Kuoni reports clear improvement in results for 2013 - dividend significantly higher

Highlights of the 2013 financial year

• Organic turnover growth of +2.0%, turnover of CHF 5 669 million (2012: CHF 5 845 million).
• Gross profit margin rises to 19.5% (2012: 18.9%)
• Much improved operating results with EBIT tripled: - EBITA of CHF 191.4 million (2012: CHF 117.7 million) - EBIT of CHF 154.2 million (2012: CHF 51.7 million)
• Clearly positive net result of CHF 69.2 million (2012: CHF -14.4 million).
• Positive organic turnover growth: - FIT (Fully Independent Traveller) +5.7% - Remaining tour operator activities in Outbound Europe/Asia +4.4% - Visa services provider VFS Global +23.6%
• Significant increases in EBIT in key pillars of future growth: - Group Travel +32.0% - FIT +12.1% - VFS Global +13.2%
• Free cash flow doubles to CHF 124.6 million (2012: CHF 63.5 million)
• Withdrawal from loss-making European tour operating activities completed at lower cost than planned
• Integration of Gullivers Travel Associates (GTA) completed successfully
• Substantial increase in dividend proposed

Key figures

CHF million	2013	2012 restated1)	Change in %
Turnover	5 669	5 845	-3.0
Gross profit	1 106	1 102	0.4
Gross profit margin	19.5%	18.9%
Operating earnings before amortisation (EBITA)	191.4	117.7	62.6
EBITA margin	3.4%	2.0%
Operating earnings (EBIT)	154.2	51.7	198.3
EBIT margin	2.7%	0.9%
Net result	69.2	-14.4
Free cash flow	124.6	63.5	96.2

1)       Restatement of prior year figures owing to introduction of IAS 19 Revised (Employee Benefits)

Peter Meier, CEO of Kuoni Group, made the following comments on the results:

"2013 was a successful year for the Kuoni Group, with further positive organic turnover growth and a significant increase in operating earnings. The Group completed its transformation and the GTA integration successfully, and achieved a clear positive net result. All business segments made a positive contribution to earnings, even before positive one-off effects. The growth-oriented activities of Group Travel, FIT and the visa services provider VFS Global generated particularly pleasing increases in EBIT."

Kuoni Group figures

Kuoni Group generated turnover of CHF 5 669 million in the 2013 financial year (2012: CHF 5 845 million). Organic turnover growth came to 2.0%; the reduction in turnover is due to the withdrawal from loss-making European tour operating activities. The net effect of acquisitions/disposals was -4.6%, equivalent to a CHF 269 million cut in turnover. Currency influences on reporting currency Swiss franc were small and had a negative effect on turnover of -0.4%. The organic growth was due to higher turnover at most of the remaining areas of business.

Gross profit rose slightly to CHF 1 106 million (2012: CHF 1 102 million). Thegross profit margin increased to 19.5% (2012: 18.9%).

Operating earnings before amortisation (EBITA) rose significantly to CHF 191.4 million (2012: CHF 117.7 million). Operating earnings (EBIT) rose sharply to CHF 154.2 million, which is three times as high as in the previous year (2012: CHF 51.7 million). The operating result included operating losses of CHF 3.1 million from the European tour operating activities that have now been sold.

The change in Switzerland from a defined benefit to a defined contribution pension scheme, and a curtailment resulting from a significant reduction in the number of Swiss employees covered by the plan, produced positive one-time, non-cash exceptional effects totalling CHF 41.3 million (see one-time effects, page 3).

The net result improved significantly to CHF 69.2 million (2012: CHF -14.4 million). This includes the CHF 47.6 million cost of withdrawing from loss-making European tour operating activities. Net result adjusted by these costs and the positive effects from the Swiss pension scheme came to CHF 84.3 million.

Cash flow from operating activity rose to CHF 160.4 million (2012: CHF 106.4 million). Free cash flow doubled to CHF 124.6 million (2012: CHF 63.5 million). This is mainly due to the higher operating result.

Kuoni Group's equity at 31 December 2013 came to CHF 779 million (31.12.2012: CHF 699 million). The equity ratio came to 32.6% (31.12.2012: 29.1%).

The average number of employees (FTE) at Kuoni Group fell by 5.4% in 2013 to 11 621 (2012: 12 279). As at 31 December 2013, the headcount was 11 478 FTEs (2012: 12 090).

Distribution proposed to the General Meeting of Shareholders

The Board of Directors proposes to shareholders to increase the dividend pay-out ratio: instead of the previous 30 to 35%, a ratio of 40 to 45% of net profit attributable to shareholders should be distributed. Accordingly, the Board of Directors is asking shareholders at the Annual General Meeting of 25 April 2014 to approve a distribution of CHF 1.50 per registered share A (2012: CHF 0.60) and CHF 7.50 per registered share B (2012: CHF 3.00) for the 2013 financial year, which would give a pay-out ratio of 42.3%. This distribution would take the form of a withholding tax-free distribution against reserves from capital contributions. The ex-dividend date is 29 April 2014. The value date for dividend payments is 5 May 2014.

One-time effects

Withdrawal from loss-making European tour operating activities completed in 2013

In 2013 Kuoni Group completed its announced withdrawal from loss-making tour operating activities in Italy, France and Belgium, as well as from the online platform Octopustravel. The CHF 3.1 million of operating losses sustained by these units in 2013 were charged against operating earnings (EBIT). The financial result was also reduced by realised losses of CHF 44.5 million from the sale of these subsidiary companies. The overall effect thus came to CHF 47.6 million. The Group successfully completed its transformation in 2013 with CHF 9 million lower transaction costs than originally planned.

Reduction in net pension liabilities in Switzerland

The pension fund in Switzerland switched from a defined benefit to a defined contribution scheme on 1.1.2014. In accordance with the applicable IFRS rules, a positive one-time, non-cash exceptional effect of CHF 34.5 million was credited against personnel expense for 2013.

Due to a curtailment owing to the significant reduction in the number of Swiss employees covered by the scheme, a positive one-time effect of CHF 6.8 million was credited against personnel expense.

EBIT benefited accordingly from these one-time effects in the amount of CHF 41.3 million. All Business Units with employees in Switzerland were positively affected (Group Travel CHF 3.6 million, FIT CHF 1.5 million, Outbound Europe/Asia CHF 28.5 million, Corporate CHF 7.7 million).

More information in the PDF on the left.

See the Online Annual Report  2013