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Kuoni to dump loss making units as euro crisis weighs
ZURICH, Sept 21 |
ZURICH, Sept 21 (Reuters) - Swiss tour operator Kuoni said on Friday it will sell or close a number of small businesses in Europe, which have failed to generate profits in recent years as the euro zone crisis crimps holiday spending in the region.
The activities earmarked for closure are tour operating businesses in Spain, Italy, the Netherlands, Belgium and Russia, as well a its online hotel platform, with combined annual sales of around 300 million francs ($321.3 million) and 500 staff.
"These activities are no longer of particular relevance to our group," said Chief Executive Peter Rothwell in a conference call with analysts and media.
"We are comfortable with our major operations in the major markets including the UK, Switzerland and France. We do not wish to exit tour operating or tour operating-related activities."
Chief Financial Officer Peter Meier said exiting the businesses would reduce Kuoni's operating result by some 80 million francs, probably in the current financial year. He said the move would eliminate annual operating losses of around 17 million francs.
"We welcome this decision, although the exit costs are expensive," said Helvea analyst Chris Burger in a note. "We believe that it will be difficult to find a buyer for most operations in this environment, so the costs probably reflect more or less the closing costs."
Shares in Kuoni traded 2.5 percent higher at 266.50 francs by 1003 GMT, outperforming a 0.7 percent rise in the Swiss Midcap index.
The company, which distributes a third of its net income as a shareholder dividend, said its dividend for this year would be based on profit numbers that exclude the costs of the closures. ($1 = 0.9338 Swiss francs) (Reporting by Martin de Sa'Pinto; Editing by David Holmes)
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