German travel giant TUI has reported exceptional financial results, surpassing earnings expectations and demonstrating strong growth despite ongoing challenges in the travel industry. The company’s success has come at a time when investors are contemplating a significant change: a potential exit from London’s stock markets in favor of a full listing in Germany. This article delves into TUI’s impressive earnings performance and the rationale behind the investors’ decision regarding its London listing.
Strong Financial Performance
TUI’s fiscal first-quarter revenue reached a record-breaking 4.3 billion euros, representing a 15% increase compared to the previous year. The company achieved this remarkable growth by capitalizing on higher demand for travel, which allowed them to raise prices and rates. The quarterly profit of 6 million euros far exceeded market expectations, defying projections of a 102 million euro loss in underlying earnings before interest and taxation (EBIT).
CEO Sebastian Ebel expressed his satisfaction with the company’s performance, stating, “We are on track, we are gaining customers and we are growing. We are accelerating our transformation quarter by quarter. We have goals that we are consistently implementing.” Ebel also highlighted the positive impact of people’s strong willingness to travel, which has contributed to TUI’s robust economic development across all areas of the company.
Investors’ Decision on London Exit
Despite TUI’s impressive financial results, investors are currently considering a strategic shift away from London’s stock markets. The company currently maintains a dual listing between Frankfurt and London, with only 10% of its shares held in the latter. The TUI board has recommended abandoning its London listing due to a perceived decline in liquidity in UK equity markets over recent years.
Shareholders will gather for an annual general meeting where they will vote on whether to strike TUI’s shares off London markets and focus solely on a German listing. This decision reflects the company’s desire to optimize its listing arrangements and streamline its operations. By consolidating its listing in Germany, TUI aims to enhance its position in its home market and potentially benefit from improved liquidity and investor interest.
Future Outlook
TUI remains optimistic about its future prospects and expects to achieve significant growth in operating profit, targeting at least 25% growth across the 2024 financial year. Moreover, the company aims for a compound annual growth rate of 7-10% over the medium term. These ambitious goals align with TUI’s ongoing transformation efforts and its commitment to meeting the evolving needs of the travel industry.
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