Thomas Cook shares tumble as United Kingdom profits drop 40 percent

Thomas Cook

Shares in Thomas Cook have fallen sharply after the travel firm reported a drop in profits at its United Kingdom business.

The holiday group reported underlying earnings of £52 million for the United Kingdom division in the year to 30 September, down from £86m the previous year after it was knocked by rising hotel prices, the pound and intense competition in the Spanish market.

The company also pointed to a surge in costs from fraudulent illness claims and a big bill supporting 10,000 customers caught up in Hurricane Irma, which devastated parts of the Caribbean and the USA state of Florida.

"We have taken a robust approach towards illness claims including improving our handling and assessment processes, and taking legal action against fraudsters - as a result, the claim rate has declined dramatically".

An improved performance in other markets meant that overall the companies full-year pre-tax profit rose by 35 percent to $61 million (£46 million). Underlying earnings rose £24m to £330m.

Thomas Cook said a "strong recovery" at its German airline Condor helped the travel firm fly to rising profits for the year. By delivering what we promised on strategy, we've inspired more customers to choose our holidays for their hard-earned weeks in the sun, while at the same time transforming the scale of the opportunity ahead for the group.




Underlying profit in the company's United Kingdom arm fell by £34 million during the period, despite a 3 percent rise in revenues, rippling across the group as overall profit margin declined 23.4 percent to 22.1 percent.

Thomas Cook has been struggling amid a price war for Spanish holidays, which partly contributed to the collapse of smaller rival Monarch last month. Its UK division saw margins drop after four years of growth. Further, the company lifted its final dividend, and said it is well-positioned to achieve a full year operating result in line with market expectations, based on current trading.

Group revenue increased to 9.01 billion pounds from 7.81 billion pounds a year ago, reflecting strong customer demand for holiday and flight offering.

He added that the "strong performance" of Thomas Cook's group airline "in what has been a hard year for European aviation is a particularly encouraging sign of our progress".

"With destinations in the Eastern Mediterranean out of favour following political unrest, holiday providers are dashing headlong into Spanish resorts".

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