February 13, 2013 / 7:16 AM / in 5 years

UPDATE 2-New TUI AG boss to act on underperforming units

* New CEO says “patience ends when division is not performing”

* Reiterates sees 2013 operating earnings on 2012 level

* Shares down 0.7 percent (Adds CEO comment, detail, shares, background)

By Peter Dinkloh and Peter Maushagen

FRANKFURT/HANOVER, Germany, Feb 13 (Reuters) - German travel and tourism group TUI AG’s new CEO, lumbered with a 22 percent stake in loss-making shipping group Hapag-Lloyd , said he would have little patience with underperforming businesses.

“I have always followed the strategy to work on the strengths of the company and not waste too much time trying to improve weaknesses,” Friedrich Joussen said at TUI’s annual shareholder meeting, at which he took over as chief executive.

“My patience ends where a division is not performing. Where there is weakness we need to act,” he said on Wednesday.

TUI has long wanted to exit Hapag-Lloyd to focus on tourism, and has the option to either sell its stake to a third party or call for a flotation. Joussen said a sale would depend on market conditions.

Joussen, who joined TUI last year, will need to satisfy shareholder demands to lift the company’s 5.6 percent operating margin. Cutting costs will likely be in his sights.

TUI owns 56.4 percent of its main earnings driver, British group TUI Travel - Europe’s largest tour operator, giving it two headquarters, in Hanover and in London. Joussen said that arrangement was costly and a solution was badly needed.

TUI decided against making a bid for TUI Travel earlier this year, saying it was too costly.

That decision may be revisited after outgoing TUI CEO Michael Frenzel said on Wednesday he would step down as head of TUI Travel on March 25, six months earlier than initially planned.

Also on Wednesday, TUI beat expectations for first-quarter results, helped by TUI Travel and better profitability at hotels which the company operates in addition to a cruise business.

Its underlying loss before interest, taxes and amortisation in the three months through December narrowed 4 percent to 141.5 million euros ($191 million), compared with a forecast for 161 million in a Reuters poll.

Joussen reiterated that TUI’s sales in 2102/13 would rise slightly, while underlying earnings before interest, taxes and amortization would remain unchanged.

Last week, TUI Travel reported first-quarter results, saying more Europeans were booking all-inclusive holidays to make the best use of dwindling incomes.

TUI shares were down 0.7 percent at 8.2830 euros at 1520 GMT, with TUI Travel up 1.1 percent to 317.4 pence. ($1 = 0.7427 euro) (Additional reporting by Victoria Bryan; Editing by Mark Potter)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below