Tui Ag · XETR:TUI1
Tui — Investor Day (May 2015)
78 slides from Tui's investor day presentation, May 13, 2015
Slide 1: TUI Group Capital Markets Update
TUI Group Capital Markets Update 13 May 2015 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 2: Taking TUI to the next level: The World's Leading Tourism Business
Taking TUI to the next level: The World’s Leading Tourism Business Peter Long 2 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 3: TUI Group – The World's Leading Tourism Business
TUI Group – The World’s Leading Tourism Business Access to over 20m customers Modern & efficient leisure airline Attractive global hotel portfolio Growing fleet of cruise ships 3 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 4: We are already delivering results
We are already delivering results Further Outperformed our Integration improvement in Strong growth in financial targets in progressing well Hotels occupancy & Cruises 2013/14 yield Significant Confident of Continued growth Simplified capital improvement in 10-15%* growth in unique holidays structur
Slide 5: Taking TUI to the next level
Taking TUI to the next level • We are focussing on profitable top-line growth in our tourism business and maximising growth and value from our other businesses • The merger is progressing smoothly, with a faster pace • We are accelerating organisational change – implementing a flat structure to enab
Slide 6: A clear structure to deliver growth and value
A clear structure to deliver growth and value Tourism Business Other Businesses Northern Region Hotels & Resorts Hotelbeds Group Specialist Group Central Region Cruises Held for sale Inbound Services Western Region (from 2015/16) LateRooms Group Hapag-Lloyd AG Platforms (aviation & customer/IT) 6 TU
Slide 7: Group Executive Committee
A strong management team with experienced commercial leaders Friedrich David Peter Long Horst Baier Sebastian Ebel Will Waggott Executive Joussen Burling Board • Specialist • Northern • Central Region Group Region Group Executive Committee • Hotels & Resorts • Hotelbeds Joint CEO Joint CEO CFO • Cru
Slide 8: What we want to achieve – our growth levers
What we want to achieve – our growth levers Deliver Tourism Growth Marketing & Flight Inbound Accommodation Integrated platforms Unparalleled Sales Service Integrated management customer proposition Maximise Growth & Value of our other businesses Deliver Merger Synergies Increased shareholder Balanc
Slide 9: Deliver Tourism Growth
Deliver Tourism Growth Friedrich Joussen 9 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 10: The World's Leading Tourism Business
The World’s Leading Tourism Business Accommodation Marketing • Strong positions in all parts >7m customers & Sales of the value chain Integrated >20m customers platforms • Business risk minimised through integrated decision Integrated making management Inbound Flight • From growing profits to Servic
Slide 11: Marketing & Sales
Marketing & Sales Marketing & Sales • One brand, local roots • Strengthen local P&Ls, build Accommodation Integrated on world-class global platforms platforms • More direct, more online • Broadening offering in existing source markets • New source markets Integrated management Inbound Flight Service
Slide 12: One brand, local roots
One brand*, local roots • If we set up our company today we would build it on one brand • If we fast forward into the future one brand would be necessary to compete, particularly online • We will ensure that we don’t lose the benefits of our local brand equity * The implementation takes place with r
Slide 13: One brand offers significant opportunities
One brand offers significant opportunities Growth Potential Renaming offers opportunity to reposition 360° Experience End to end consistent customer experience including media power Digital Opportunity for more impact through centralised URL Efficiency Operational efficiency by optimising content pr
Slide 14: Our brand migration process
Our brand migration process* will make sure that we don’t lose local brand equity NL Phased approach Phase 1 allows transfer of FR Introduce TUI best practice and enables us to BE minimise risk Nordics Phase 2 UK Supporting Workstreams Airline rebranding, destination & airport rebranding, external &
Slide 15: Strengthen local P&Ls, build on world-class global platforms
Strengthen local P&Ls, build on world-class global platforms Northern Region Central Region Western Region €398m EBITA, 6.4% margin €163m EBITA, 3.0% margin €82m EBITA, 2.8% margin 91% direct distribution 39% direct distribution 66% direct distribution 56% online distribution 12% online distribution
Slide 16: Key levers for profitable top-line growth
Key levers for profitable top-line growth Key Regional Growth Levers Common Levers • Broader, more flexible customer offering (tailor-made, durations, third-party flying) • More direct, more online Northern • Long-haul expansion • Modernise UK cruise offering • One brand Region • Nordics margin impr
Slide 17: Broadening our offering in existing source markets
Broadening our offering in existing source markets can deliver top- line growth Flexibility Third-party flying Long-haul Wider choice of flight times and departure points enabled by IT, Leveraging our integrated A more flexible customer resulting in a broader model to expand our offering enabled by
Slide 18: New source markets will deliver additional growth
New source markets will deliver additional growth • Scalable technology platform, already launched in Spain • Low cost / low risk • Straightforward route to market entry • Enhances occupancy management for Group hotels - not competing as an OTA Opportunity to increase occupancy in Group hotels 18 TU
Slide 19: Flight - Building a Competitive Aviation Platform
Flight - Building a Competitive Aviation Platform Marketing Accommodation Integrated & Sales platforms Integrated Flight management Inbound • High rates of asset utilisation • Central platform with local airlines Service • 787 expansion 19 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 20: Europe's 7th largest airline fleet
Europe’s 7th largest airline fleet: Industry-leading rates of asset utilisation 8 aircraft 59 aircraft 10 aircraft 29 aircraft 22 aircraft Aircraft numbers as at 31 September 2014; TUIfly excludes aircraft leased out to Air Berlin; Corsair excluded from above figures 20 TUI GROUP | Capital Markets U
Slide 21: Central platform with local airlines
Central platform with local airlines • One central organisation across 5 AOC’s Organisational structure Central Platform • One engineering & maintenance function • Full interoperability among fleet & crew Business model / • One IT landscape serving all AOCs ways of working • Fully joint long-haul pl
Slide 22: 787 Expansion
787 Expansion Growing 787 fleet Significant commercial benefits 787-8 787-9 • Opens up new destinations 20 15 4 • Enhanced customer experience 1 2 3 10 • Lower fuel consumption than similarly sized 13 13 13 13 13 5 8 aircraft 0 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 • Switch from -8 to -9 increas
Slide 23: Our unique Inbound Service will bring our brand alive
Our unique Inbound Service will bring our brand alive Marketing Accommodation Integrated & Sales platforms Integrated Inbound Service management • One service team • Seamless approach based on world Flight class customer platform 23 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 24: One service team
One service team Delivering our differentiation strategy One organisation in all destinations Over 6,500 11m 109 employees customers destinations Customer Sales Service experience Increase NPS and CSQ Increase sales & margin Transport Excursions Transfers Handling People Cost engagement Being fully
Slide 25: Seamless approach based on world class customer platform
Seamless approach based on world class customer platform Key Initiatives Benefits Joint operations Joint transfers, management and transport Cost TUI Collection Differentiated, local experience excursions Customer experience & sales Enabling customers to use mobile TUI Connect Customer experience &
Slide 26: Growth in Accommodation will drive Tourism revenue and margin
Growth in Accommodation will be key in driving Tourism revenue and margin growth Accommodation • Growth in our strong Marketing hotel and club brands Integrated • Growth in our powerful & & Sales exclusive international platforms hotel concepts • Profitable growth in cruises Integrated management In
Slide 27: Growth in Our Strong Hotel and Club Brands
Growth in Our Strong Hotel and Club Brands Hotels Clubs Brand Continue to grow the Expand & internationalise Strategy highly profitable brand the club product Other Our new brand : Footprint Nth Africa New hotels plus Other Nth Africa Med Med (30/9/14) repositioning of Med Caribbean some existing Nt
Slide 28: Growth Roadmap – Hotel & Club Brands
Growth Roadmap – Hotel & Club Brands Hotels Clubs Operational trial 4 new hotels 1 new club Summer 2015 2014/15 (Aruba, Mauritius, Europe) (Iberotel Sarigerme) (Tunisia) Growth through 3 new hotels 1 new hotel 2 new clubs internationalisation of (Italy, Oct 16) (Maldives, Greece) 2015/16 (US & Mexic
Slide 29: Growth in Hotels - Riu & TUI Blue
Growth in Hotels - Riu & TUI Blue • Joint venture between TUI Group and Riu family • TUI Group’s largest hotel brand • Characterised by excellent service, 103 location and quality New hotels focussed hotels • ~60% all-inclusive on differentiation Repositioning of and quality – some existing 85% • 4
Slide 30: Growth in Clubs - Robinson & Magic Life
Growth in Clubs - Robinson & Magic Life • Professional offering of sport, entertainment and programmed events • Family friendly holiday villages, varied sport and international • Portfolio has already undergone entertainment programmes restructuring, resulting in 23 significant improvement in ROIC i
Slide 31: Growth in our Powerful & Exclusive International Hotel Concepts
Growth in our Powerful & Exclusive International Hotel Concepts • Differentiates our local market offering Luxurious (5* only) family- friendly hotels, exceptional Adult-only 4&5* seafront Upscale modern family resorts • Earlier bookings (4* and above) first class wellness facilities and world- hote
Slide 32: Profitable Growth in Cruise
Profitable Growth in Cruise Brand Fleet Structure Customer Proposition 4 JV with Royal Premium all-inclusive, (+4 on order) Caribbean German-speaking 5 Part of Northern Region Wide range of great value cruises 4 Subsidiary Luxury & expedition cruising Cruise company management to become more integra
Slide 33: TUI Cruises – Fleet expansion
TUI Cruises – Fleet expansion 100% View 13/14 12/13 % • German-speaking cruise market has been growing by over 10% per annum Turnover 382 315 +21 • Strong competitive advantage in having secured additional Underlying EBITA 77 49 +57 capacity EBITA-Margin 20% 16% • New ships financed 80% debt / 20% e
Slide 34: Thomson Cruises – Fleet modernisation
Thomson Cruises – Fleet modernisation Fleet development • Small, but significant market share in the Lease expiry UK with access to Thomson’s distribution Celebration 2018 network Dream 2020 • Fleet modernisation is required to maintain Being replaced by market share: Island Escape Splendour Majesty
Slide 35: Hapag-Lloyd Kreuzfahrten – Repositioning & turnaround
Hapag-Lloyd Kreuzfahrten – Repositioning & turnaround • Successful repositioning of the brand completed • Top ratings for customer satisfaction and recommendations for all ships • Europa and Europa 2 have 5* plus ratings in Berlitz Cruise Guide • Hanseatic is the only 5* expedition cruise ship on th
Slide 36: The World's Leading Tourism Business
The World’s Leading Tourism Business Accommodation Marketing Integrated & Sales >7m customers platforms >20m customers Integrated Inbound management Flight Service 13m customers 11m customers 36 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 37: Integrated Platforms - Focus on Customer Experience
Integrated Platforms - Focus on Customer Experience Central Mobility Platform Central Customer Platform • Increasingly mobile first • SAP solution: • Key driver of customer engagement at every stage • Single view of the customer of the journey • Contact management • Over 1 million downloads to date
Slide 38: Executive Board and management team
A strong management team with experienced commercial leaders Friedrich David Executive Peter Long Horst Baier Sebastian Ebel Will Waggott Board Joussen Burling • Central Region • Northern • Specialist Group • Hotels & Resorts Region • Hotelbeds Group Joint CEO Joint CEO CFO • Cruise • LateRooms • Ho
Slide 39: Conquering Destinations - Long-haul case study
Deliver Tourism Growth: Conquering Destinations - Long-haul case study Peter Long 39 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 40: Conquering Destinations
Conquering Destinations Our business model enables us to Growing our presence conquer destinations in relevant destinations Customers Flights New hotels & ships Inbound service 40 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 41: Conquering Destinations - Our long-haul presence
Conquering Destinations - Our long-haul presence Over 1m customers Over 40 group hotels Range of cruise routes 13 x 787s (S15) (source markets, accommodated) USA Caribbean Mexico & Middle East Asia & India C.America Indian Ocean Australia Significant and growing long-haul presence Figures correct fo
Slide 42: Why long-haul growth?
Why long-haul growth? Commercial Advantages Leveraging our Scale & Platforms • Broadens our customer offering • Strong, international brands mean we can grow in underpenetrated/new destinations • Broadens our customer base outside • Growing 787 fleet gives improved customer Europe experience & great
Slide 43: Conquering Destinations - UK : Caribbean case study
Conquering Destinations - UK : Caribbean case study UK has grown customer volumes Growth is driven by Group hotels, JV significantly in recent years partners & expansion of hotel concepts UK customers (000) % flown on own 787 520 • Strong presence throughout the Caribbean 428 466 • Access to exclusi
Slide 44: Conquering Destinations - Long-haul growth opportunities
Conquering Destinations - Long-haul growth opportunities >50% growth in source market customers over the next 5 years New concept openings More flights – Caribbean from 13 x 787s to 17* Indian Ocean New hotels Cruise growth Thailand Expanding our inbound services Our integrated business model is ena
Slide 45: Maximise Growth and Value of our other businesses
Maximise Growth and Value of our other businesses Peter Long 45 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 46: Maximise Growth and Value of our other businesses
Maximise Growth and Value of our other businesses • Optimise strategic future through standalone operation Hotelbeds • Run as independent business Group • Inbound Services being integrated into Tourism • Evaluating our options Specialist • Portfolio of businesses Group • Run independently and manage
Slide 47: Hotelbeds Group - Market Leader
Hotelbeds Group - Market Leader Products Availability and price Platform Book online Customers c.70k hotels >31k B2B customers Source markets Travel Agencies OTAs Airlines Other • #1 global market position – business grown organically • Continuing to outperform the market – delivering >20% TTV/CAGR
Slide 48: Growth continues to be driven by geographic expansion
Growth continues to be driven by geographic expansion Asia Pacific Americas Europe Africa 3% Data shown on source market basis 1% 7% 13% 1% 24% 62% 89% 2008 TTV split 2014 TTV split 48 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 49: Hotelbeds Group - Growth Strategy
Hotelbeds Group - Growth Strategy Deepen our global • Continue expansion in Asia and Africa footprint • Bedsonline expansion plan (focussing on travel agents) Invest in innovative & • Enhance existing technology to deliver business growth scalable technology • Implement cutting-edge innovative techn
Slide 50: Deliver Merger Synergies
Deliver Merger Synergies Horst Baier 50 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 51: Merger Synergies
Merger Synergies 1 2 Corporate Cash tax streamlining benefits Uplifted by €5m to €50m* Significant 7% point reduction in ETR** synergy 3 potential 4 Increased occupancy from Inbound Services vertical integration cost savings Each 1% point increase equivalent to €6m EBITA* At least €20m* * Synergy am
Slide 52: Corporate Streamlining
1) Corporate Streamlining • New organisational structure established In €m Incremental One-off (Group Exco plus direct reports) underlying EBITA P&L cost impact • Synergy targets agreed with new Group 2014/15 - c.20 functional heads 2015/16 c.20 c.15 • Focus on removal of duplication (FTEs) and 2016
Slide 53: Cash Tax Benefits
2) Cash Tax Benefits • Profit & loss transfer agreement between TUI AG and Leibniz-Service GmbH approved by TUI AG shareholders in February 2015 • This enabled immediate corporate restructuring for tax purposes • No restructuring or one-off costs in relation to achieving this synergy • Underlying ef
Slide 54: Occupancy Improvement
3) Occupancy Improvement • Joint management of occupancy by source In €m Incremental underlying markets and Group hotels EBITA impact 2014/15 c.6 • Source market targets set 2015/16 c.12 • Occupancy expected to improve by 5% 2016/17 c.12 points by 2016/17 as a result of integration Total 30 Implied
Slide 55: Inbound Services
4) Inbound Services • Detailed organisation work undertaken and In €m Incremental One-off plans agreed for key areas affected underlying EBITA cost • IT; Finance, Tax & Legal; People & impact (SDI, tax, capex) organisation; Commercial & Operations 2014/15 - c.35 • Legal entity/IT separation from Hot
Slide 56: Merger synergies – Targets
Merger synergies – Targets Synergy Segment Incremental underlying EBITA benefit One-off costs to achieve Affected Approximate phasing in €m in €m 14/15 15/16 16/17 Total Restr. Tax Capex Total Corporate streamlining Central - 20 30 50 35 - - 35 Occupancy improvement Hotels 6 12 12 30 - - - - Tourism
Slide 57: Growth Roadmap
Growth Roadmap Horst Baier 57 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 58: 2013/14 - A strong set of results (Underlying EBITA)
2013/14 - A strong set of results (Underlying EBITA) Pro forma figures €m FY2012/13 FY 2013/14 Main drivers Northern Region 402.7 398.3 • Growth from online and direct distribution Central Region 152.7 163.0 • Growth of unique & differentiated products Western Region 23.2 81.7 • Continued improvemen
Slide 59: Growth Roadmap - Growth Levers
Growth Roadmap - Growth Levers What we want to achieve Profitable top-line growth & further efficiency enhancements in source markets Continue strategy of capacity growth in hotels & cruises We expect to deliver at least 10% underlying EBITA CAGR over the next Maximise growth & value of three years*
Slide 60: Growth Roadmap - Growth Levers
Growth Roadmap - Growth Levers What we want to achieve Growth Roadmap Profitable top-line growth & Profitable top-line growth which further efficiency enhancements Source Markets outperforms the market (>3%) in source markets One Aviation (€50m) Continue strategy of >60 new hotels @ €1.4m EBITA* cap
Slide 61: Growth Roadmap - KPIs
Growth Roadmap - KPIs Source Markets Hotels Cruises Details for operational KPIs will be provided per major market and brand including a 100% view on the major Joint Ventures 61 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 62: Pro forma underlying EPS 2013/14
Pro forma underlying EPS 2013/14 In €m Pro forma Underlying EBITA 870 Restated; LateRooms treated as discontinued Net interest expense -225 Convertible bond expense 108 Adjusted interest expense -117 Underlying PBT 753 Pre-merger effective tax rate Underlying ETR 29.4% Tax charge -221 Minority inter
Slide 63: Focus on balance sheet strength and free cash flow generation
Focus on balance sheet strength and free cash flow generation • Strict focus on SDI management • Optimised financing structure leads to lower interest level on a like-for-like basis • Asset-right strategy gives a balance of risk and returns • Capex reflects our growth plans • Focus on strong balance
Slide 64: Separately Disclosed Items Guidance
Separately Disclosed Items Guidance ~€220m • Strict focus on SDI management • Purchase price allocation stable at ~€75m per annum €95m ~€100m 21 • SDI guidance does not include M&A transactions or 74 significant new restructuring projects 2013/14 2014/15e 2015/16e long-term Merger related Non-merger
Slide 65: Interest Guidance
Interest Guidance • Lower 2015/16e P&L interest €229m ~€200m driven by removal of four convertible bonds, partially offset ~€180m by expected increase in asset €115m financing costs (aircraft, hotels, cruise ships) • Hybrid finance charge reduced to nil from 2015/16 (not included €114m in interest)
Slide 66: Strong balance sheet for future growth
Strong balance sheet for future growth Balance sheet needs to Asset financing consists Focus on rating to cover cash flow of on/off balance sheet obtain optimal financing seasonality of the liabilities (aircraft, conditions Tourism Business hotels, cruise ships) TUI Group has the right balance sheet
Slide 67: Balance sheet reflects seasonality requirements of Tourism business
Balance sheet reflects seasonality requirements of Tourism business June 14 Sep 14 €m Dec 14 Mar 15 Restated Restated Cash and cash equivalents 1,915 2,258 1,094 1,045 Other current assets 2,908 2,757 3,110 3,713 Non-current assets 8,922 8,992 8,921 10,187 Total assets 13,745 14,007 13,125 14,945 Eq
Slide 68: Asset financing consists of on and off balance sheet liabilities
Asset financing consists of on and off balance sheet liabilities June 14 Sep 14 €m Dec 14 Mar 15 Restated Restated Cash and cash equivalents 1,915 2,258 1,094 1,045 Convertible bonds 1,270 822 789 12 High yield bond - 292 293 293 Bank liabilities 387 261 953 1,139 Finance leases 476 501 598 898 Othe
Slide 69: Focus on rating to obtain optimal financing conditions
Focus on rating to obtain optimal financing conditions • TUI‘s rating has increased, especially during the course of the merger in Autumn 2014: 2009/10 2010/11 2011/12 2012/13 2013/14 Mar 2015 Outlook Standard & Poor's B- B- B- B B+ BB- stable Moody's Caa1 Caa1 B3 B3 B2 Ba3 stable • Although the out
Slide 70: Financial policy
Financial policy TUI is committed to improve its credit metrics following the delivery of merger We will set financial targets in the region of synergies and the implementation of its an Intermediate Financial Risk Profile growth roadmap Financial policy of the combined Group 70 TUI GROUP | Capital
Slide 71: We operate an asset-right strategy
We operate an asset-right strategy 310 hotels 13 cruise ships 136 aircraft Franchised Owned Finance lease Leased 10% 6% Large proportion Advantageous of hotels are Opg. 38% lease Owned financing available Owned managed, which is for new build ships Operating Managed 46% lower risk Fin. lease lease •
Slide 72: Flexible Asset Ownership Model
Flexible Asset Ownership Model Highest level of investment Level of control required Owned 38% Leased 10% Managed 46% Franchised 6% Minimal investment required EBITA returns EBITA returns illustrative only Hotels figures correct as at 30 September 2014, 72 TUI GROUP | Capital Markets Update | 13 May
Slide 73: Capex strategy reflects growth plans
Capex strategy reflects growth plans • Higher 2014/15e capex driven by growth ~€800m capex for hotels and Europa 2 ~€750m • Capex strategy reflects growth plans: €636m • Source Markets Customer platform (SAP solution), All other strategic marketing platform / eCRM (IBM) • Hotels Growth of core brand
Slide 74: Progressive dividend policy
Progressive dividend policy Indicative Dividend Growth 70 Based on growth in underlying EBITA • 2014/15 dividend will be 65 based off 44.5 cents 60 Additional 10% 55 • Dividend in respect of 50 44.5 cents 45 2014/15 and 2015/16 will 40 33 cents grow in line with growth in 35 underlying EBITA at 30 c
Slide 75: Closing Remarks
Closing Remarks Peter Long 75 TUI GROUP | Capital Markets Update | 13 May 2015
Slide 76: TUI Group – A Compelling Investment Case
TUI Group – A Compelling Investment Case Deliver Tourism Growth Marketing & Flight Inbound Accommodation Integrated platforms Unparalleled Sales Service Integrated management customer proposition Maximise Growth & Value of our other businesses Deliver Merger Synergies Increased shareholder Balance s
Slide 77: Taking TUI to the Next Level – the World's Leading Tourism Business
Taking TUI to the Next Level – the World’s Leading Tourism Business • Merger integration ahead of our original plan - we are working well together • New organisation structure in place - a flatter, more agile structure • Strong and sustainable business model with exciting growth prospects • Profitab
Slide 78: Q&A
Q&A TUI GROUP | Capital Markets Update | 13 May 2015