Weakening economic growth, uncertainty in North Africa and the impact of the Japan earthquake and tsunami make predictions for 2011 “difficult to estimate”, Kuoni warned today.
The Swiss-based group revealed UK and Benelux region bookings for the year were down by 3% in local currency terms at March 13 against the same period last year. Overall group tour operating bookings are flat year on year, but down by 7% in Swiss franc terms.
The update came as the company released its 2010 results showing that operating profit for the UK and Benelux region was down by 10 million Swiss francs to CHF 8.2 million based on turnover that was down to CHF 595 million from CHF 652 in 2009. The underlying earnings before interest and taxes (EBIT) came in at CHF 16.1 million helped by “sustainable cost savings”.
The result was “heavily influenced” by external factors such as flight cancellations due to Icelandic volcanic ash and a negative effect on demand due to ”weak consumer sentiment”.
The overall Kuoni group saw underlying EBIT almost double from CHF 60.5 million to CHF 127 million with turnover up by 2.3% to almost CHF 4 billion. Net profit was increased from CHF 1.6 million to CHF 23.2 million.
The best performing regions last year were Scandinavia, Asia and the company’s destination management business to which Kouni recently addeed GTA having agreed a buy-out from Travelport.
Group chief executive Peter Rothwell said the second half of 2010 performed better than the first half in the wake of economic recovery. Looking forward, he said: “Political turmoil, particularly in the North African tourist destinations of Egypt and Tunisia, led to a temporary suspension of all holidays to these countries in February 2011.
“Cancellations were only partially offset by rebookings, so booking volumes are down. However, our flexible business model allows us to adjust our offerings to other holiday regions. The sharp depreciation of the euro against the Swiss franc is also hurting booking figures.
“Due to the slight weakening of economic growth in the main markets, the uncertain geopolitical situation in Arabic countries and the potential consequences of the severe earthquake in Japan, it is difficult to estimate what will happen in 2011,” Rothwell added.