in the half year which does not include the key summer period.
Last year, for example TUI's group third-quarter underlying operating profit almost tripled compared with the second quarter.
Over all, TUI expects group profit considerably higher than a year earlier due to lower integration costs in tourism and proceeds from the sale, closed in March, of a majority stake in the container shipping unit Hapag-Lloyd.
TUI said it had a book gain of 990 million euros in the first quarter from the deal, which it used to reduce debt.
Its net debt fell to 2.6 billion euros from 4.1 billion as of the end of 2008, it said.
TUI Travel trades at 9.7 times 12-month forecast earnings, in line with Thomas Cook, Europe's second-largest travel company, according to Thomson Reuters StarMine.
StarMine weights analyst estimates according to their track record.
"The share price was being driven by ongoing speculation about the future of the group and the plans of major shareholder Frederiksen." said Commerzbank analyst Johannes Braun, who kept his "reduce" rating on the stock, .
"Not only the outcome of Fredriksen's campaign to oust two supervisory boards member is hard to predict, but visibility on the company's future strategy and set-up is extremely low," Braun said.
TUI's underlying loss before interest, tax and amortisation was 324.2 million euros (291.1 million pounds), compared with a loss of 213.7 million in the same period last year, missing the average estimate for a loss of 304 million in a Reuters analyst poll.
This was mainly due to a further widening of TUI Travel's underlying operating loss as political unrest in Madagascar and the French West Indies as well as in Thailand hurt business.
Sales of TUI Travel, in which TUI holds 51 percent, fell 16 percent, hit by capacity reductions, a weakening exchange rate of the British pound against the euro and a shift of the Easter holidays into the second quarter this year.
TUI will hold its annual shareholder meeting on Wednesday.
TUI Travel, which generated about 96 percent of TUI's turnover last year, said it remained well positioned to meet its expectations for the year to Sept 30, with trading over the last eight weeks robust.
The group, formed in 2007 from the merger of TUI's travel division and First Choice, said in recent weeks demand for long haul holidays were up 2 percent in the last two weeks over the same period a year ago, despite the outbreak of swine flu in Mexico.
Along with rival Thomas Cook, TUI Travel has responded to the recession by reducing the amount of holidays it has on sale, enabling it to increase average selling prices and avoid discounting heavily in the late bookings market.
As a result, it has continued to grow profits, while smaller operators have struggled to stay afloat. Britain's third-biggest travel firm, XL Leisure, fell into administration last year.
Tour operators traditionally make a loss in the half year which does not include the key summer period.
Last year, for example TUI's group third-quarter underlying operating profit almost tripled compared with the second quarter.
Over all, TUI expects group profit considerably higher than a year earlier due to lower integration costs in tourism and proceeds from the sale, closed in March, of a majority stake in the container shipping unit Hapag-Lloyd.
TUI said it had a book gain of 990 million euros in the first quarter from the deal, which it used to reduce debt.
Its net debt fell to 2.6 billion euros from 4.1 billion as of the end of 2008, it said.
TUI Travel trades at 9.7 times 12-month forecast earnings, in line with Thomas Cook, Europe's second-largest travel company, according to Thomson Reuters StarMine.
StarMine weights analyst estimates according to their track record.