Thomas Cook says Tunisia, Greece and forex to dent profit

Thousands of tourists rushed to leave Tunisia after Britain warned another attack was highly likely. Thomas Cook has canceled all trips to the North African country until October (File Photo: AP)

Travel firm Thomas Cook has warned that cancellations of holidays to Tunisia after a beach gun attack, concerns regarding Greece’s potential exit from the euro and a currency hit would knock 64 million pounds ($100 million) off this year’s profit.

Shares in the London-listed group, down 13 percent since June 26 when a gunman killed 38 mainly British holidaymakers in a Tunisian beach massacre claimed by Islamic State of Iraq and Syria (ISIS) militants, recovered from early losses to be marginally up by mid-morning.

Thomas Cook said the impact on fourth quarter bookings of the events in Tunisia and Greece would reduce 2014-15 operating profit by about 25 million pounds.

Foreign exchange translation would slice another 39 million pounds off operating profit, up from previous guidance of 25 million, due to further depreciation of the euro and Swedish krona against sterling.

However, the group said it remained confident of full year profit growth on a constant currency basis.

Prior to Thursday’s update analysts were forecasting a full-year operating profit of 341 million pounds, according to Reuters data, up from 323 million in 2013-14.

Analysts at Numis cut their 2014-15 forecast by 12 percent to 309 million, their 2015-16 forecast by 10 percent to 387 million and their price target to 130 pence from 145, although they maintained their “hold” stance.

Thousands of tourists rushed to leave Tunisia after Britain warned another attack was highly likely. Thomas Cook has canceled all trips to the North African country until October.

Thomas Cook CEO Peter Fankhauser flew to Tunisia on Monday to meet Prime Minister Habib Essid and seek reassurance over how customer safety can be ensured.

“Tunisia going forward is going to be a popular holiday destination again,” he told reporters. “I’m convinced that they will recover but we are of course heavily relying on the government advice.”

For Thomas Cook and TUI, Europe's two biggest holiday firms, North Africa accounts for about 10 percent of customers, a third of them in Tunisia.

Thomas Cook posted an operating profit of 3 million pounds for the three months ended June 30, its fiscal third quarter, reversing a 50 million loss a year earlier.

Revenue rose 0.2 percent to 1.95 billion pounds.

It said summer 2015 holidays were 78 percent sold, the same as this time last year, while customer bookings had generally improved in most markets over the last few weeks.

($1 = 0.6406 pounds)

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Last Update: Wednesday, 20 May 2020 KSA 09:44 - GMT 06:44
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