Thomas Cook soars after strategy update

Shares in travel agent Thomas Cook Group rose sharply on Wednesday after investors reacted very positively to the company´s strategy update.

Shares in travel agent Thomas Cook Group rose sharply on Wednesday after investors reacted very positively to the companys strategy update.

The firm reported that its business transformation was gaining momentum with a further £50m of cost-out actions having been identified, bringing total profit improvement actions so far to £350m with more to come, it said.

Progress was achieved in embedding improved working capital management practices, which contributed to an approximately £150m improvement in average working capital.

The group said that a thorough UK restructuring was underway to re-shape the organisation to meet customer need with a target to deliver UK EBIT (earnings before interest and tax) margins in excess of 5.0% by fiscal year 2015.

It also said that its non-core disposal programme was underway with the opportunity to realise gross proceeds of £100-£150m.

New growth strategy unveiledThe group published a new growth strategy, which was focused on delivering "trusted, personalised holiday experiences delivered through a high-tech, high-touch approach," it said.

Fiscal year 2015 targets included new product revenue exceeding £500m and an increase in group web penetration to by more than 50%.

A cost out/profit improvement target of £350m was additionally outlined.

Harriet Green, the Group Chief Executive Officer of Thomas Cook, said: "Our business transformation plans are ahead of schedule and already delivering substantially improved performance, which resulted in our recent return to the FTSE 250.

"We have exceeded our initial commitments and today announced a further £50m of cost out actions, bringing the total profit improvement actions identified already to £350m, £290m of which is still to come, stabilising the business has been our priority through addressing our cost and cash challenges, and strengthening the leadership team to create a more effective, aligned organisation focused on rigorous execution," he added.

Thomas Cook's share price was up 14.94% to 100p at 11:23 on Wednesday.

MF

Recommended

Share tips of the week – 21 January
Share tips

Share tips of the week – 21 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
21 Jan 2022
Seven cheap defence stocks to buy now
Share tips

Seven cheap defence stocks to buy now

We’ve got used to a world without war between major powers, but that era is coming to an end as Russia threatens Ukraine and China eyes Taiwan. Buy de…
21 Jan 2022
Invest in VCTs: tax-free investments set to break records
Investment strategy

Invest in VCTs: tax-free investments set to break records

Generous tax breaks make VCTs – venture capital funds – an attractive supplement to pensions.
21 Jan 2022
HubSpot: a tech stock set to tumble
Trading

HubSpot: a tech stock set to tumble

US tech stocks have had a fantastic couple of years. But this year is unlikely to be so bullish for high-fliers that can’t turn big profits.
18 Jan 2022

Most Popular

Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022
US inflation is at its highest since 1982. Why aren’t markets panicking?
Inflation

US inflation is at its highest since 1982. Why aren’t markets panicking?

US inflation is at 7% – the last time it was this high interest rates were at 14%. But instead of panicking, markets just shrugged. John Stepek explai…
13 Jan 2022