Tui Travel basks in record profit

Thomson and First Choice owner Tui Travel reported another year of record results today as its new line of luxury all-inclusive deals kept up demand for package holidays.

Europe’s biggest travel company shrugged off the impact of this summer’s heatwave to post its highest ever earnings, with overall underlying pre-tax profits surging 21 per cent to a higher-than-expected £473 million for the year to the end of September.

Package holiday sales rose 5 per cent in the UK, helped by its focus on more profitable unique holidays targeted at groups including couples and those looking for luxury resorts, such as Sensatori and SplashWorld, which now account for 83 per cent of all departures.

Chief executive Peter Long said: “The year has been outstanding and highlights that our strategy of delivering unique holidays sold directly to our customers is the right one.”

Despite the record profits, Tui revealed it paid just £14m of UK corporation tax as it continues to offset losses incurred following a restructuring launched six years ago. The group courted controversy last year when it admitted paying zero UK corporation tax, but said today that it paid £96m of corporation taxes in other countries.

Tui’s board proposed a final dividend of 9.75p a share, an increase of 17 per cent on a year earlier, giving a total payout for the year of 13.5p.

Analysts at Shore Capital said: “With strong cash flow forecast and expectations for limited acquisitions, we see scope for an acceleration in cash returns to shareholders over the medium term, and today’s dividend increase is perhaps just the start.”