ii view: TUI maintains full-year forecast

Holiday company TUI remains upbeat despite the Boeing 737 grounding hitting profit.

Third-quarter results      

• Revenue up 3.7% to €4.75 billion
• Profit attributable to shareholders down 85% to €21.7 million
• Full-year profit forecast maintained

Chief executive Fritz Joussen said:

"Despite the challenging environment in 2019 to date, our underlying business remains robust, and we expect to deliver a solid performance in 2019, which, however, will not match the prior year's result as expected due to the grounding of the 737 Max. Hotels & Resorts will benefit from our diversified portfolio and Cruises will deliver strong growth. We have significantly reduced our dependence on traditional tour operators over the past five years. The transformation of our group will continue."

ii round-up:

TUI AG (LSE:TUI) is a major leisure and tourism company employing over 70,000 people. Listed on the London, Frankfurt and Hanover Stock Exchanges, the company operates across two broad segments. 

Holiday experiences includes its cruise ship business, hotels and resorts and destination experiences. It operates over 380 of its own hotels. Markets and airlines include its airline operation and tour operators broken down into three geographical regions - Northern, Central and Western. Its tour operator brands cover airtours in Germany to First Choice in the UK. It has a fleet of around 150 planes. 

Here's our round-up of TUI's third-quarter results.

ii view:

A strategy of owning its own hotels, airline and cruise ships instead of packaging others' together for slim margins has helped separate TUI from rival holiday companies. But with so many factors, often outside of management's control, potentially influencing performance, the holiday business can be a highly volatile industry in which to invest. 

For investors, a historic dividend yield of around 8% draws the eye, but analyst forecasts suggest a possible cut to something nearer 6% over the next year. On a valuation basis, the forward price earnings (PE) ratio currently sits marginally above the three-year average. 

Positives: 

• Integrated business model
• Diversified asset portfolio
• Reviewing and selling non-core businesses

Negatives:

• Factors outside of management's control can hinder performance
• Owning assets requires capital
• Possible dividend cut

The average rating of stock market analysts:

Buy