When Fritz Joussen, Tui’s chief executive, announced he was scrapping the Thomson Holidays brand and replacing it with the smiley face of the Tui “master brand” three years ago, there was consternation that he should dispense with a name that for 50 years had been dispensing sun, sea and sangria to British holidaymakers.
Not that we Brits were the only ones to lose long-established holiday brands. Since October last year, all the company’s main European tour operator brands now carry the Tui name, so whether you are in the Netherlands, France, Belgium, Sweden or in UK and Ireland, the chances are you’ll be booking a Tui-branded package.
Announcing half-year results yesterday, the Tui boss clearly felt vindicated as he declared: “The Thomson business is now back to where it was before the rebrand.” He said that the brand health tracker showed that “awareness is where it should be” while the rebranding had cost less than expected.
Not only that, but by taking the opportunity presented by the change to “reinvigorate” the business, the German brand had emerged as “a ten-year younger brand” than Thomson, which as well as attracting a broader — and younger — clientele, had made it easier to hire the youthful, digital-savvy talent the company is looking for.
Mr Joussen’s theme of creating a contemporary travel business extended to the location he was presenting the results from: aboard the new Mein Schiff 1 cruise liner, moored in Hamburg. Under his tenure, Tui has been turned from a bit part player in the cruise industry into a force to be reckoned with, and he has not, he argued, achieved this by offering a traditional cruise business complete with captain’s table and black tie dinners. As well as creating floating hotels that appeal to younger people, especially families, Tui runs themed cruises, including “full metal cruises” complete with heavy metal bands. “The last one sold out in half an hour,” he revealed.
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All of which helped the FTSE 100 travel group deliver a narrowing in seasonal losses from €214.3 million to €158.6 million, with turnover up 7.2 per cent to €6.81 billion. It said that bookings for this summer continued to “fully meet our expectations”. While demand for Spain remained strong, Mr Joussen said that Turkey had bounced back strongly, with bookings up 100 per cent in the past eight weeks. He said the main Egyptian resorts were also well ahead, although it was early days for Tunisia after the resumption of flights following the terrorist attack on Sousse three years ago. Cyprus, Croatia and Bulgaria are also seeing a solid rise in bookings while cruises and hotels are both delivering strong growth.
Another area that the Tui boss is focusing on which he believes will help differentiate it from rivals is its “destination experiences” division, which organises excursions and activities for holidaymakers. It may sound like a useful add-on to its core business, but this is a division that sells 4.5 million excursions, trips and other activities. It is in the process of expanding the unit by buying a destination management business from Hotelbeds. Tui used to own Hotelbeds, but Mr Joussen said that the €110 million price tag of the bit it was buying back was half what it had received in the sale of Hotelbeds.
The transformation wrought by Mr Joussen as he has moved the business into higher-value content has not disturbed the target he set in 2014 to double profit by 2020. The promise of at least 1o per cent growth in underlying earnings this year also reassures.
ADVICE Buy
WHY Shares are up 47 per cent over the past 12 months, but strong trading and a dividend yield of 3.6 per cent are attractive
Renishaw
Investors heading to Renishaw’s headquarters today at the site of a former 19th-century mill near the Cotswold town of Wotton-under-Edge will have another reason for a spring in their step.
Ahead of the engineering company’s investor day, it posted an upbeat trading update for the nine months to the end of March and raised its full-year guidance.
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Total revenue rose 11.9 per cent to £429.9 million, driven by a 12.5 per cent rise to £406.6 million in its core metrology division. Revenue in its smaller healthcare business was up 1.7 per cent to £23.3 million. It helped push adjusted profit up 39.2 per cent to £97.6 million.
Renishaw upgraded its profit forecast for the year to end of June to a range of £135 million to £150 million, up from the £127 million to £147 million guided at its half-year results in January. Its revenue forecast was also raised to between £585 million and £610 million from £575 million to £605 million.
The Gloucestershire company is one of the UK’s leading specialist precision engineers employing 2,700 people in Britain with a market capitalisation of £3.9 billion.
Renishaw’s main business is making measuring instruments for sectors such as aerospace, automotive and oil and gas and its growth has been bolstered by the consumer electronics market, particularly smartphones. It also supplies robotics for neurosurgery and analytical instruments for the healthcare industry.
The trading update was reassuring for investors as it comes after an uncertain start to the year. The two-year rally in Renishaw’s price was checked in January, when despite posting a set of in-line interim results, investors were unnerved by change at the top of the company.
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Sir David McMurtry, the executive chairman who co-founded Renishaw in 1973 with John Deer, the deputy chairman, announced plans to hand over some control to William Lee, the new chief executive, who joined Renishaw in 1996, before joining the board as sales and marketing director two years ago.
The shares, which trade on a 2019 price/earnings ratio of 30 times, rallied 14.5% per cent to £54.40, close to January’s record high of £57.75.
ADVICE Buy
WHY An experienced team behind new chief executive