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Analysts expect Thomas Cook profit turning point

Thomas Cook will unveil annual results on Wednesday with analysts forecasting an improved performance following a dire 2011-12.

Group chief executive Harriet Green is expected to report an underlying operating profit of near to £155 million, in line with expectations.

However, a series of exceptional costs will leave the group with substantial overall losses, much of it on operations outside Cook’s core businesses in the UK, Germany and the Nordic countries.

Investec analyst James Hollins suggested in a note to investors: “We regard the management’s results as a new dawn for the group. The business turnaround opportunity is tangible.”

Morgan Stanley told investors the underlying profit figures “should not come as a surprise, [but] marks a turnaround”.

It said: “For the first time in a year, Thomas Cook Group should meet consensus expectations. It will mark a turning point for profitability.”

“We expect the company to come up with initiatives to improve the product offering, IT systems and technology, to cut overheads, [and] to exit or sell certain divisions.”

The analysts’ optimism was reflected in a 20% rise in Thomas Cook’s share price over last week, albeit from a low base.

However, Panmure Gordon suggested the share price would fall and said the company should put its UK retail business into voluntary administration in order to restructure.

Thomas Cook chief executive Green, who joined the group in July, is not expected to reveal details of her plans to take the group forward until completing a business review early next year.

Reports in the national press at the weekend suggested the company had briefed City journalists. The Sunday Telegraph reported Green would warn “further costs need to be stripped from the business”.

It added: “Senior and middle management are expected to bear the brunt of the latest restructuring.”

Green recently brought in a new head of the UK business, Peter Fankhauser, who already runs Thomas Cook on the Continent.

The UK business has seen a series of high-profile departures, including its two UK chief executives and head of retail, in the last month.

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