The heavily indebted travel firm Thomas Cook has said its UK turnaround plan remains on track despite reporting a six per cent decline in revenue during the second quarter of 2012, the result of planned capacity reductions offsetting additional revenue from acquisitions.
The firm made an underlying operating loss for the quarter at £26.5m (2011: profit of £20.1m), reflecting the "challenging trading environments" across all markets and increased operating costs as a result of acquisitions and input cost inflation, on revenues of £3,294.8m.
Exceptional costs in the period were slightly lower at £33.2m (2011: £35.3m), mainly the result of reorganisation costs in the UK, North America and West Europe segments and professional fees relating to the group's financing.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Net debt at the period end was £1,099.3m (2011: £902.5m), an increase on the prior year due to the higher opening position and increased seasonal losses.
Harriet Green, who joined the firm as Group Chief Executive at the end of July, said: "My initial focus is to review our businesses, quickly establish priorities and develop a clear plan to reinvigorate Thomas Cook, which I expect to be able to present to you next Spring.
"The group has been through a difficult period, but much has been achieved which has strengthened the balance sheet and improved liquidity. The strength of the group's brands and the quality of its businesses and people provides a foundation from which to bring the business back to full strength.
"The outlook for this year remains challenging. However, recent booking trends are encouraging and the UK turnaround plan is delivering against its objectives. The group's quarterly financial trend is showing signs of improvement and we expect that in the fourth quarter the variance will narrow delivering a full year result broadly in line with expectations."
Overall UK bookings remain stable, the firm said, with mainstream bookings showing a significant improvement in recent weeks and there is now 33% less left to sell, whilst pricing over the last four weeks is up 8.0%, which demonstrates that yield measures introduced as part of the turnaround plan are starting to take effect.
Differentiated product account for 35% of mainstream holidays, up seven percentage points on last year. The programme is 88% sold and departures in June and July have achieved record load factors. In the Specialist & Independent business bookings remain strong, up 8.0% year on year, however, sales of the Olympic and Paralympic packages to corporate customers have been "challenging".
Regionally, trading across West Europe continues to be challenging for the group, particularly in France, while in Central Europe things are looking better, as the German business continues to perform well with bookings and pricing two per cent ahead of planned capacity.
In Northern Europe, there has been a good improvement in both bookings and pricing and the firm now expects the summer season to perform in line with last year.
The share price fell 1.49% to 16.50p by 10:53.
NR
FCA reveals 'once in a generation' advice changes - what the reforms mean for you
Zoopla: House prices slows to 1.4% in May as rate of sales at four year high
