TUI AG.pptx
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TUI AG, also known as TUI Group, One of the leading travel and tourism companies in the world.
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TUI AG.pptx
- 1. Company Name: Home Of Dissertations Website: https://www.dissertationhomework.com Contact Number: +44 7842798340 TUI AG (Case Study) CONNECT NOW
- 3. Key Information: 2018 TUI AG, also known as TUI Group, One of the leading travel and tourism companies in the world. Operates as: The company operates in Traveling and holiday Agencies Hotel and tour destination Business Currently poses: 150 airlines & 17 cruise ships Has approximately: 61,182 employees & 1600 retail shops in Europe Annual turnover of 17.4€ billion & Net income - 653€ million. Significant events Choice to focus on the Hotel and tourist destination business Collapse of Thomas Cook Group a major competitor Grounding of the companies Boeing 737 Max planes
- 4. TUI AG Competitors: Dart Group PLC Dart Group PLC, deals in: Leisure, Travel, Distribution & Logistics group of companies Specializes in provision of: Scheduled holiday travels Licensed holiday packages as well as Transport, distribution and logistics services Annual revenue- 3.15€ billion Net annual income-146.5€ million Employs approximately 11000 people globally. Listed in the London stock exchange & Has up to 30% stock held by top holders in other companies. Following the collapse of Thomas Cook , Dart Group PLC stands a better chance of increasing its market share and is a stronger competitor to TUI group
- 5. Financial Performance Unsteady revenue streams, Increase constantly in the last 4 years from 17.15 to 19.52€ billion Main business focus and profitable endeavors, include (registered up to 27% profit): Hotel, Cruise, Destination and Holiday business and experience Airline segment is least profitable segment TUI AG Dart Group P;C 2017 2018 2017 2018 Gross Profit 10.79% 10.15% 5.2% 5.6% Operating Profit 4.06% 3.15% 6.0% 5.5% ROCE 15.23% 14.39% 15.3% 13%
- 6. Cash Flow Analysis TUI AG DART GROUP PLC Cash Flow 2017 (Million Euros) 2018 (Million Euros ) 2017(Million Euros) 2018 (Milion Euros) Operating Activities 1,583 1,150 331.1 414.9 Investment Activities 687 845 604.2 430.7 Stock and Dividend 733 236 417.9 321.7
- 7. Investor Information TUI AG to have a P/E ratio of 14.41 below the average DE market at 19.7. The company’s current dividend yield is as 4.7% The dividend cover is also currently at 1.65 Both companies shares spiked by 7% due to the collapse of a major competitor TUI AG DART GROUP P/E Ratio 14.41 16.63 Dividend Yield 4.7% 0.71% Dividend Cover 1.65 10.2
- 8. Sustainability Report Four key focus areas describe the companies sustainability endeavors. Currently the company is invested in: Reducing environmental -reducing the carbon foot print of its airlines by 10% Creating a positive change for people & communities -delivering up to 10 million greener and fairer holidays per year in 2020 Pioneering sustainable tourism: investing up to 10 million € yearly in the TUI care foundation & Creating the best workplace -achieving a colleague engagement score of over 80% (currently at 77%).
- 9. Conclusion TUI AG underwent transformational change in 2014, built around: Focus on its competitive advantage areas led growth & reclaiming the position in the industry. Financial performance highlights: Increased revenue stream Opportunity for potential growth Increase in profits on their key areas of focus. Considerably good stock market and performance to warrant investment strong financial and environmental sustainability strategy Fall out by the major competitor Thomas Cook has impacted increased profitability and development
- 10. References Dart Group PLC (2019). https://www.dartgroup.co.uk/About_Us/ Financial Times (2019) DARTS GROUP PLC. [online] ft.com Available at https://markets.ft.com/data/equities/tearsheet/profile?s=DTG:LSE Hardy E. (2019). TThomas Cook rivals Tui and Jet2 see shares spike as world's oldest holiday firm topples into liquidation, but On The Beach warns collapse will be costly.[online] Available at https://www.thisismoney.co.uk/money/markets/article-7494151/Thomas-Cook-rivals-Tui-Jet2-shares-spike-Beach-warns-collapse- costly.html Hopkins J (2018). Dart Group sees full-year profits jump 49%, expects current year profit to “substantially exceed market expectations”. [online] Available at https://www.proactiveinvestors.co.uk/companies/news/200657/dart-group-sees-full-year-profits-jump-49-expects-current-year-profit-to-substantially-exceed-market- expectations-200657.html Karantzavelou V. (2018). TUI Group publishes sustainability report: Scaling positive change through sustainable tourism. [online] traveldailynews.com Available at https://www.traveldailynews.com/post/tui-group-publishes-sustainability-report-scaling-positive-change-through-sustainable-tourism Lansdown H. (2019). TUI AG [online] Available at https://www.hl.co.uk/shares/shares-search-results/t/tui-ag-ord-reg-shs-npv-di/dividends MarketWatch (2019). Dart Group PLC. [online] available at https://www.marketwatch.com/investing/stock/dtg/financials/cash-flow Morningstar (2019). TUI AG. [online] morningstar.co.uk Available at http://tools.morningstar.co.uk/uk/stockreport/default.aspx?tab=10&vw=cf&SecurityToken=0P00014DXZ%5D3%5D0%5DE0WWE%24%24ALL&Id=0P00014DXZ &ClientFund=0&CurrencyId=BAS Muirhead C. (2019). Thomas Cook: Who will be the Winners and Losers . [online] Available at https://www.proactiveinvestors.co.uk/companies/news/903483/thomas-cook-who-will-be-the-winners-and-losers-903483.html Nadkar T. (2019). Dart group sees demand boost after Thomas Cook collapse.[online] reuters.com Available at https://uk.reuters.com/article/uk-dart-grp-outlook/dart- group-sees-demand-boost-after-thomas-cook-collapse-idUKKBN1WQ0LE Reuters (2017). TUI Group to target Brazil and China in global expansion. [online]. Available at https://uk.reuters.com/article/uk-tui-results-results/tui-group-to- target-brazil-and-china-in-global-expansion-idUKKBN15T0JF TUI AG (2019) Annual Report of the TUI AG Group. [online]. Tuiaggroup.com Available at https://www.tuigroup.com/damfiles/default/tuigroup- 15/en/investors/6_Reports-and-presentations/Reports/2018/TUI_AR18_EN.pdf-41a3f925c083a43d9ef92d2abeb95a62.pdf Wall Street (2019). Here’s What TUI AG’s (ETR:TUI1) P/E Ratio Is Telling Us. [online]. Simplywall.st Available at https://simplywall.st/news/heres-what-tui-ags- etrtui1-p-e-ratio-is-telling-us/ Young S. (2019). TUI Says 737 max grounding could cost it 400 million euros in 2020. [online] reuters.com Available at https://uk.reuters.com/article/uk-tui- results/tui-says-737-max-grounding-could-cost-it-400-million-euros-in-2020-idUKKBN1YF1D3
- 11. Contact us now Website : https://www.dissertationhomework.com Contact Number : +44 7842798340 THANK YOU !! CONNECT NOW
Editor's Notes
- TUI AG Is an Anglo-German multinational travel and tourism company headquartered in Hannover, Germany (FAME, 2019) In the UK they operate under the name TUI TRAVEL since 3rd September 2007 by the merger of First Choice Holidays PLC & TUI AG. (TUI Travel Plc, 2007) It was incorporated 17 December 2014 (According to Fame) merger of TUI AG and TUI TRAVEL (FAME, 2019) It is jointly listed on the Frankfurt Stock Exchange and the London Stock Exchange as a constituent of the FTSE 100 Index (TUI AG, 2019) It consists of strong tour operators, with 1,600 travel agencies and leading online portals, six airlines with around 150 aircraft, over 380 hotels, 17 cruise liners. (TUI AG, 2019) TUI is considered an integrated tourism group as it deals with Hotels & Resorts, Cruises, and Airlines, Tour operators (TUI AG, 2019) This integration offers them the opportunity to provided excellent holiday experiences to in 180 regions to their 27 million customers. (TUI AG, 2019) The key feature of the company's corporate culture is their global responsibility for economic, environmental and social sustainability, which is reflected in more than 20 years of commitment to sustainable tourism. (TUI AG, 2019) In 2018 financial year the TUI Group with a headcount of around 70,000 recorded turnovers of €18.5bn and an operating result of €1.177bn. (TUI AG, 2019) Among the Major significant events that have impacted the Industry over the past decade include the collapse of a major industry player and competitor in Thomas cook in September 2019 which has significantly left a gap in the market and an opportunity to capitalize on. The company also strategized to focus its operations on Hotel, cruises, destination and holiday experiences where they were more profitable as compare to the airline sector which has been significantly less profitable. Another major occurrence for the company includes the global grounding of their Boeing 737 Max planes, which further piled up the lossess in the airline sector ()
- The following companies are the major competitors of TUI Group (Merketline Report) Dart Group PLC Accor Hotels Carlson Inc Carnival Corporation & Plc Holidaybreak Ltd Kuoni Global Travel Services Thomas Cook Group plc However the study will focus on Darts Group PLC for comparison Darts Group PLC Dart Group PLC is a leisure, travel, distribution and logistics group of companies specializing in: Provision of scheduled holiday travels Provision of licensed holiday packages as well as Provision of transport, distribution and logistics services The company majorly operates through its three sublet companies: Jet2holidays, Jet2.com and Fowler Welch. The company registers an annual revenue of 3.15 billion Euros with an net annual income of 146.5 million euro It employs up to 11000 people all across the globe. The company is also listed in the London stock exchange and has up to 30% of its stock held by top holders in other companies. Its operations within the hotel and travel industry especially through Jet2 airlines makes it a significant competitor to TUI AG and thus the major competitor used within this analysis Following the collapse of Thomas Cook , Dart Group PLC stands a better chance of increasing its market share and coupled woth being a high perfomance company it presents a major significant competitor to TUI AG (Nadkar, 2019) and thus highlights the rationale for its use.
- While the company’s revenue streams have not been steady over the decade, the company has managed to constantly increase their revenue over the last four years amounting to 19.52 Billion Euros in 2018 as compared to 17.15 billion Euros in 2015 (Stipp, 2018) however the net profits significantly dropped with a 0.64% margin in the last year. According to TUI AG annual report 2018, both the operating profit as well as the Return on Capital employed (ROCE) ratios similarly significantly declined. TUI AG group (2018) highlights a decrease in the operating profit ratio from 4.06% to 3.15% and a decrease in the ROCE ratio from 15.23 to 14.39. The 2018 Half Year financial report released by the company however highlights a significant increase in the cash flow for operating activities by 165 million Euros thereby pointing out the cause of the decrease in both operating and gross profit margins subsequently highlighting the decrease in the ROCE. While the company is a group that operates on many fronts including operating airlines, cruise ships, Hotels and resort as well as destination services and experiences, TUI AG group (2018) highlights that the company’s internal realignment meant to focus on hotel, cruise and destination business in 2014, and which has now become the company’s specialty is especially responsible for the increase in revenue over the last 3 years leading up to the company’s current performance and position. This realignment coupled with the 2018 financial outcome as highlighted in the report shows that the hotel, cruise, destination and holiday business and experience are among the areas of business focus and profitable endeavors registering up to 27% profit levels between 2017 and 1018. This as compared to their airline markets and other segments which have consistently made losses in the last couple of years highlight their airline segment to be a dragging factor in their performance. While Dart Group numbers are not entirely as consistent as TUI AG group they indicate a general decrease in the ratios which highlights a level of increased activity within the industry, presumably due to the exit of Thomas Cook. Hopkins 2018 points out that while the pretax margins of the companies profits increased between 2017 and 2018 from 5.2% to 5.6% its operating profits slipped to 5.5% from 6.0% within the same period. This could be attributed to increased operations as a result of Thomas Cook fallout minimizing operations profit and impacting an increase in their overall gross profit. Wall street (2019) further highlights a consistent drop of the companies ROCE from 29% three years past to 15.3% in 2017 and 13% in 2018. however the journal highlights that the current ratio despite raising heads on looming challenges is still manageable at the companies current financial performance level. TUI AG clearly have the better ratios to Darts and as such indicates their competitive supremacy within the market
- Cash flow analysis highlights the flow of cash within a company and is critical in determining which segment is more profitable. Within this analysis operating cash flow, the analysis will also consider cash from investments and dividends and compare them with operating costs to extrapolate their sustainability. Morningstar (2019) highlights an overall decrease in the cash flow from operating activities from 1.583 billion Euros in 2017 to 1.15 billion in 2018; these include major operations such as accounts received from services, Inventory, other available working capital as well as non-cash items. Cash flow from investing activities majorly consisting of Acquisitions amounted to 845 Euros up from 687 million Euros in 2017. Other investments including stocks issued as well as dividends amount to 236 million in 2018 down from 733 million Euros in 2017. The operating cost based on the cash flow information is as such still way above the cash on dividends and investment highlighting the company’s sustainability in continued carrying out of business. The company majorly uses cash for day to day operations which include Inventory, operating and management of properties and assets including restaurants and hotels, airplanes as well as business strategies such as expansion and introduction of new products from time to time. According to Reuters (2017) the company reorganized its structure and operations in 2017 to invest more in hotels and Restaurants in Brazil and China as part of their Global expansion strategy. A move that has been significantly strategic given its viewing and non-core business operations yet significantly impacting the companies profitability in the current economy. While their competitors Darts group Plc highlight significantly lower cash flow ratios, the company has equally been investing and using its cash on inventory and management of its assets as well as expansion. Nadkar (2019) highlights the company developing an expansion strategy especially to take advantage of the gap left in the market by the collapse of Thomas Cook.
- Investor information uncovers the company’s performance and the returns to investors in terms of stock exchange values and share prices. This analysis particularly relies on three ratios the P/E ratio, dividend yield and Dividend cover. Wall street (2019) based on the last 12 months coming up to October 2019 highlights TUI AG to have a P/E ratio of 14.41 which is certainly below the average DE market at 19.7. While this means a yield rate of 6.5% for the company which is not entirely good, the company’s balance sheets and cash flow figures highlights significant potential for growth. According to Lansdown (2019) the company’s current dividend yield is as 4.7% and despite the fact that it represents the lowest figure throughout the year with a majority being within the 5% range, it has remained within the range of 5% over the last four years since the implementation of the new strategic focus highlighting the ability of the company to maintain the current dividends. While the dividend cover is also currently at 1.65 it maintains a constant level within the past years further confirming the steadiness of the companies dividends. This ratio highlight a company with an effective growth potential and a steady stock market which is effective for investment as such provide a good investment opportunity, this in comparison to Dart Group PLC which has a significantly lower level of dividend yield and a high P/E ratio. Hardy (2019) highlights that the collapse in Thomas cook significantly impacted the stock prices of its rival companies TUI AG and Darts Group PLC. Both of the companies share prices spiked by 7% upon the announcement of Thomas Cook intention to seize operations leading to the loss of up to 21,000 jobs. Muir head (2019) highlight that the TUI’s shares soared above € 9.00 in September registering its best since February due to the exit of Thomas Cook. Jet2 owner Dart Group likewise jumped to € 9.2 in September and closed the year at € 8.97 an overall average increase of 6.1% This makes both companies the greatest beneficiaries of their major competitors fall out and will continue to benefit from the gap left in the market.
- The company’s financial performance, cash flow ratio as well as the investor analysis highlights a high potential for its financial and business sustainability. However the company also has a sustainability campaign towards ensuring overall sustainability which is focused on four key sectors according to the new 2020 commitment. The 2020 strategy according to TUI AG (2019) includes four core pillars where TUI aims to advance sustainable tourism at scale within its own operations, along its value chain, across the wider industry and in communities where it operates. The company has invested in reducing environmental impact of holidays by effectively reducing the carbon foot print of its airlines by up to 10% Creating a positive change for people as well as communities through delivering up to 10 million greener and fairer holidays per year in 2020 Pioneering sustainable tourism across the world through investing up to 10 million Euros yearly in the TUI care foundation through improving life chances, protecting animal welfare, linking sustainable agriculture to tourism The company also contributes in creating the best workplace by achieving a colleague engagement score of over 80% with their score being currently at 77%. While these are almost similar steps taken up by their competitors, this steps highlight the companies environmental sustainability agenda and framework and as such would effectively appeal to ethically minded investors and further improve the company’s potential of investment success. (Karantzavelou, 2018) The competitors Darts Group Plc while also significantly involves in environmental sustainability is however more focused on minimizing its carbon footprint and enhancing sustainable and environmental friendly leisure travels.
- TUI AG after undergoing a transformation and change in 2014 to focus on their strong hold areas without a doubt have grown to reclaim their position in the industry, its financial performance highlights an increased revenue stream as well as a potential for continued growth given the increase in profits on their key areas of focus. The company also has a considerably good stock market and performance to warrant investment. In addition the company boosts of a strong financial and environmental sustainability strategy that significantly guarantee its potential performance making it quite an effective place for investment. Further the collapse of the major competitor in Thomas Cook in September 2019 has thus far had a significant increase in the companies profitability as evident in the spike of the companies shares by up to 7% in the last quarter of 2019 This is however not only true for TUI AG, its major competitor is equally effectively positioned financially and significantly growing and developing as a result of Thomas Cook’s fall out. Eventually the company as well as its current major competitor Darts Group PLC have significantly ben impacted by the changes in the industry and continue to forge a path towards global commercial success.