Thomas Cook profits fall 16% in 'difficult year for tourism'

Thomas Cook (Frankfurt: A0MR3W - news) has reported a 16% fall in annual profits after lower demand for holidays in Turkey and North Africa knocked £800m off sales.

The travel operator's chief executive Peter Fankhauser said it had been a "difficult year for tourism" as the group reported a slide in revenues for the year to the end of September.

Pre-tax profits fell to £42m compared to £50m a year before and the scale of the fall would have been bigger but for the slump in the pound, which means euro revenues translate to a higher value in sterling.

Efforts to shift holiday programmes to alternative destinations such as Spain also cushioned the blow.

Stripping out currency and fuel price changes, revenues for the year of £7.8bn were £371m, or 5%, lower than in 2014/15.

This was mainly due to lower customer demand to Turkey, where Thomas Cook is the biggest operator, and to North African countries such as Egypt and Tunisia.

Sales to those destinations, which have been hit by political unrest and terrorism, fell by 50%, or £800m.

Thomas Cook said weaker demand combined with "unprecedented levels of disruption".

It also saw an effect on its Belgian business after the Brussels terror attacks.

But it has decided to pay a dividend to shareholders for the first time in five years saying this reflected confidence in its growth strategy. Shares (Berlin: DI6.BE - news) rose more than 7% by the close of Wednesday's trading.

Mr Fankhauser said the operator was taking a "cautious approach to the year ahead".

He added: "We've had an encouraging start to bookings for summer 2017 in our key markets, but it is early days."

UK bookings for this winter are up 2% on last year, helped by expansion in schedules to include long-haul destinations such as Cape Town and Tobago.

Thomas Cook is not the only holiday operator experiencing a tough time.

Last week, easyJet reported a 28% fall in annual profits amid a £138m hit from "unprecedented external events" and currency turmoil since the Brexit vote.