Thomas Cook said its business transformation plans were starting to have an impact as it announced higher margins in its first quarter to December.
The travel operator and retailer saw revenues of £1,724 million in the three months to the end of December. And it achieved gross margin of 21.9%, up 1.3 percentage points over the comparable period last year, it said in a trading update.
The group said plans to achieve annual savings of £100 million over the next two years to 2015 were on track and a further £60 million of savings had been identifed.
Harriet Green, group chief executive, said she was particularly pleased with Cook’s UK performance.
“As we continue to strengthen Thomas Cook and determine our profitable growth strategy for the future, the power of our brand remains key to the transformation.
“We have seen stronger operating performances in our major markets – the UK, Germany and the Nordics. I am particularly pleased with the improved performance in the UK as the benefits of the turnaround plan are reflected in its operating results.
“Our business transformation is firmly on track. We have further strengthened our leadership team and the pace at which we are driving change gives me confidence that together we will achieve our near term objectives and much more.
“The business has generated higher gross margins than we did last year and this will remain an area of focus for us through the financial year.
“Our cost-out initiatives and improved cash management will be important contributing factors to the Group’s future performance and continue to receive strong focus in all parts of the business.
“Although global economic conditions and consumer confidence remain challenged, our business transformation is firmly on track.”
Cook said its Business Transformation programme was “firmly on track” to deliver on its three key elements:
• building an effective organisation: high quality executives, bringing a wealth of experience, appointed to the Thomas Cook leadership team;
• addressing costs and cash management: on track to execute announced £100m of cost reductions with a further £60m identified;
• profitable growth strategy: undertaken rigorous, and independently verified, market and customer research, to ensure strategy and future resource allocation is based on extensive and fact based information.
Cook said higher gross margins and lower overhead costs were reflected in the Group’s improved underlying operating which saw losses of £70 million compared to £93 million in 2012
It reported lower net debt of £1,559m, which had been reduced by £86m year on year and higher liquidity headroom of £290m, up £72m over the prior year due to improved cash management disciplines
In a statement it said: “Winter and Summer bookings are robust, in-line with expectations as our strategy of improved capacity management results in higher sale prices and improved margins.”
Cook also revealed the completion of the first phase of “one of the largest customer surveys undertaken in the sector” involving nearly 18,000 consumers from the UK, Sweden and Germany. The survey results have been combined with in-house data from Cook’s 23 million annual customers.
“The results, along with a profitability analysis of the industry by internal and external experts, will be used to shape our business model and future strategy, as well as accelerating our web transformation to create a web centre of excellence with channel ownership in each of our market segments,” the group said.