Revenue: EUR 3.7 billion, an increase of 1.5%. Underlying EBIT: EUR 207 million, influenced by the Easter holiday shift into Q3. Bookings: Up 2% with an Average Selling Price (ASP) increase of 4%. Hotel Occupancy: Increased by 1% with a daily rate increase of 8%. Cruise Capacity: Increased by 23% with occupancy at the same level and a daily rate increase of 2%. Interest Expense: Improved to EUR 180 million from EUR 210 million the previous year. Net Debt: Slight improvement of EUR 0.1 billion. App Share: Increased by 40%, with the UK reaching 20%. Dynamic Packaging Growth: Significant increase, especially in the UK, driven by Ryanair and easyJet connections. Guidance: Reconfirmed 7% to 10% EBIT growth for the year.

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Release Date: May 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

TUI AG (TUIFF) reported a strong set of numbers for Q2 2025, exceeding expectations. The company reconfirmed its guidance for 7% to 10% EBIT growth for the year. Revenue increased by 1.5% to EUR 3.7 billion, with a strong performance in Holiday Experiences. The TUI app saw significant growth, with app sales up 40% and a 10% share in the UK. TUI Cruises and Marella showed strong performance, with increased capacity and high occupancy rates.

Negative Points

The Q2 performance was impacted by the shift of Easter, affecting booking patterns and revenue timing. There were revaluation effects due to currency fluctuations, impacting hotel results. The company faces geopolitical and macroeconomic uncertainties, focusing on margin protection and cost reduction. Risk capacity bookings are slightly down year-on-year, with a focus on dynamic packaging to offset this. The company is cautious about the second half of the year due to higher uncertainty and cost inflation.

Q & A Highlights

Q: Can you comment on competition in Germany and how it impacts your summer bookings? Also, could you quantify the revaluation effects on Hotels and other segments? A: The booking pattern is later due to the Easter shift and proximity to Labor Day. The revaluation effects on Hotels were primarily due to currency translation, not operational performance. Without these effects, the operating result would have been higher than the previous year.

Q: What are the dynamics in the German market following the disappearance of FTI, and how does dynamic packaging affect average selling price? A: FTI's insolvency was due to high losses, and we are cautious not to enter unprofitable segments. Dynamic packaging is growing, especially in the UK, and will become a significant part of our strategy, potentially increasing beyond 10% or 20% of our business.

Story Continues

Q: Is your risk capacity for summer bookings down year-on-year, and how does the later booking window affect ASP? A: We have slightly reduced risk capacity to focus on dynamic packaging. We aim to maintain the current ASP despite the later booking window, which is why we reduced risk capacity.

Q: Can you explain the discrepancy in RIU occupancy and your expectations for the second half of the year? A: RIU occupancy was affected by keeping hotels open longer during low-demand periods. The ASP is strong, and the outlook for the second half is very positive. We do not anticipate a significant weakening in the Spanish market.

Q: Why is the EBIT growth expectation lower in the second half compared to the first half, and what is the currency impact on EBIT? A: The first half was up like-for-like, and the second half will benefit from additional cruise capacity and other factors. The currency impact is primarily from translation effects, with a EUR 25 million impact if calculated at constant currency.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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