Kuoni Group's 2014 net result on previous year’s level – Dividend unchanged – Implementation of new strategic direction progressing as planned Dienstag, 17. März 2015 - 06:43
Highlights of the 2014 financial year
- Stable turnover of CHF 5 508 million compared to prior year in organic terms, despite, a challenging business environment (2013: CHF 5 669 million)
- Solid operating earnings:
EBITA CHF 122.2 million (20131: CHF 150.1 million).
EBIT CHF 85.7 million (20131: CHF 112.9 million) - Net result of CHF 67.4 million similar to prior year’s level (2013: CHF 69.2 million)
- FIT (new: GTD) reported strong organic turnover growth of 8.8% and exceeded 13 million worldwide hotel room nights booked for the first time
- Visa services provider VFS Global posted organic turnover growth of 13.9% and a 30.6% increase in EBIT
- Unchanged dividend of CHF 7.50 per share proposed (distribution against reserves from capital contributions)
Key figures
CHF million | 2014 | 2013 | 2013 | Change in %2 |
Turnover | 5 508.5 | 5 668.9 | 5 668.9 | -2.8 |
Gross profit | 1 025.1 | 1 105.5 | 1 105.5 | -7.3 |
Gross profit margin (%) | 18.6 | 19.5 | 19.5 |
|
Operating earnings before amortisation (EBITA) | 122.2 | 150.1 | 191.4 | -18.6 |
EBITA margin (%) | 2.2 | 2.6 | 3.4 |
|
Operating earnings (EBIT) | 85.7 | 112.9 | 154.2 | -24.1 |
EBIT margin (%) | 1.6 | 2.0 | 2.7 |
|
Net result | 67.4 | 36.7 | 69.2 | 83.7 |
Free cash flow | 33.2 | 124.6 | 124.6 | -73.4 |
1 excluding the effect of Swiss pension plan changes and a curtailment of CHF 41.3 million in total
2 2013 adjusted vs 2014
Peter Meier, CEO of Kuoni Group, made the following comments:
"The implementation of the new strategic direction announced in 2015 is going according to plan. Kuoni Group is now concentrating on its core business as a service provider to the global travel industry and governments, as well as on strategic initiatives designed to accelerate growth and increase profitability. Kuoni Group has therefore decided to sell its tour operating activities. Despite the challenging business environment, turnover in financial year 2014 was stable compared to prior year in organic terms. Two of our core activities – Global Travel Distribution (GTD), formerly FIT, and VFS Global – posted positive organic growth, especially in Asian source markets. Net result was similar to 2013."
Current trading 2015
With the introduction of the new group structure (see communication of 14 January 2015), the trading update is now reported through three divisions: Global Travel Distribution (GTD), Global Travel Services (GTS) and VFS Global.
As at 8 March 2015, percentage changes in booking levels and turnover for the year to date compared with the equivalent prior-year period were as follows in Swiss franc (CHF) and local currency (LC) terms:
| CHF | LC |
Global Travel Distribution (GTD), | +11% | +20% |
Global Travel Services (GTS), | -14% | -9% |
VFS Global |
| +10% |
Discontinued operations: Outbound Units | -14% | -9% |
Medium-term outlook to 2017
Owing to Kuoni's international activities and foreign subsidiaries, the removal of the minimum Swiss franc exchange rate against the euro on 15 January 2015 is likely to have a significant negative impact on the Group's consolidated accounts, which are presented in Swiss francs. For the years from 2015 to 2017, Kuoni Group aims to achieve annual growth (CAGR) significantly higher than the 3.8% industry growth rate forecast by the UN World Tourism Organisation (UNWTO). The basis for measurement is the new structure with the core activities of Divisions GTD, GTS and VFS Global in 2014, but exchange rates as at end-January 2015. The following targets have been set for 2017:
Kuoni Group | 2014 | 2014 | 2017 |
Turnover CHF million | 3 436 | 2 970 | ≥5% p.a. |
EBIT margin2 | 2.3% | 1.9%3 | ≥3.0% |
Free cash flow as % | n/a4 | n/a4 | ≥2.5% |
1 Exchange rates at end-January 2015
2 corresponds to EBITA margin: 3.2% (2014 reported), 2.8% (2014 currency adjusted basis), ≥3.6% 2017
3 adjusted by sale of no longer needed property “Geroldstrasse” with the amount of CHF 10.1 million
4 Free cash flow not available in new structure
Kuoni Group figures
Reporting in accordance with old 2014 segment structure
Kuoni Group generated turnover of CHF 5 508 million in the 2014 financial year (2013: CHF 5 669 million). Organic growth came to -0.1%. The segments FIT and VFS Global recorded positive organic growth of 8.8% and 13.9% respectively. The net effect of acquisitions/divestments came to -1.0% owing to the exit from loss-making European tour operating activities in 2013. Currency influences on the presentation currency came to -1.7%.
Gross profit came to CHF 1 025 million (2013: CHF 1 106 million). The gross profit margin came to 18.6% (2013: 19.5%). The reduction in gross profit can be attributed primarily to the performance of Outbound Nordic, Group Travel and Destination Management Specialists. On the other hand VFS Global achieved a significant increase in gross profit.
Operating earnings before amortisation (EBITA) came to CHF 122.2 million (2013 adjusted1: CHF 150.1 million). Operating earnings (EBIT) stood at CHF 85.7 million (2013 adjusted1: CHF 112.9 million).
Net result came close to the previous year's at CHF 67.4 million (2013: CHF 69.2 million, 2013 adjusted1: CHF 36.7 million) and includes almost CHF 2 million of costs already incurred for the announced sale of tour operating activities. The costs of
CHF 47.6 million in 2013 relating to the withdrawal from loss-making European tour operating activities mainly affected the financial result in 2013.
Cash flow from operating activities came to CHF 64.0 million (2013: CHF 160.4 million). Free cash flow stood at CHF 33.2 million (2013: CHF 124.6 million). This decline was due mainly to lower operating earnings (EBIT), as well as swings in Net Working Capital.
Kuoni Group's equity at 31 December 2014 came to CHF 779 million (31.12.2013:
CHF 779 million). The equity ratio was practically unchanged at 32.2% (31.12.2013: 32.6%).
As at 31 December 2014, Kuoni Group had a total of 11 934 employees (FTE) (2013: 11 478 FTE). While headcount was reduced in most units, it rose in the two growth areas FIT and VFS Global.
Distribution proposed to the General Meeting of Shareholders
The Board of Directors, based on its current dividend policy, proposes to shareholders to distribute 40-45% of the net result attributable to shareholders. Accordingly, the Board of Directors is asking the Annual General Meeting of 20 April 2015 to approve an unchanged distribution of CHF 1.50 per registered share A and CHF 7.50 per registered share B. This corresponds to a distribution ratio of 43.7%. The dividend would take the form of a withholding tax-free distribution against reserves from capital contributions. The ex-dividend date is 22 April 2015. The value date for the distribution is 24 April 2015.
1 excluding the effect of Swiss pension plan changes and a curtailment of CHF 41.3 million in total
Kuoni Group figures
Income statement
CHF million | 2014 | 2013 | Change in % |
Turnover | 5 508.5 | 5 668.9 | -2.8 |
Direct costs | -4 483.4 | -4 563.4 | 1.8 |
Gross profit | 1 025.1 | 1 105.5 | -7.3 |
Personnel expense | -557.4 | -548.5 | -1.6 |
Marketing and advertising expense | -59.8 | -64.4 | 7.1 |
Other operating expense | -234.7 | -250.1 | 6.2 |
Share in result from joint ventures | -2.0 | -2.7 | 25.9 |
Depreciation | -49.0 | -48.4 | -1.2 |
Operating earnings before amortisation (EBITA) | 122.2 | 191.4 | -36.2 |
Amortisation | -36.5 | -37.2 | 1.9 |
Operating earnings (EBIT) | 85.7 | 154.2 | -44.4 |
Financial income | 12.0 | 6.2 | 93.5 |
Financial expense | -7.5 | -58.2 | 87.1 |
Result before taxes | 90.2 | 102.1 | -11.7 |
Income taxes | -22.8 | -32.9 | 30.7 |
Net result | 67.4 | 69.2 | -2.6 |
Of which: |
|
|
|
Attributable to non-controlling interests | 1.0 | 1.1 |
|
Attributable to shareholders of Kuoni Travel Holding Ltd | 66.4 | 68.1 |
|
|
|
|
|
Basic earnings per registered share A in CHF | 3.44 | 3.55 |
|
Diluted earnings per registered share A in CHF | 3.44 | 3.55 |
|
|
|
|
|
Basic earnings per registered share B in CHF | 17.20 | 17.77 |
|
Diluted earnings per registered share B in CHF | 17.20 | 17.77 |
|
Breakdown of turnover
(as per new structure from 2015)
CHF million | 2014 | 2013 | Change |
Global Travel Services |
|
|
|
Group Travel | 873 | 943 | -7.4 |
FIT (Fully Independent Traveller) | 1 933 | 1 802 | 7.3 |
Outbound & Specialists |
|
|
|
Outbound Nordic | 844 | 982 | -14.1 |
Outbound Europe/Asia | 1 343 | 1 414 | -5.0 |
remaining activities | 1 343 | 1 355 | -0.9 |
sold/closed activities |
| 59 |
|
Destination Management Specialists | 365 | 417 | -12.5 |
VFS Global | 271 | 244 | 11.1 |
Turnover elimination | -121 | -133 |
|
Kuoni Group | 5 508 | 5 669 | -2.8 |
Breakdown of turnover
(as per old 2014 structure)
CHF million | 2014 | 2013 | 2013 | Change in %2 |
Global Travel Distribution (GTD) | 63.2 | 73.0 | 74.5 | -13.4 |
Global Travel Services (GTS) | 4.8 | 29.6 | 33.2 | -83.8 |
Acquisition and integration cost | 0.0 | -4.7 | -4.7 |
|
VFS Global | 52.5 | 40.2 | 40.2 | 30.6 |
|
|
|
|
|
Outbound Units | 12.9 | 43.4 | 71.9 | -70.3 |
|
|
|
|
|
Corporate | -11.2 | -31.4 | -23.7 | 64.3 |
Kuoni Group | 122.2 | 150.1 | 191.4 | -18.6 |
1 elimination according to the 2014 segment reporting
Breakdown of EBITA
(as per new structure from 2015)
CHF million | 2014 | 2013 | 2013 | Change in %2 |
Global Travel Services |
|
|
|
|
Group Travel | 16.9 | 23.2 | 26.8 | -27.2 |
FIT (Fully Independent Traveller) | 63.2 | 73.0 | 74.5 | -13.4 |
Acquisition and integration cost | 0.0 | -4.7 | -4.7 |
|
Outbound & Specialists |
|
|
|
|
Outbound Nordic | -7.6 | 37.8 | 37.8 |
|
Outbound Europe/Asia | 20.5 | 5.6 | 34.1 | 266.1 |
remaining activities | 20.5 | 8.6 | 37.1 | 138.4 |
sold/closed activities |
| -3.0 | -3.0 |
|
Destination Management Specialists | -12.1 | 6.4 | 6.4 |
|
VFS Global | 52.5 | 40.2 | 40.2 | 30.6 |
Corporate | -11.2 | -31.4 | -23.7 | 64.3 |
Kuoni Group | 122.2 | 150.1 | 191.4 | -18.6 |
Breakdown of EBITA
(as per old 2014 structure)
CHF million | 2014 | 2013 | 2013 | Change in %2 |
Global Travel Services |
|
|
|
|
Group Travel | 16.9 | 23.2 | 26.8 | -27.2 |
FIT (Fully Independent Traveller) | 63.2 | 73.0 | 74.5 | -13.4 |
Acquisition and integration cost | 0.0 | -4.7 | -4.7 |
|
Outbound & Specialists |
|
|
|
|
Outbound Nordic | -7.6 | 37.8 | 37.8 |
|
Outbound Europe/Asia | 20.5 | 5.6 | 34.1 | 266.1 |
remaining activities | 20.5 | 8.6 | 37.1 | 138.4 |
sold/closed activities |
| -3.0 | -3.0 |
|
Destination Management Specialists | -12.1 | 6.4 | 6.4 |
|
VFS Global | 52.5 | 40.2 | 40.2 | 30.6 |
Corporate | -11.2 | -31.4 | -23.7 | 64.3 |
Kuoni Group | 122.2 | 150.1 | 191.4 | -18.6 |
1 excluding the effect of Swiss pension plan changes and a curtailment of CHF 41.3 million in total
2 2013 adjusted vs 2014
Breakdown of EBIT
(as per new structure from 2015)
CHF million | 2014 | 2013 | 2013 | Change in %2 |
Global Travel Distribution (GTD) | 42.0 | 51.5 | 53.0 | -18.4 |
Global Travel Services (GTS) | -3.4 | 21.2 | 24.8 |
|
Acquisition and integration cost | 0.0 | -4.7 | -4.7 |
|
VFS Global | 52.5 | 40.2 | 40.2 | 30.6 |
|
|
|
| |
Outbound Units | 5.8 | 36.1 | 64.6 | -83.9 |
|
|
|
|
|
Corporate | -11.2 | -31.4 | -23.7 | 64.3 |
Kuoni Group | 85.7 | 112.9 | 154.2 | -24.1 |
Breakdown of EBIT
(as per old 2014 structure)
CHF million | 2014 | 2013 | 2013 | Change in %2 |
Global Travel Services |
|
|
|
|
Group Travel | 12.4 | 18.7 | 22.3 | -33.7 |
FIT (Fully Independent Traveller) | 42.0 | 51.5 | 53.0 | -18.4 |
Acquisition and integration cost | 0.0 | -4.7 | -4.7 |
|
Outbound & Specialists |
|
|
|
|
Outbound Nordic | -8.5 | 36.8 | 36.8 |
|
Outbound Europe/Asia | 14.3 | -0.7 | 27.8 |
|
remaining activities | 14.3 | 2.4 | 30.9 | 495.8 |
sold/closed activities | 0.0 | -3.1 | -3.1 |
|
Destination Management Specialists | -15.8 | 2.5 | 2.5 |
|
VFS Global | 52.5 | 40.2 | 40.2 | 30.6 |
Corporate | -11.2 | -31.4 | -23.7 | 64.3 |
Kuoni Group | 85.7 | 112.9 | 154.2 | -24.1 |
1 excluding the effect of Swiss pension plan changes and a curtailment of CHF 41.3 million in total
2 2013 adjusted vs 2014
Turnover Outbound Units
CHF million | 2014 | 2013 |
Outbound Nordic | 844.1 | 982.2 |
Switzerland | 679.1 | 722.9 |
United Kingdom | 409.8 | 402.1 |
Benelux Specialists | 37.1 | 39.3 |
India | 138.5 | 125.0 |
Hong Kong/China | 78.8 | 65.9 |
Gross profit Outbound Units
CHF million | 2014 | 2013 |
Outbound Nordic | 125.9 | 188.2 |
Switzerland | 150.5 | 156.7 |
United Kingdom | 77.9 | 74.4 |
Benelux Specialists | 7.9 | 8.3 |
India | 24.9 | 22.1 |
Hong Kong/China | 12.4 | 10.4 |
Operating earnings before amortisation (EBITA) Outbound Units
CHF million | 2014 | 2013 |
Outbound Nordic | -7.6 | 37.8 |
Switzerland | 12.2 | 8.3 |
United Kingdom | 9.0 | 8.0 |
Benelux Specialists | 0.7 | 1.6 |
India | -2.0 | -8.8 |
Hong Kong/China | 2.9 | 2.2 |
1 excluding the effect of Swiss pension plan changes and a curtailment of CHF 41.3 million in total
Operating segments
Reporting in accordance with old 2014 segment structure
Group Travel (new part of Global Travel Services, GTS)
Turnover came to CHF 873 million (2013: CHF 943 million). The organic decline of
-6.5% can be attributed primarily to lower demand in the Japanese market following the increase of the consumer tax and the devaluation of the yen. Meanwhile, the booking trend in Taiwan, South Korea, India and Hong Kong was positive. The competitive environment temporarily became tougher owing to reduced demand in key Asian markets. A lower gross profit margin had to be accepted as the price of maintaining a leading position in the most important markets. Operating earnings before amortisation (EBITA) came to CHF 16.9 million (20131: CHF 23.2 million). Operating earnings (EBIT) stood at CHF 12.4 million (20131: CHF 18.7 million). The number of room nights booked fell by 3.0% to 3.1 million.
FIT (Fully Independent traveller, new Global Travel Distribution, GTD)
The FIT business area increased turnover to CHF 1 933 million (2013: CHF 1 802 million). Organic turnover growth came to 8.8%. More than 13 million room nights in hotels were booked in a single financial year for the first time. Source markets in Asia/Pacific, the Middle East, Central Europe and Africa contributed most to the increase. In Asia (excluding Japan) there was organic growth of 13%. Operating earnings were affected by the cost of updating e-commerce platforms and by higher staffing costs resulting from the growth strategy. Operating earnings before amortisation (EBITA) came to CHF 63.2 million (20131: CHF 73.0 million). Operating earnings (EBIT) stood at CHF 42.0 million (20131: CHF 51.5 million).
Outbound Nordic
Outbound Nordic was heavily affected by the challenging market environment. Demand was reduced as a result of geopolitical events (political unrest in Egypt and Thailand), negative currency influences and very good spring and summer weather in Scandinavia. Excess flight capacity significantly lowered the level of achievable prices and margins. Outbound Nordic reported turnover of CHF 844 million (2013: CHF 982 million). Earnings before amortisation (EBITA) fell to CHF -7.6 million (2013:
CHF 37.8 million). EBIT went down to CHF -8.5 million (2013: CHF 36.8 million).
Outbound Europe/Asia
Tour operating activities saw operating earnings (EBIT) go up again namely thanks to business in the important summer quarter. In the Swiss market in particular, rainy summer weather helped to boost demand and earnings. Despite travel warnings for important destinations in Kenya and Thailand, the UK market generated higher earnings. Activities in India and Hong Kong/China also achieved better results. Turnover for 2014 stood at CHF 1 343 million (2013: CHF 1 414 million). Earnings before amortisation (EBITA) improved significantly to CHF 20.5 million (20131:
CHF 5.6 million). Operating earnings (EBIT) stood at CHF 14.3 million (20131:
CHF -0.7 million).
Destination Management Specialists (new part of Global Travel Services, GTS)
There was a mixed performance from the Destination Management Specialists, which are active in various regions. Geopolitical events had a very negative impact on results. Specifically in Kenya and Thailand temporary travel warnings prompted by political conflicts led to falling demand. The United Arab Emirates and South Africa were affected by the lower number of tourists from Russia and the Ukraine, and suffered as a result from increased pressure on prices. Meanwhile, demand for travel to India went up owing to the cheaper rupee. Turnover at the Destination Management Specialists unit fell to CHF 365 million (2013: CHF 417 million). Earnings before amortisation (EBITA) came to CHF -12.1 million (2013: CHF 6.4 million). EBIT stood at CHF -15.8 million (2013: CHF 2.5 million).
VFS Global
The world’s leading visa services provider continued to perform very well, achieving higher turnover and operating earnings. Turnover rose by 11.1% to CHF 271 million (2013: CHF 244 million). The increase can be attributed to growth in regions with higher visa fees, and to the introduction of the first front office services (FOS). FOS offer governments and authorities in-country public citizen services. The first services were launched in Asia, Africa and Europe. EBITA and EBIT increased to CHF 52.5 million (2013: CHF 40.2 million), a rise of 30.6%. In 2014, 18.2 million applications were processed and almost 6 million biometric data sets were recorded. Activities in the Ukraine and Russia in particular declined significantly, but this was offset by the increase in applications from Asia. At the end of 2014, VFS Global was operating 1 486 application centres in 120 countries for 45 governments. A total of 54 application centres in 26 countries were opened as part of the joint venture to serve the Kingdom of Saudi Arabia.
1 excluding the effect of Swiss pension plan changes and a curtailment of CHF 41.3 million in total
Property sale (information from 21 August 2014)
In consequence to a better use of office capacity and the aim to exploit synergies at Kuoni's head office in Zurich, the business activities of the specialist Swiss tour operators were moved from the "Geroldstrasse" building to the "Neue Hard" building. Kuoni Group then sold the "Geroldstrasse" building, which it no longer needed, on 30.6.2014. This sale added CHF 10.1 million to operating earnings (EBIT).
This information on the 2014 financial year is also available in the original German.
The German version shall prevail.
Agenda 2015
Kuoni Group will report on its business performance as follows:
Capital Market Day 11 June 2015
Half-year report 21 August 2015
Nine-month business update 5 November 2015
The General Meeting of Shareholders will be held in Zurich on 20 April 2015.
Information about the General Meeting of Shareholders on 20 April 2015
Ray Webster, Member of the Board of Directors of Kuoni Travel Holding Ltd. since 2006, has decided not to stand for another term of office. He will leave the Board of Directors at the Annual General Meeting of Shareholders on 20 April 2015.
The Board of Directors is proposing that the AGM elects Selina Neri to the Board. Selina Neri is an Italian citizen who has worked in the ICT industry for more than 22 years, most recently as Chief Executive Officer of online luxury fashion retailer Dadu Luxe based in Dubai. Selina Neri is, among other things, an expert in digital business transformation and e-commerce. She has an MBA from Clemson Business School, South Carolina, USA and a degree in economics from the University of Parma, Italy. Selina Neri's detailed CV can be found at:
http://www.kuoni.com/corporate-governance/annual-general-meeting/20151
All the other Members of the Board of Directors are standing for a further term of office.
The following agenda items are being put before the General Meeting of 20 April 2015 for voting:
1. Approval of the 2014 business review, financial statements and consolidated financial statements; acknowledgement of the auditors‘ report.
2. Appropriation of the 2014 balance sheet result, distribution
2.1 Appropriation of the 2014 balance sheet result
2.2 Distribution against statutory reserves from capital contributions
3. Discharge of the members of the Board of Directors and the Group Executive Board
4. Elections
4.1 Election of the Board of Directors
4.1.1 Re-election of Heinz Karrer
4.1.2 Re-election of Jae Hyun (Jay) Lee
4.1.3 Re-election of John Lindquist
4.1.4 Re-election of Adrianus (Adriaan) Nühn
4.1.5 Re-election of David J. Schnell
4.1.6 Re-election of Annette Schömmel
4.1.7 Election of Selina Neri
4.2 Re-election of Heinz Karrer as Chairman of the Board of Directors
4.3 Election of the Members to the Compensation Committee
4.3.1 Re-election of Jae Hyun (Jay) Lee
4.3.2 Re-election of Adrianus (Adriaan) Nühn
4.3.3 Re-election of Annette Schömmel
4.4 Re-election of REBER Rechtsanwälte, Zurich, as independent proxy
4.5 Re-election of KPMG AG, Zurich, as auditors
5. Amendment of the Articles of Incorporation. New article on Principles of Compensation, Performance-related Compensation as well as Participation and Option Plans
6. Compensation
6.1 Consultative vote on the 2014 Compensation Report
6.2 Approval of a maximum total amount for the compensation of the Board of Directors for the period until the next Annual General Meeting
6.3 Approval of a maximum total amount for the compensation of the Executive Board for the financial year 2016
7. Any other business
The official, complete and legally relevant invitation to the 89th Annual General Meeting of Kuoni Travel Holding Ltd for the business year 2014 including all agenda items, proposals as well as the explanations by the Board of Directors will be sent either by mail or electronically via the Sherpany online platform to all shareholders who are registered in the Company's share register, and will be published on March 27, 2015 in the Swiss Official Gazette of Commerce.
The present announcement does not constitute an invitation to the annual general meeting of shareholders 2015.