Thomas Cook shares slump 20% as the travel company issues a profit warning and its finance boss steps down
- Thomas Cook now expects full-year underlying operating profit of about £280m
- It has blamed the exceptional UK summer for a decline in trips abroad
- Chief financial officer Bill Scott is to leave the company at the end of November
Thomas Cook shares slumped by almost a quarter today after the travel firm issued another profit warning, blaming the exceptional UK summer for a decline in trips abroad.
The group, which already warned on profits in July, said it now expected full-year underlying operating profit of about £280million, down from previous estimates of £323million.
Along the update, Thomas Cook also announced that its chief financial officer Bill Scott is to leave the company at the end of November, after the full-year results announcement. Sten Daugaard, who is currently on the board, will act as interim chief financial officer until a replacement is found.
Staying put: Holidaymakers put off overseas getaways to enjoy the heatwave at home
Thomas Cook shares fell 20.8 per cent to 61.65p in morning trading.
The group said sales were hit by the European heatwave, which caused a fall in demand for last-minute trips abroad, which in turn lead to ‘even tougher competition and higher than usual levels of discounting’.
Overall bookings for summer 2018 rose 12 per cent, driven by the return in popularity of holidays to Turkey, Egypt, Tunisia and Greece. But average selling prices fell 5 per cent as hot weather at home meant more potential customers chose to stay put, resulting in heavier discounting.
Chief executive Peter Fankhauser admitted the group’s recent performance was ‘clearly disappointing’.
‘Summer 2018 has seen a return to popularity of destinations such as Turkey and Tunisia. However, it has also been marked by a prolonged period of hot weather across Europe.
‘This meant many customers spent June and July enjoying the sunshine at home and put off booking their holidays abroad, leading to even tougher competition and higher than usual levels of discounting in the ‘lates’ market of August and September.’
Analyst Neil Wilson at Markets.com said the share price fall was ‘perhaps an overreaction’.
He said: ‘The manner of these large share price moves whenever a company misses its numbers appears increasingly excessive, although we must note that profit warnings rarely come alone.
‘We really need to wait to see how summer 2019 looks now to get a clear idea of where the company stands. Further improvements in Egypt and Turkey should help with the Spanish market tough.’