Thomas Cook softens profits fall with restored dividend

Thomas Cook has sweetened the pill for investors with its first dividend in five years amid a sea of red.

Lower demand for holidays to Turkey, where Thomas Cook is the market leader, dented full-year profits but the tour operator cushioned the blow by promising shareholders a 0.5p dividend, totalling £7.7 million.

The payout is higher than chief executive Peter Fankhauser had indicated to investors, a sign the Swiss businessman wants to keep them sweet amid declining profits and reputational woes. It last paid investors a dividend in 2011.

Shares rose as much as 7% before settling up 4.55p at 78.1p.

“It’s been a difficult year for tourism. This is a good result,” Fankhauser said.

Stripping out foreign exchange and the oil price, the group’s revenues fell £371 million to £7.81 billion and underlying profits fell by £41 million to £308 million.

Customer demand for holidays to Turkey, Egypt and Tunisia fell by £800 million, a 50% drop on last year and the main driver of the revenue decline.

Terrorist incidents, plus the failed coup in Turkey and security fears over Egypt’s Sharm el-Sheikh airport, underpinned the shrink in demand.

That took a toll on Thomas Cook’s German airline Condor, which is the market leader in flights to Turkey. It made an underlying operating loss of £10 million versus a £66 million profit last time.

“I can’t remember the last time it made a loss,” Fankhauser said.

The group has put in a number of measures to try to return the airline to profit, including cutting the number of less profitable short and medium-haul flights.

The multinational, which traces its roots back to Thomas Cook & Sons formed in 1841, is cautious about the year ahead. It said UK holidaymakers were getting more adventurous and taking longer-haul trips to places such as Cape Town and Tobago.

Bookings this winter are up 2% on last year, with package tours up 11% and seat-only sales rising 4%.