Tui Ag · XETR:TUI1
Tui — Non-Deal Roadshow (June 2018)
47 slides from Tui's roadshow presentation, June 2018
Slide 1: TUI Group Investor Presentation June 2018
TUI Group Investor Presentation June 2018
Slide 2: What is TUI Group?
What is TUI Group? Hotel & Resorts, Cruises and Destination Experiences holiday experiences “product” provider with own distribution and fulfilment KEY HIGHLIGHTS HOLIDAY EXPERIENCES €357m Leading leisure hotel and club brands around 20m customers EBITA the world; investments, operations, ownership
Slide 3: Our business model and strategic positioning
Our business model and strategic positioning: Product-focused holiday experience provider with 59% holiday experience earnings SALES & MARKETING – 41% EBITA HOLIDAY EXPERIENCES – 59% EBITA INTEGRATION BENEFITS / Digitalisation, diversification Growth, diversification STRATEGY Northern, Central, West
Slide 4: What does it mean? Integrated model brings strong strategic benefits
What does it mean? Integrated model brings strong strategic benefits in the wider market context INTEGRATION BENEFITS / TUI STRATEGY WIDER MARKET CONTEXT 1 Own customer end-to-end Enables us to personalise our customers’ holiday experiences, basis for targeted marketing 2 Yielding our own risk capac
Slide 5: What do we offer to our investors – reasons to invest
What do we offer to our investors – 3 reasons to be invested / to invest • Global leading tourism group • Holiday product provider with own distribution STRONG • Own customer end to end: Sales & Marketing, Hotels, Cruises, Destination Experiences STRATEGIC • Individualization and targeted marketing
Slide 6: Growth & Digitalisation Initiatives
GROWTH & DIGITALISATION INITIATIVES 6 TUI GROUP | Investor Presentation | June 2018
Slide 7: Merger synergies delivered, strong earnings growth story continues
Merger synergies delivered, strong earnings growth story continues STRONG GROWTH TRACK RECORD: FUTURE GROWTH: MERGER SETS BASIS MERGER SYNERGIES MARKET DEMAND, DIGITALISATION, INVESTMENTS FOR FUTURE GROWTH >+10% CAGR • Target extended to 2020: at +12%1 1 least 10% underlying EBITA Earnings growth CA
Slide 8: TUI's re-investment programme FY16-FY19 – doubling EBITA under way
1 TUI’s re-investment programme FY16-FY19 – doubling EBITA under way GROWTH INVESTMENTS FY16 to FY18 H1 GROWTH INVESTMENTS FY18 & FY19 REINVESTMENTS 230 • Reinvestment of disposal ~€0.4bn proceeds by FY19 ~€0.4bn 400 40 • Own content growth • Basis for end-to-end profitability 55 4 270 • Inves
Slide 9: Hotels & Resorts investments: 38 new hotels since merger
1 Hotels & Resorts investments: 38 new hotels since merger, low capital intensity PORTFOLIO DIVERSIFICATION DE-RISKED GROWTH • Pre-dominantly low capital intensity Berlin Croatia Bulgaria • Ownership in 365 days Dublin destinations/ where scarcity of Greece New York Portugal assets Ibiza Italy Turke
Slide 10: Cruise capacity growth financed through disposal proceeds and JV
1 TUI’s cruise capacity growth financed through disposal proceeds re-investment programme and off-balance sheet (JV) OFF-BALANCE FINANCING AS BRAND / OWNERSHIP FLEET DEVELOPMENT PREFERRED OPTION Off-balance: JV Current fleet: • Funded by JV • No CAPEX requirements for TUI Deliveries: FY19 FY23 On ba
Slide 11: Strong cash generation allowing to invest, pay dividends and strengthen balance sheet
1 Strong cash generation allowing to invest, pay dividends and strengthen balance sheet ILLUSTRATIVE CASH FLOW PROFILE FY17 - FY19 CAPITAL ALLOCATION FRAMEWORK Attractive dividend Growth investments • In line with earnings growth • Re-investing disposal proceeds Normalised • FY17: €0.65 per shar
Slide 12: Group initiatives and digitalisation driving efficiency
2 Group initiatives and digitalisation driving efficiency BOOKINGS FLIGHT/ TRANSFER HOTELS & CRUISES • 6 One platforms introduced in 2015 • 2 new initiatives 2017 • One CRM One Brand One Aviation One Hotels (Cloud based) Northern Central • One Inventory Western One IT One DS One Cruises (Blockchain)
Slide 13: Data driven CRM process: One CRM platform rolled out
2 Data driven CRM process: One CRM platform rolled out to all source markets Title DATA COLLECTION LAYER DATA MARKET LAYER DATA ANALYSIS LAYER CAMPAIGN LAYER • Level 1 • Level 2 •Online Level 3 Destinations Cloud App Hotels • Multiple customer • Centralised data lake • Artificial intelligence • Camp
Slide 14: Personalized experiences during journey increase customer satisfaction and revenues
2 Personalized experiences during journey increase customer satisfaction and revenues BOOKING / HOLIDAY COUNTDOWN FLIGHT/ TRANSFER HOTELS & CRUISES FLIGHT Wellness Triggered Recommendations when follow-ups Excursions Late Check-Out for manage my booking when click or bundle offer those with late fli
Slide 15: Customer profile builds over time – example
2 Customer profile builds over time enabling personalized recommendations – example NEW REPEAT COOKIE PROSPECT CUSTOMER CUSTOMER • Nota bene: Sophia is a Name 2801928128 Mrs Sophia Meyer Mrs Sophia Meyer Mrs Sophia Meyer fictional character Status & Value Status: New Prospect Status: New Customer C:
Slide 16: Destimo purchasing and Blockchain Inventory
2 Launched 2017: Destimo purchasing and Blockchain Inventory – Opportunity to commercialise our risk inventory of 100m bed nights and our €5bn purchasing volume from 3rd party hoteliers Our vision: 20m customers - Cyrus Yield Management • Centralised inventory management based on Blockchain technolo
Slide 17: Blockchain Inventory: first feature launched in July 2017 – bed swap
2 Blockchain Inventory: first feature launched in July 2017 – bed swap • Bundling of inventory UK customer UK source market across source markets • Artificial intelligence based demand analysis Customer demand Room allocation One Inventory Base for same hotel room CYRUS YIELD SYSTEM • Bed swapping m
Slide 18: Blockchain Inventory: Bed swap screenshot
2 Blockchain Inventory: Bed swap screenshot 18 TUI GROUP | Investor Presentation | June 2018
Slide 19: Blockchain Inventory: Strategic optionality
2 Blockchain Inventory: Strategic optionality – Low risk entry into new markets and reduction of yield pressure at the same time • Source markets 20m customers expansion into new (Northern Europe) Own risk capacity and 3rd markets by applying TUI party hotels Own risk capacity (Southern Europe) and
Slide 20: Our Ambition
OUR AMBITION 20 TUI GROUP | Investor Presentation | June 2018
Slide 21: Our ambition: underlying EBITA doubling in 6 years
Our ambition: Strong strategic positioning, strong earnings growth and strong cash generation with underlying EBITA doubling in 6 years €~1.5bn STRONG STRATEGIC POSITION • Underlying EBITA almost doubling in 6 years • No equity raised, but dividends paid STRONG €779m1 EARNINGS GROWTH At least +10% S
Slide 22: Appendix
APPENDIX 22 TUI GROUP | Investor Presentation | June 2018
Slide 23: FY18 H1 Results
FY18 H1 RESULTS 23 TUI GROUP | Investor Presentation | June 2018
Slide 24: On track to deliver our growth targets
On track to deliver our growth targets • Good H1 performance • Strong demand continues for our hotels, TURNOVER UNDERLYING EBITA cruises and holidays €6.8bn -€158.6m • Delivering our growth strategy based on +7.2% +26.0% investments, market demand and digitalisation • On track to deliver at least 10
Slide 25: Holiday Experiences: Hotels & Resorts – H1
Holiday Experiences: Hotels & Resorts – H1 Continuing growth strategy across portfolio of destinations AVERAGE OCCUPANCY % AVERAGE REVENUE PER TURNOVER AND EARNINGS (€m) BED € 88 87 71 FY18 H1 FY17 H1 % 75 77 70 69 68 Turnover 287.9 300.0 -4.0 Underlying EBITA 179.2 122.8 45.9 o/w Equity result 44.5
Slide 26: Holiday Experiences: Cruises – H1
Holiday Experiences: Cruises – H1 Strong demand and capacity growth continue to drive earnings TURNOVER AND EARNINGS (€M) TUI CRUISES MARELLA CRUISES 147 148 FY18 H1 FY17 H1 % 2.5 127 136 100 2.0 99 100 Turnover 395.6 345.9 14.4 100 1.3 Memo: TUI Cruises Turnover 569.5 458.8 24.1 1.1 Underlying EBIT
Slide 27: Holiday Experiences: Destination Experiences – H1
Holiday Experiences: Destination Experiences (formerly Destination Services) – H1 Global tours & activities leader well-positioned for strong future growth TURNOVER AND EARNINGS (€M) • Acquisition of Destination Management business FY18 H1 FY17 H1 % from Hotelbeds Group, expected to complete in H2 F
Slide 28: Strategic expansion of Destination Experiences – HBG acquisition
Strategic expansion of our Destination Experiences business – HBG Destination Management business acquisition ticks 3 relevant boxes DIGITALISATION MORE PRODUCTS MORE GUESTS MORE DESTINATIONS TUI DX STRATEGY • Part of global CRM platform • Differentiation of excursion • TUI package customers • More
Slide 29: One CRM as accelerator for Destination Experiences
TUI’s One CRM initiative as accelerator for our Destination Experiences business – now in even more destinations CUSTOMER BOOKING 4-6 MONTHS “EXCLUSIVE“ MARKETING PERIOD ARRIVAL IN DESTINATION First cross-selling One CRM to drive Destination Experiences cross-selling Range of Destination Experiences
Slide 30: Sales & Marketing – H1
Sales & Marketing – H1 Portfolio of source markets continues to deliver good overall result CUSTOMERS (M‘s) UNAIDED AWARENESS % TURNOVER AND EARNINGS (€M) FY17 70% 2.4 2.4 2.4 H1 61% TUI Pre FY18 H1 FY17 H1 % 2.1 1.8 1.9 50% 47% Rebrand Turnover 5,762.3 5,346.3 7.8 FY18 H1 22% TUI Feb Underlying EBI
Slide 31: FY18 Guidance
FY18 Guidance1 FY18e FY17 Turnover2 Around 3% growth €18,535m Underlying EBITA At least 10% growth €1,102m Adjustments ~€80m €76m Net interest expense ~€120m €119m Underlying effective tax rate ~20% 20% Net capex & investments incl. PDPs ~€1.2bn €1.1bn Net (debt)/cash Slightly negative €0.6bn Levera
Slide 32: FY18 H1 Turnover by Segment
FY18 H1 Turnover by Segment (excludes Intra-Group Turnover)* In €m FY18 H1 FY17 H1 Change FX Change ex FX Hotels & Resorts 287.9 300.0 -12.1 -14.6 2.5 - Riu 234.4 244.2 -9.8 -11.7 1.9 - Robinson 33.9 32.4 1.5 -1.1 2.6 - Blue Diamond - - - - - - Other 19.6 23.4 -3.8 -1.8 -2.0 Cruises 395.6 345.9 49.7
Slide 33: FY18 H1 Underlying EBITA by Segment
FY18 H1 Underlying EBITA by Segment* In €m FY18 H1 FY17 H1 Change FX Change ex FX Hotels & Resorts 179.2 122.8 56.4 -2.8 59.2 - Riu 200.4 175.2 25.2 -5.6 30.8 - Robinson 1.0 1.3 -0.3 0.7 -1.0 - Blue Diamond** 21.2 15.1 6.1 -3.2 9.3 - Other -43.4 -68.8 25.4 5.3 20.1 Cruises 92.4 75.0 17.4 -0.6 18.0 -
Slide 34: Current trading progressing well
Current trading progressing well HOLIDAY EXPERIENCES SALES & MARKETING HOTELS & RESORTS CRUISES DESTINATION • S181 revenue +7%, bookings • Spain remains strong with • Demand remains strong with EXPERIENCES +5% demand rebalancing to Turkey higher yields in all three • Volumes develop in line with • S
Slide 35: FY17 Results
FY17 RESULTS 35 TUI GROUP | Investor Presentation | June 2018
Slide 36: FY17 Turnover by Segment
FY17 Turnover by Segment (excludes Intra-Group Turnover)* In €m FY17 FY16 Change FX Change ex FX Hotels & Resorts 679.0 618.6 60.4 -24.9 85.3 - Riu 493.1 461.6 31.5 -10.2 41.7 - Robinson 82.6 72.2 10.4 -0.8 11.2 - Blue Diamond - - - - - - Other 103.3 84.8 18.5 -13.9 32.4 Cruises 814.9 703.1 111.8 -5
Slide 37: FY17 Underlying EBITA by Segment
FY17 Underlying EBITA by Segment* In €m FY17 FY16 Change FX Change ex FX Hotels & Resorts 356.5 303.8 52.7 -5.5 58.2 - Riu 355.9 318.3 37.6 -5.5 43.1 - Robinson 38.5 38.7 -0.2 1.6 -1.8 - Blue Diamond** 20.1 16.5 3.6 0.6 3.0 - Other -58.0 -69.7 11.7 -2.2 13.9 Cruises 255.6 190.9 64.7 -7.8 72.5 - TUI
Slide 38: Income Statement
Income Statement In €m FY17 FY16 ADJUSTMENTS 17,153.9 Reduced by €27m due to completion of post-merger integration Turnover 18,535.0 Underlying EBITA 1,102.1 1,000.5 INTEREST Adjustments (SDI's and PPA) -75.6 -102.4 Improvement of €60m, due to lower RCF utilisation, lower interest on provisions EBIT
Slide 39: Deliver Merger Synergies
Deliver Merger Synergies Per Capital Markets Update Realised to FY16 Realised to FY17 May 2015 Synergies One-off Synergies One-off Synergies One-off costs to costs to costs to In €m achieve achieve achieve Corporate 50 35 40 35 53 35 streamlining Occupancy 30 - 30 - 30 - improvement Destination 20 4
Slide 40: Adjustments & Net Interest Result
Adjustments & Net Interest Result In €m FY17 FY16 Gain/(Loss) on disposals 2.2 -0.8 Restructuring expense -23.1 -12.0 Purchase Price Allocation -29.2 -41.9 Other one-off items -25.5 -47.7 Total Adjustments -75.6 -102.4 In €m FY17 FY16 Debt related interest -102 -126 Non-debt related charge -38 -75 I
Slide 41: Earnings per share (continuing operations)
Earnings per share (continuing operations) Reported Reported Pro forma Pro forma* In €m FY17 FY16 FY17 FY16 EBITA 1,027 898 1,102 1,001 Net interest expense -119 -180 -119 -180 Underlying effective tax HL AG book value adjustment and equity result 172 -100 - - rate calculated based on underlying EBT
Slide 42: Cash Flow & Movement in Net Debt
Cash Flow & Movement in Net Debt STRONG OPERATING IMPROVEMENT IN In €m FY17 FY16 CASHFLOW WORKING CAPITAL EBITDA reported 1 1,490.9 1,305.1 Full-year improvement of ~€560m Driven by growth in Source Markets turnover Working capital 406.2 271.8 Other cash effects 89.9 63.7 TRAVELOPIA - DISPOSAL HAPAG
Slide 43: Net Financial Position, Pensions and Operating Leases
Net Financial Position, Pensions and Operating Leases In €m 30 Sep 2017 30 Sep 2016 Financial liabilities -1,933 -2,041 - Finance leases -1,227 -1,232 - High Yield Bond - -306 - Senior Notes -296 - - Liabilities to banks -381 -411 - Other liabilities -29 -92 Cash 2,516 2,073 Net cash (debt) 583 32 -
Slide 44: Leverage ratio – medium-term target range
Leverage ratio – medium-term we feel well placed within new target range (3.0x-2.25x) LEVERAGE RATIO FY17 DEVELOPMENT AND OUTLOOK €m FY17 Guidance 3.50x Gross debt 1,933 3.25x to Bonds 296 2.75x SPLIT 3.00x to Liabilities to banks 80% Aircraft 20% Cruises & Other 381 2.50x to Finance leases 1,227 2.
Slide 45: Transformational Growth Investments funded by Disposal Proceeds
Transformational Growth Investments funded by Disposal Proceeds NORMALISED NET INVESTMENTS (€BN) DISPOSALS (€BN) 1.2 0.4 1.1 1.1 Hapag-Lloyd Additional net investments for xx 2 transformation 0.4 FY16-19 = €1.9bn1 Travelopia 0.6 ~€2.0bn Normalised net 2 investments ~3.5% of Revenue 1.2 Hotels ~30% H
Slide 46: Financial Calendar 2018 & 2019
Financial Calendar 2018 & 2019 9 AUGUST 2018 27 SEPTEMBER 2018 13 DECEMBER 2018 12 FEBRUARY 2019 Q3 FY18 REPORT PRE – CLOSE ANNUAL REPORT ANNUAL GENERAL TRADING UPDATE FY18 MEETING 46 TUI GROUP | Investor Presentation | June 2018
Slide 47: Contact
Contact ANALYST AND INVESTOR ENQUIRIES Peter Krüger, Director of Investor Relations, M&A and Group Strategy Tel: +49 (0)511 566 1440 Contacts for Analysts and Investors in UK, Ireland and Americas Sarah Coomes, Head of Investor Relations Tel: +44 (0)1293 645 827 Hazel Chung, Investor Relations Manag