Online travel agent TUI (TUI) has beaten expectations in its first set of full year figures following the merger of its UK and German businesses, with a 23% rise in earnings before interest, tax and amortisation (EBITA) to €1.07 billion.

The number of customers in the UK rose by 5% in the year to 30 September, despite the terrorist attack in Tunisia at the end of June.

TUI’s Hotels & Resorts and Cruises divisions also performed strongly. The bullish results send the shares up 5% to £11.76.

TUI - Comparison Line Chart (Rebased to first)

The group’s return on capital invested improved to 25.13% from 21.45% and it has announced a dividend of 56 cents per share, an increase of 70%.

The results don’t include the impact on tourism of flights to and from Sharm el-Sheikh being suspended or the Paris attacks.

Despite the tragic incidents, TUI says current trading for winter and summer is in line with expectations. It expects to deliver underlying EBITA growth of at least 10% in 2015/16 and reiterates its guidance of least 10% underlying EBITA CAGR (compound annual growth rate) over the next three years.

Ian Forrest, investment research analyst at The Share Centre, says the figures are very good given the challenges TUI has faced in some of its markets.

‘Subsequently, we recommend the shares as a “buy” for medium risk investors seeking a balance of income and growth due to the improving economic backdrop in the UK, growing dividends, long-term benefits of the merger and reducing competition in the sector,’ he adds.

Issue Date: 10 Dec 2015