We achieved industry-leading margins, supported by robust capacity management, cost reductions achieved through negotiations with our suppliers, strong efficiency gains and internal business process innovation.
- Peter Fankhauser
- Chief Executive Officer,
Central Europe
- Thomas Döring
- Chief Executive Officer,
East and West Europe
This segment comprises businesses in Austria, Belgium, the Czech Republic, France, Germany, Hungary, the Netherlands, Poland, Slovakia and Switzerland. Each business tailors its products to its individual markets, while benefiting from the Thomas Cook asset-light approach and focus on margins.
Financial highlights1
Key performance indicators
| Year ended 30 September 2009 |
Pro forma year ended 30 September 2008 |
Change | |
|---|---|---|---|
| Controlled distribution‡‡ | 38.3% | 36.2% | +5.8% |
| Internet distribution‡‡ | 10.0% | 9.0% | +11.1% |
| Passengers† | Change |
|---|---|
| Flight-inclusive | -4.7% |
| Non-flight inclusive | -9.9% |
| Average selling price# | +4.6% |
- Following tough trading conditions in the 2009 financial year, GDP forecasts for 2010 are ahead of previous expectations helping to improve consumer sentiment.
- Increase sales of exclusive and differentiated product to maintain margin advantage.
- Continue to grow online distribution channels and improve dynamic packaging capabilities.
- Increase sales to medium haul destinations such as Turkey and North Africa.
- 1The Group statutory results for the financial year ended 30 September 2009 are set out in the Financial Statements section. Current year figures have been compared to the unaudited pro forma figures for the 12 months ended 30 September 2008 (Read Appendix 1 for more detail). See Appendix 2 for key.
Progress against strategy
Mainstream
- We achieved industry-leading margins, supported by robust capacity management, cost reductions achieved through negotiations with our suppliers, strong efficiency gains and internal business process innovation.
- In France, we added scale to our operations, expanding our tour operating capabilities through the successful integration of our Jet Tours acquisition.
- We doubled sales of our unique packages which deliver higher margins and stronger customer retention.
- SENTIDO, our hotel franchise concept, had a successful brand launch and opened 19 four and five star beach hotels in Egypt, Spain, Greece, Cyprus, Turkey and Kenya. Bookings were strong and we have high demand from hoteliers wishing to join the concept.
Independent
- In independent travel, we made significant improvements in our dynamic packaging capabilities.
- Outside of Germany, online sales grew by 30% taking advantage of the opportunity in those markets.
Financial performance
Our Continental Europe businesses delivered a strong improvement in results year on year. Profit from operations increased by 19.5% to £127.0m and the operating profit margin was also improved from 2.9% to 3.2%. Revenue was also 10.5% higher than the prior year at £4,000.3m. However, this increase was driven by changes in euro to sterling translation rates and the full year impact of acquisitions made last year. Excluding these, underlying revenue fell 9%, reflecting fewer passengers travelling as a result of the global recession.
In Germany, our largest market in this segment, flight-inclusive passengers were 10% lower than in the prior year and average selling prices were 1% higher. Successful renegotiations with hoteliers meant that margin loss from volume was offset by the impact of lower bed rates. In addition, acquisitions made in the prior year performed strongly and we were able to realise significant cost savings from a major restructuring programme that was undertaken in anticipation of the tough trading conditions. These positive developments more than offset the impact of swine flu which management believe adversely affected the German results by £3.2m. As a result, we were able to strengthen the operating margin in our German tour operator from 1.9% to 2.3%. The overall operating margin we achieved in Germany (i.e. including Airlines Germany) also improved from 3.1% to 3.3%.
We experienced a similar development in results in our Western markets (France, Belgium and the Netherlands). Flight-inclusive passengers in Belgium and the Netherlands fell by 5% and 10%, and average selling prices increased by 1% and 3% respectively. In France, flight-inclusive passengers increased by 58% with average selling prices up 10%. However, this development was heavily influenced by the acquisition of Jet Tours, in August of 2008, which has been successfully integrated into the underlying French business and is performing well. Overall, accommodation rates were held flat in our Western markets but swine flu adversely affected the results by £4.2m. However, profitability was improved by savings generated from extensive restructuring programmes in all markets. As a result, we were able to improve the operating margin in our Belgian business to over 5%. Margins in France and the Netherlands were maintained around 5% and 3% respectively.
In the smaller Eastern businesses (Poland, Hungary and the Czech Republic) conditions were also difficult, with passenger volumes and average selling prices both falling year on year as a result of the poor economic conditions and the weak currencies in those markets.
Our Independent businesses in Continental Europe have performed well in the year.
We have also continued to grow our proportion of controlled distribution, further enhancing the multi-channel proposition which we continue to believe plays an important role. Controlled distribution now represents 38% of total distribution, with internet bookings running at 10%.
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