Thomas Cook says summer heatwave in the UK responsible for drop in half year profits
Holiday firm Thomas Cook has blamed the summer heatwave for a drop in its full-year profit forecast.
“Many customers” had put off booking holidays abroad, instead staying at home in June and July to enjoy the sunshine, it said. The company said this had led to “higher than usual levels of discounting” in August and September.
It now expects full-year earnings of £280m, below its earlier forecast of around £323m, which it made in July. Thomas Cook’s shares plunged 18% after the warning to 64p.
Thomas Cook usually makes all of its annual profits during the summer. But it also warned that the impact of the heatwave “is continuing to be felt into winter trading”.
It said a return in popularity of holidays to Turkey, Egypt, Tunisia and Greece meant that total group bookings for the summer period were 12% higher than the same period last year.
However, average selling prices were 5% lower than last year, it said.
Chief executive Peter Fankhauser admitted its trading performance was “disappointing”, but said the firm had made “good strategic progress which positions us well to driver further performance improvement”.
The firm warned in July that annual earnings would be at the lower end of market expectations due to more people staying at home rather than booking last-minute holidays.
Patricia Yates, the director of Visit Britain, told the BBC earlier this year that there was a growing trend towards more late bookings, with nearly 80% of all trips being booked within three months of the travel date.
The hot weather in the UK therefore acts as a “timely reminder” to people who are “making a late-call on where to go on holiday”, she said.
In August, Thomas Cook’s bigger rival Tui Group reiterated its full-year profit forecast, but said the heatwave meant it was unlikely to exceed its profit prediction.
In a separate statement, Thomas Cook said its chief financial officer Bill Scott would leave the company at the end of November, and be replaced on an interim basis by Sten Daugaard, a board member of Thomas Cook’s German business. A search for a permanent successor would be started immediately, the company added.