Kuoni narrows loss as trade picks up

CEO Hans Lerch believes the industry upturn will last for 18 months Keystone

Switzerland’s largest tour operator, Kuoni, has reported improved first-half figures on the back of increased travel demand.

The company posted a net loss SFr12.9 million ($10.3 million), compared with a deficit of SFr44.1 million a year ago when the war in Iraq and the Sars virus hit the sector.

The Zurich-based travel group said double-digit growth in bookings up to the end of April and a cost-cutting drive had helped to narrow losses.

“After two difficult years, the tourism business is picking up again,” said chief executive Hans Lerch.

“Thanks to its strong market position and rigorous cost management, Kuoni has been and continues to benefit from this upswing in terms of both turnover and profit.”

Turnover rose by 14.1 per cent to SFr1.572 billion, buoyed by strong performances from its Asian, Scandinavian and French divisions.

Earnings before interest, tax and amortisation (EBITA) increased to SFr5.6 million from a loss of SFr18.7 million in 2003.

Kuoni forecast 2004 sales of more than SFr3.5 billion and an EBITA margin of 3.5 per cent, which disappointed analysts.

“Although the result is good, we expect that the share could be under pressure given the below-market-expectation outlook,” said Lombard Odier Darier Hentsch analysts in a note.

The tour operator’s share price was down more that 2.5 per cent at SFr465 during afternoon trading on Friday.

Upturn to continue

Lerch said he expected the sector upturn to continue for another 18 months and said Kuoni was on the prowl for acquisitions.

The company is focusing on more exclusive packages rather than the cheaper mass-market segment.

As part of this strategy, Kuoni said it had sold its stake in Hellenic Tours of Greece to local management.

Lerch said Kuoni was big enough to survive on its own. The company has been touted as a possible takeover target, with bigger operators such as Germany’s Tui, seen as possible buyers.

Kuoni said developments in July, which accounts for more than a third of the firm’s EBITA profit, confirmed its upbeat sales outlook for the year.

swissinfo with agencies

Key facts

Kuoni first-half 2004:

Turnover: SFr1.572 billion (SFr1.378 billion in 2003).
Net loss: 12.9 million (SFr44.1 million in 2003).
EBITA: SFr5.6 million (-SFr18.7 million in 2003)